Jobless Claims in U.S. Drop to Three-Year Low in Past Month

December 30, 2011, 3:09 PM EST By Bob Willis

(Updates with economist comment in fourth paragraph.)

Dec. 29 (Bloomberg) -- Fewer Americans filed applications for unemployment benefits over the past month than at any time in the past three years, a sign the U.S. labor market is on the mend heading into the new year.

The four-week moving average for claims, a less volatile measure than the weekly figures, dropped to 375,000 last week, the lowest level since June 2008, Labor Department figures showed today in Washington. Applications rose for the first time in a month in the week ended Dec. 24, climbing by a more-than- forecast 15,000 to 381,000.

The jump in claims last week may say more about their volatility during this time of year than about the state of the job market, according to economists like Eric Green. Their recent decline has stoked speculation the world’s largest economy was on the cusp of showing bigger gains in employment.

“The labor market is improving,” said Green, chief market economist at TD Securities Inc. in New York. “You should expect to see stronger payroll numbers going forward.”

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.3 percent to 1,247.9 at 8:40 a.m. in New York.

States Estimated

A Labor Department spokesman said there was nothing unusual in the state-level data last week. Claims were estimated for six states and the District of Columbia as the holiday-shortened week prevented offices from completing their counts, the spokesman said. The estimates are usually close to the actual figures and therefore rarely lead to large revisions, he said.

The median forecast of 32 economists surveyed by Bloomberg News projected an increase to 375,000 from 364,000 initially reported for the prior week. Estimates ranged from 350,000 to 385,000. The government revised the previous week up to 366,000.

The number of people continuing to receive jobless benefits rose by 34,000 in the week ended Dec. 17 to 3.6 million. Those figures do not include the number of Americans receiving extended benefits under federal programs.

The number of workers who’ve used up their traditional benefits and are now collecting emergency and extended payments fell by about 7,800 to 3.5 million in the week ended Dec. 10.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, climbed to 2.9 percent from 2.8 percent, today’s report showed.

State Breakdown

Twenty-three states and territories reported an increase in claims, while 30 reported a decrease. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

The economy generated 150,000 jobs in December, economists forecast the Labor Department’s monthly jobs report on Jan. 6 will show.

Financial services providers are among companies still trimming staff. Morgan Stanley, the investment bank that said this month it will cut 1,600 jobs globally, may eliminate 580 of those positions in New York City, according to a filing this week with state labor regulators.

The “rolling layoffs” began Dec. 15, the New York-based firm said in paperwork submitted to the state’s Department of Labor.

Americans will be helped by Congress’ decision last week to pass a two-month payroll tax cut extension and continue expanded unemployment benefits. Yet fiscal policy uncertainty remains over whether the tax cuts will be extended for the full year and as debate continues over cutting the budget deficit by $1.2 trillion over 10 years.

--With assistance from Chris Middleton in Washington. Editor: Carlos Torres

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To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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U.S. Business Activity, Home Sales Beat Forecasts: Economy

December 30, 2011, 5:06 PM EST By Bob Willis

(Updates with closing market prices in fifth paragraph.)

Dec. 29 (Bloomberg) -- Companies cranked out more goods in December and pending sales of existing homes jumped in November for a second month, pointing to a pickup in U.S. economic growth as 2011 comes to a close.

The Institute for Supply Management-Chicago Inc. said today its business barometer was little changed at 62.5 from a seven- month high of 62.6 in November. The index of signed contracts to buy previously owned houses rose 7.3 percent after climbing 10.4 percent the prior month, the National Association of Realtors said. Both figures surpassed the median estimate of economists surveyed by Bloomberg News.

“2011 is ending on a solid note,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who forecast a reading of 63 for the Chicago index. “Manufacturing has some momentum,” he said, and “we’re starting to see some signs of life in housing.”

Combined with a drop in firings over the past month and improving consumer confidence, the data show the world’s largest economy may be strengthening enough to fend off major damage from the European debt crisis. Stocks rallied, buoyed by the stronger-than-projected readings and by a decline in Italian borrowing costs.

The Standard & Poor’s 500 Index climbed 1.1 percent to 1,263.02 at the close in New York, sending the measure up 0.4 percent for the year. Treasury securities rose, sending the yield on the benchmark 10-year note down to 1.9 percent from 1.92 percent late yesterday.

