It May Cost $2 Trillion on Europe Bank Rescue

Governments and private-sector partners may have to spend as much as $2 trillion to rescue Europe’s banks, said Laurence D. Fink, the chairman and chief executive officer of BlackRock Inc. (BLK)

“Stabilizing Europe is very costly,” Fink, who heads the world’s largest asset manager, said today during an event in Toronto. “It could be as much as a couple trillion dollars.”

World equity markets have plunged over the past two months amid concern the European debt crisis is intensifying. The International Monetary Fund cut its forecast for global growth last month and predicted “severe” repercussions if Europe fails to contain its debt crisis or U.S. policy makers deadlock over a fiscal plan.

Fink said his firm has purchased equities this week including Morgan Stanley (MS), after the MSCI All-Country World Index slumped 22 percent between May 2 and Sept. 30. BlackRock oversaw $3.66 trillion in assets as of June 30.

“The hysteria is so rampant now, it’s probably a good time to invest,” he said.

A European rescue program would be more of an investment opportunity than a bailout, Fink said today. On Sept. 14, he recommended a $1 trillion plan similar to the U.S. Troubled Asset Relief Program. He said today that he envisioned Europe needing an additional $1 trillion public-private partnership.

“It’s not lost money,” he said. “It’s no different than what the U.S. government did with TARP. In most cases, the U.S. got its money back.”

‘Euro Two’

Greece is unlikely to leave the euro region, as returning to a single-country currency would be too disruptive to credit markets, Fink said.

“If there is a restructuring of the euro, it would be good countries leaving the euro and creating the ‘euro two,’ and all the other countries keeping the euro,” he said.

A solution to the European crisis will return the world’s attention to the U.S. and the lack of progress toward reducing the country’s budget deficit, Fink said. The failure of U.S. politicians to compromise on taxes and spending is leaving Americans too uncertain about the country’s future to return to the markets, he said.

Reducing the deficit will probably require less spending and increasing taxes or changing the tax code, he said.

Fink said he is pessimistic the Federal Reserve’s plan to buy longer-term debt, known as Operation Twist, will improve the economy.

“This program is really baffling me,” he said. “U.S. companies are sitting on trillions of dollars of cash. Lowering finance costs by 1 percent for 10-year money, I don’t see how that can stimulate the economy.”

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

HP said NO to BIG Softwares

Hewlett-Packard Co. (HPQ) won’t look for big takeover targets in thesoftware industry following its $10.3 billion purchase of Autonomy Corp., Chief Executive Officer Meg Whitman said at an event in San Francisco today.

“It’s certainly the end of big acquisitions,” said Whitman, when asked whether she would continue the software expansion strategy of her predecessor, Leo Apotheker, who was ousted as CEO last month.

Whitman said the company has to pay attention to its hardware businesses, such as servers and printers.

“You don’t transform $129 billion companies,” she said at a forum to discuss California’s economic future hosted by the Public Policy Institute of California. “We have to take the most incredible assets we have and make them great.”

Yesterday, Whitman told a conference on women in leadership sponsored by Fortune magazine that Hewlett-Packard would decide whether to spin off its $41 billion personal-computer division by the end of October, pushing up the company’s timetable.

As for the economy, Whitman said it’s a “very difficult environment, particularly for a company the size of HP.” She said the Palo Alto, California, technology giant hasn’t decided yet if job cuts are needed. “I don’t know yet,” she said.

Seeking Harmony

Whitman, former CEO of EBay Inc., joined Hewlett-Packard’s board in January after a failed run for California governor in 2010. She took over as CEO of the computer maker on Sept. 22, when Apotheker was ousted after less than 11 months on the job. Whitman and Executive ChairmanRay Lane have promised to bring accord to the company’s executive suite and improve employee morale.

The Public Policy Institute of California is a nonprofit research group that studies issues including economic development, education and immigration. Walter B. Hewlett, son of Hewlett-Packard co-founder William Hewlett, is on the institute’s board, according to its website.

