01/02/2012 World Business Report


01/02/2012

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set up emergency shelters. Those are the latest headlines. Time for

:00:02.:00:12.

the latest money news. Here is Sally and World Business Report.

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Hello and a warm welcome to World Business Report. Here are the

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headlines - Facebook is set to launch its share sale today. The

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company wants to raise $5 billion on the stock market. Portugal wants

:00:28.:00:34.

to borrow $2 billion but investors worry whether they will get their

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money back. I'm Rico Hizon. Manufacturing activity in China

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continues to improve as a spring festival in January helps boost the

:00:43.:00:53.

country's domestic consumption. Good to have you with us. There has

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been an awe pull lot of anticipation about it. It looks

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like Facebook will start its share sale today. The company wants to

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raise around $5 billion. That would make it the biggest first-time

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any. It would value Facebook at more

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than companies like Disney. From New York, here is our correspondent.

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This is an adventure sport company in this seven countries this.

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Business has been built entirely using Facebook. The founder says

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its been a great fit. We tis almost exclusively through

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Facebook. Our first event was only two years ago. We were hoping for

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500 people. We had a marketing budget of $8,200. We filled 5,000

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spots. Facebook sizable profits come from

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companies that place ads on your Facebook page or attach them to a

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piece of interesting content, what is known as sponsored stories.

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Those two stories are 90% of Facebook's profit. The power of

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Facebook certainly when it comes to generating advertising revenue, is

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it has masses of information and it can really target advertisements

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directly to the individual. Sometimes it's not even a company

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but a friend telling you about a brand that they happen to like.

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It used to be that businesses could tis, right, and people would either

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respond or not. Now businesses can build a presence on Facebook and

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let their own customers do their advertising for them as they spread

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the word to their friends. But Facebook has other cash

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generators. They take a slice of all applications that use Facebook

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as a platform and they sell highly profitable virtual gifts online.

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There are new ideas like Facebook's own currency, Facebook credit.

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There are companies which use Facebook credit to create a loyalty

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programme and say this could be a huge money spirn in the future.

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We are predicting that every year for the next five years, that the

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revenue from Facebook credits will double for the next five years and

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the - which would lead it to to be a $16 billion business by the end

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of 2016. Looking in may be free but all your information and

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connections are worth a lot to Facebook, whether you like it or

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not. Later this morning, Portugal will

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attempt to raise $-- 1.5 billion euros. Portugal would have been

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able to borrow that money at a low interest and pay it back over many

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years but confidence has evaporated and many fear Portugal will have to

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go to creditors and ask for a large part of its debt to be forgiven.

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Flee markets are the new trend in Portugal. They are a way for people

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to sell pe sessions to make ends meet and others snap up bargains.

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For good reason, thanks to the government's programme of cuts,

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national spending is set to be cut by 4%. The country's deficit in

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proportion to GDP has continued to soar. The government insists it

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needs no more bailout money but the yields on its bonds recently spiked.

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The markets suspect Portugal will have to write down its debt.

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Given the high level of debt, it's clearly a risk that Portugal will

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have to restructure its debts in order to get them down to a

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sustainable level. Not only that, it's possible it might have to

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contemplate leaving the eurozone to boost growth and get it out of

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recession as well. But that would be a big blow for

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the whole eurozone. The recovery plan is that only Greece will

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default. If they have to say that Greece and

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Portugal have had to restructure their debt, they feel that might

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undermine confidence in other countries and lead to a chain

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reaction across the eurozone. Portugal is defying public anger

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and cutting spending. It says it can pay back all its blound money

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by September next year. But if the yields remain high, it will have to

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ask for another bailout. It is suspected they will have to accept

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a Greek-style drawdown. Now Disney is expanding its reach

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in India. Rico Hizon is in Singapore with the details on that.

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Nice to see you. Tell us what Disney is up to?

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Well, the American entertainment giant sees India as a very

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lucrative market for its film, television and interactive content.

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It's expanding its footprint there by acquiring a controlling stake in

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UTV, which is the country's largest media and entertainment company.

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The financial terms were not revealed but Disney did say the two

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companies plan to integrate operations which will produce both

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UTV films and Disney-branded local films. This will help increase the

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US media giant's reach in the country, which is more than one

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billion strong. This already owns three children's markets.

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Let's talk about China. Some good news out about the money sector

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there which has brought cheer to the market?

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Absolutely. We saw an improvement for the index in the month of

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January, indicating that the economic slow down may be

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stabilising. The PMI rose to 50.5, up slightly from 50.3 in December.

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Last November was the worst. The PMI was 49. A roading below 50

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suggests a contracts. Analysts are suggesting, Sally, that the week-

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long spring festival holiday, which helped boost the country's domestic

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consumption, led basically by industries which include the likes

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of tobacco, food processing and food production. This strong demand,

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basically offset Europe's sovereign debt crisis which has impacted the

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world's second-largest economy over the past year. On some economists

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are concerned whether the PMI number above 50 can be sustained.

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They say if it continues, exports could weaken and bring it below 50.

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It the government imposes rate cuts and more fiscal pressures, this

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could keep the number above 50. We will have to see what the PMI shows

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over the next few months. Sally. Thank you, Rico, in Singapore.

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Amazon warned it could make a loss in the first three months of this

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year. That follows a sharp drop in profits at the end of 2011. The

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company is investing heavily in its online retailing business as well

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as new convenient furs. The Kindle e-book is one of those. Apple

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barely makes any money on the device or possibly even a loss. It

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looks like France has won a huge deal to sell combat jets to India.

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They are going to buy 1. 26 jets. A family is considering taking

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fashion shares which has been trading in Milan since 1976. They

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will meet to decide whether they buy shares. Markets, as Rico

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Chinese manufacturing number which proves to be more positive than we

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expected. That boosted the markets but they are fairly flat at the

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moment. We are waiting for that conclusion of debt resf debt res

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