Inflation Outlook

A report from Europe today showed the sovereign debt crisis is damping inflation pressures. The rate of growth in M3 money supply, which the European Central Bank uses as a gauge of future price pressures, fell to 2 percent in November from 2.6 percent a month earlier, the central bank said. The decline may give policy makers more room to reduce interest rates to a record low early next year.

In Asia, industrial production in South Korea unexpectedly fell last month. The 0.4 percent decline followed a 0.6 percent drop in October, Statistics Korea said today.

The number of Americans filing claims for jobless benefits dropped to 375,000 on average over the past four weeks, the fewest since June 2008, Labor Department figures showed today in Washington. Applications rose for the first time in a month for the week ended Dec. 24, climbing by a more-than-forecast 15,000 to 381,000.

More Jobs

Last week’s increase says more about their volatility during this time of year than about the state of the job market, according to economists like Eric Green. Their recent decline has stoked speculation the U.S. is on the cusp of showing bigger gains in employment.

“The labor market is improving,” said Green, chief market economist at TD Securities Inc. in New York. “You should expect to see stronger payroll numbers going forward.”

The economy generated 150,000 jobs in December, up from 120,000 the prior month, economists forecast the Labor Department’s monthly jobs report on Jan. 6 will show.

Consumer confidence last week eased from a five-month high, showing an improvement in sentiment will take time to develop, another report showed. The Bloomberg Consumer Comfort Index fell to minus 47.5 in the period ended Dec. 24 from minus 45 the prior week, the highest reading since July.

“While consumer sentiment has shown signs of stabilizing, it is still quite fragile,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. “Households remain stressed, and it would not be surprising to see further declines in sentiment in early 2012 once the bill for the recent increase in consumer spending comes due.”

Survey Results

Readings greater than 50 for the Chicago index signal growth. Economists forecast the gauge would fall to 61, according to the median of 49 estimates in a Bloomberg survey. Projections ranged from 59 to 65.

Gains in car sales and holiday spending on other goods and services at a time when companies are holding lean inventories may pave the way for stronger factory orders.

The Chicago group’s measures of employment and order backlogs climbed, while production and new orders grew at a slower pace than in November.

Moline, Illinois-based Deere & Co., the world’s biggest farm machinery makers, is forecasting 2012 will see another increase in sales as the global farm industry thrives and the world economy expands.

‘Charge Ahead’

“John Deere enters 2012 on a very strong pace,” head of investor relations Susan Karlix said on a conference call last month. “We’re looking for further improvement in the year ahead as a result of some pickup in overall economic conditions, and a global farm sector that shows every sign of continuing to charge ahead.”

Economists watch the Chicago index and other regional manufacturing reports for an early reading on the national outlook. The Chicago group says its membership includes both manufacturers and service providers with operations in the U.S. and abroad, making the gauge a measure of overall growth.

The ISM’s national factory index climbed in December to 53.2 from 52.7 the prior month, according to the median projection in a Bloomberg survey ahead of the group’s report Jan. 3. Like the Chicago survey, a reading greater than 50 signals expansion.

The back-to-back jump in pending home sales brought the real-estate agents’ index to the highest level since April 2010. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg survey.

“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” NAR chief economist Lawrence Yun said in a statement accompanying the release. “Some of the increase in pending sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”

--With assistance from Timothy R. Homan and Chris Middleton in Washington. Editors: Carlos Torres, Vince Golle

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net.

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Alibaba Hired Duberstein Group for Washington Lobbying Help

December 30, 2011, 8:04 PM EST By Ian King

(Updates share price in second-to-last paragraph.)

Dec. 29 (Bloomberg) -- Alibaba Group Holding Ltd. hired Washington lobbying firm Duberstein Group Inc. earlier this year as it explored potential transactions involving Yahoo! Inc.

Duberstein, founded by Kenneth Duberstein, a former chief of staff under President Ronald Reagan, disclosed its affiliation with Alibaba’s legal representatives in a filing this month.