Shares of Hewlett-Packard gained 84 cents, or 3.7 percent, to $23.86 at 4 p.m. today on the New York Stock Exchange. The stock has slumped 43 percent this year.

To contact the reporters on this story: Aaron Ricadela in San Francisco ataricadela@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Samsung Seeks Ban on IPhone 4S in France, Italy

Samsung Electronics Co. aims to stop Apple Inc. (AAPL)’s iPhone 4S handset being sold in France and Italy on patent-infringement claims, escalating the dispute between the world’s two biggest makers of smartphones and tablets.

Samsung will file motions with courts in Paris and Milan seeking the ban, each citing two patent infringements on wireless telecommunications technology, the Suwon, South Korea- based company said in an e-mailed statement yesterday. Apple unveiled the iPhone 4S in Cupertino, California this week and aims to start sales later this month.

The move adds to legal disputes that began in April, when Apple claimed that Samsung’s Galaxy devices ‘‘slavishly” copied the iPad and iPhone. At stake is dominance in the fastest- growing segment of the $207 billion mobile-phone market, where Apple is competing against makers of handsets powered by Google Inc. (GOOG)’s Android operating system.

“It’s clearly part of this increasing mobile patent war that we’ve been seeing in recent months,” said James Cordwell, a London-based analyst at Atlantic Equities Service who rates Apple’s shares “overweight” and doesn’t own any. “What’s at stake is your long-term strategic position. It’s less about the country-by-country blockade.”

Steve Park, a Seoul-based spokesman for Apple, declined to comment on Samsung’s statement. Florence Catel, a spokeswoman for Samsung France, did not have any additional information on when the suit will be filed or when a hearing will take place.

‘Flagrantly Violate’

Samsung plans to file preliminary injunctions in other countries after further review, it said in the statement. Apple, maker of the iMac computer and the iPad tablet, is also one of the South Korean company’s biggest buyers of chips and displays.

“Apple has continued to flagrantly violate our intellectual property rights and free ride on our technology,” Samsung said. “Samsung believes that Apple’s violation as being too severe and that iPhone 4S should be barred from sales.”

Samsung gained 1.7 percent to 842,000 won at the 3 p.m. close of trading in Seoul, before the company issued the statement. Apple lost 0.6 percent to $370.23 in New York trading as of 10:44 a.m. local time.

Apple this week introduced the iPhone 4S equipped with a faster processor, a higher-resolution camera and a new software interface to help it vie with Google’s Android, which powers Samsung’s Galaxy phone and tablets.

Smartphone Sales

At stake is leadership in the market for smartphones, which is projected to double by 2015, when 1 billion of the handsets will be sold, according to research firm IDC. While Apple is the single biggest smartphone maker, the Android coalition leads the market, accounting for 41.7 percent. The iPhone accounted for almost half Apple’s sales in the most recent quarter.

“If Samsung just sits there doing nothing, they will end up letting Apple label them as a copycat,” said Choi Do Yeon, an analyst at LIG Investment & Securities Co. in Seoul. “Samsung will want to win something from any court, whether it’s a ban or an agreement from Apple to pay royalties.”

Apple had earlier won backing from a Dusseldorf court that upheld a temporary ban on sales of the Galaxy Tab 10.1 in Germany, which Strategy Analytics forecasts will be Europe’s third-largest market for tablets this year. Samsung filed an appeal against the ruling.

Apple’s Blockade

In Australia, Apple has delayed the release of the product for two months by seeking a temporary judicial ban.

Samsung will abandon plans to sell the Galaxy Tab 10.1 in Australia if it doesn’t win approval to sell it in the next two weeks, Neil Young, a Samsung lawyer told Federal Court Justice Annabelle Bennett in Sydney this week. Missing the Christmas season would result in the new tablet being “dead,” he said.

Samsung avoided an injunction on its tablet computers in the Netherlands, where it was ordered by a court in The Hague to halt some sales of the Galaxy S, S II and Ace smartphones.

To contact the reporters on this story: Jun Yang in Seoul at jyang180@bloomberg.net;

To contact the reporters on this story: Amy Thomson in London at athomson6@bloomberg.net

India to Sell $22 Tablet

India plans to sell tablet computers, made popular by Apple Inc. (AAPL)’s iPad, to schools for as low as 1,100 rupees ($22) as Asia’s third-biggest economy aims to boost computer literacy.

The government will initially buy 100,000 tablets for 2,250 rupees each from DataWind Ltd., a U.K.-based company, and sell it to schools at the subsidized price, Kapil Sibal, India’s telecommunications minister, said at a news conference in New Delhi yesterday. India subsequently plans to purchase 10 million tablets over the next five years, he said.

The 7-inch tablet that can run videos and games and browse the Internet will be used by educational institutions to teach students, Sibal said. The world’s second-most populous nation had 4.2 computers for every 100 people at the end of last year, according to CyberMedia Research, based near New Delhi, compared with 63.2 mobile phones per 100 people.

“It’s going to increase the desirability of computing devices for people who wanted them but couldn’t afford the price tag,” said Vishal Tripathi, an analyst at Gartner Inc. (IT) in Mumbai. “People who are using this device are not going to get the seamless experience of an iPad or a Samsung. There’s no comparison.”

The DataWind tablet runs on Google Inc. (GOOG)’s Android operating system like Samsung Electronics Co.’s Galaxy Tab. The iPad 2 range starts at 29,500 rupees in India.

Sky in Hindi

The tablet called ‘Aakash,’ which means sky in Hindi, has been developed by closely held DataWind and the state-run Indian Institute of Technology Rajasthan. DataWind won the contract after offering a price that was at least 15 percent lower than the next competitor, Chief Executive Officer Suneet Singh Tuli said, without elaborating.

Aakash has a 366 megahertz processor, 256 megabytes of memory, 2 gigabytes of storage, two USB ports and Wi-Fi and cellular connectivity, according to a DataWind statement. It can run for up to 180 minutes on a charge.

Shipments of tablet devices in India, the world’s second- largest market for mobile-phone services after China, may surge 66 percent to 266,000 next year, according to research firm IDC.

“Aakash will ensure that digital illiteracy will be vanquished,” said Sibal. “Technology that is low cost, that provides quality access, that can be owned and operated by every student, would truly empower the child.”

To contact the reporters on this story: Malavika Sharma in New Delhi atmsharma52@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; 

Biggest Two-Day Rise Since Aug.

U.S. stocks rallied, giving the Standard & Poor’s 500 Index its biggest two-day gain in more than a month, as economic data topped estimates and investors speculated Europe will act to contain the region’s debt crisis.

Alcoa Inc. (AA) and Cisco Systems Inc. (CSCO) added at least 2.7 percent to pace gains among companies most-tied to the economy. Financial stocks rebounded as Morgan Stanley jumped 3.4 percent.Monsanto Co. (MON) climbed 5.2 percent as the world’s largest seed company forecast higher-than-expected earnings. Yahoo! Inc. surged 10 percent, the most since 2008, after a report that Microsoft Corp. (MSFT) may make a bid. Apple Inc. (AAPL) gained 1.5 percent, preventing the longest decline since 1998.

The S&P 500 advanced 1.8 percent to 1,144.03 at 4 p.m. New York time, rallying 4.1 percent in two days. The Dow Jones Industrial Average added 131.24, or 1.2 percent, to 10,939.95.

“We are headed for the mother of all counter-trend rallies in equities,” said Michael A. Gayed, the chief investment strategist at Pension Partners LLC in New York. “We’ve seen tremendous panic. There’s likely to be some kind of reevaluation of the financial sector. It could be because of the realization that we’re going to have some sort of recapitalization in Europe. It could very well be that we saw the bottom.”

Stocks reversed losses yesterday, rallying in the final hour of trading, amid speculation European Union officials are examining how to recapitalize the region’s banks. The S&P 500 was on the brink of abear market during the worst of yesterday’s losses, falling more than 20 percent from an April peak. The index is now down 16 percent since April 29, on concern about Europe’s debt crisis.

‘Bad Bank’

The International Monetary Fund said EU officials are working on plans to boost bank capital. France and Belgium said a "bad bank" will be set up to hold Dexia SA’s troubled assets. German Chancellor Angela Merkel said Europe’s rescue fund will only be used as a last resort to save banks and that investors may have to take deeper losses as part of a Greek rescue.

Investors also weighed economic reports that topped forecasts. Private employment expanded last month, while the Institute for Supply Management’s non-manufacturing index fell to 53. The median forecast of 75 economists surveyed by Bloomberg News was for a drop to 52.8. Orders picked up.

A 3.8 percent rally tomorrow in the S&P 500 would create a pattern that may result in a “sharp decline” a day later, according to Tom DeMark, the creator of indicators for identifying turning points in securities. The index would send a bearish sign if it reached 1,188 tomorrow, he said.

‘Important Day’

“Tomorrow is a very important day for us,” DeMark said in an interview with Bloomberg television. “People are not smart off of market bottoms. If you do get three up closes off a low, we’ll see a vacuum in the market and that vacuum will accent the decline even more than the upside.”

DeMark, the founder of Market Studies LLC, said on Sept. 22 that the S&P 500 might drop as low as 1,076 before investor panic abated and stocks advanced. The benchmark index for American equities fell yesterday to 1,074.77 and has gained 6.4 percent since.

The Morgan Stanley (MS) Cyclical Index of companies most-tied to the economy rose 2.7 percent today. The Dow Jones Transportation Average, a proxy for the economy, added 2.7 percent. Alcoa, the largest U.S. aluminum producer, gained 2.7 percent to $9.37. Cisco increased 3.7 percent to $16.16.

Banks Rebound

The KBW Bank Index of 24 stocks rallied 1.1 percent after falling as much as 2.5 percent. Morgan Stanley jumped 3.4 percent to $14.48.Bank of America Corp. (BAC) added 0.2 percent to $5.77 after falling as much as 4.3 percent.

Monsanto advanced 5.2 percent to $66.25. The company forecast higher-than-forecast fiscal first-quarter profit as Latin American farmers increase demand for genetically modified crops. Profit will be 10 cents to 15 cents a share in the three months that began Sept. 1. Five analysts surveyed by Bloomberg estimated earnings of 8 cents, on average.

Yahoo surged 10 percent to $15.92. Microsoft might enlist a partner to go after Yahoo, Reuters reported today, citing sources close to the situation. Yahoo spurned a $47.5 billion bid from Microsoft in 2008. No decision has been made to come back to the negotiating table, and there are internal divisions at Microsoft over the idea, Reuters said.

Apple, the world’s largest technology company, rose 1.5 percent to $378.25, halting a string of consecutive declines. The stock fell 7.9 percent over the previous seven days.

Analyst Changes

Some stocks moved on analysts’ recommendations. Walt Disney Co., the largest theme-park operator, added 5.5 percent, the most in the Dow, to $31.51 after being raised to “buy” from “hold” at Citigroup Inc. Apollo Group Inc. (APOL), the biggest U.S. for-profit college, gained 8.5 percent to $42.22 as Credit Suisse Group AG boosted its rating to “outperform” from “neutral.”

The U.S. stock market probably hit bottom yesterday and will rebound as investors refocus on fundamentals and earnings after weeks of distraction from the European debt crisis, Oppenheimer & Co.’s Brian Belski said.

The U.S. stock market is positioned for a rally after weeks of defensive positioning and indiscriminate selling that has led to record declines, Belski, chief investment strategist at Oppenheimer in New York, said on Bloomberg Television’s “Inside Track With Deirdre Bolton and Erik Schatzker.” Investors have become overly focused on the daily news on the Greek sovereign debt crisis and have forgotten that earnings drive stock prices, not macroeconomic news, he said.

“Earnings will surprise to the upside -- earnings estimates have been slashed too much,” Belski said. “The market’s going to get squeezed and we’re going to have a nice year-end rally.”

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net