Alibaba, China’s largest e-commerce business, has sought to buy back a stake that Yahoo owns in the company. It stepped up efforts to make a deal after the September ouster of Yahoo Chief Executive Officer Carol Bartz, who opposed a sale. Yahoo also is considering proposals by private-equity firms seeking to buy minority stakes, people with knowledge of the talks have said.

Yahoo’s 40 percent stake in Alibaba has given it a piece of the fast-growing Chinese market, helping maintain the U.S. Internet company’s value even as it loses ground to Google Inc. and Facebook Inc. Yahoo acquired the stake in Hangzhou, China- based Alibaba for about $1 billion in 2005.

Yahoo has considered offers for a minority stake from bidders such as TPG Capital and a group led by Silver Lake, people familiar with the matter have said. Silver Lake’s bid valued Yahoo at about $16.60 a share, these people said. TPG Capital’s offer was higher, they said.

Huawei’s Example

Alibaba’s involvement in a deal may draw scrutiny from the U.S. government, especially because Yahoo handles online communications for millions of Americans.

In 2008, China’s Huawei Technologies Co. dropped a bid for Marlborough, Massachusetts-based computer-equipment maker 3Com Corp. after the U.S. government began investigating whether a deal would give China access to technology used by the Defense Department.

John Spelich, an Alibaba spokesman, declined to comment, as did Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo. The Duberstein Group said it doesn’t comment on its clients.

Yahoo shares rose 2.2 percent to $16.13 at the close in New York. The stock has declined 3 percent this year.

Alibaba hiring Duberstein was previously reported by Reuters.

--With assistance from Kristin Jensen in Washington. Editors: Nick Turner, John Lear

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net.

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

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Growth in U.S. May Pick Up Even as Europe Shrinks: Economy

December 30, 2011, 5:17 PM EST By Bob Willis and Timothy R. Homan

(Updates with closing market prices in fifth paragraph.)

Dec. 30 (Bloomberg) -- Rising confidence, fewer firings and gains in holiday sales show the U.S. economy is picking up, defying a slowdown in Europe and much of the rest of the world.

The divergence will become even starker in 2012 as the world’s largest economy accelerates, the 17-member euro area sinks into a recession and growth in emerging markets cools, according to economists like Maury Harris of UBS Securities LLC and Barclays Capital Inc.’s Dean Maki.

“There is a sense of decoupling,” said Harris, chief economist at UBS Securities in New York, whose team was the most accurate in forecasting the U.S. economy in the two years through September. “We can still have a decent year here in the U.S. even with the rest of the world slowing down.”

An improving job market and freer credit may underpin American household sentiment and spending just as the debt crisis in Europe prompts additional belt-tightening overseas. Stabilization in housing will erase a source of weakness at the same time vehicle replacement demand benefits companies like General Motors Co.

Stocks fell on concern over Spain’s budget deficit. The Standard & Poor’s 500 Index dropped 0.4 percent to 1,257.6 at the close in New York. The benchmark equity gauge was little changed this year.

Investors have been less kind to European equities. The Stoxx Europe 600 Index dropped almost 12 percent in 2011 as the debt crisis spread across the major economies of the euro area.

China and U.K.

Among reports today, manufacturing in China contracted in December for a second month as Europe’s debt crisis slowed export demand. The euro area’s crisis is crimping housing and growth in the U.K. as well, with the average cost of a home dropping 0.2 percent in December, the first monthly decline since August, the Swindon, England-based Nationwide Building Society said in an e-mail.

The extension of a tax cut through February is one reason economists are turning more optimistic on U.S. prospects. The economy will grow 2.5 percent in 2012, up from a prior estimate of 1.9 percent, according to a revised forecast issued on Dec. 23 by Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. The new estimate was based on the assumption that lawmakers will agree to retain the tax break for all of next year, he said in a research note.

JPMorgan projects the combined economies of the countries in the euro area will shrink 0.7 percent next year.

Fewer Jobless Claims

Another reason for optimism is a decrease in firings by U.S. companies that may portend a pickup in hiring in early 2012. Fewer Americans filed applications for jobless benefits in the four weeks through Dec. 24 than at any time since June 2008, according to figures yesterday from the Labor Department.

Less joblessness, rebounding stocks and falling gasoline prices are helping boost confidence. The Bloomberg Consumer Comfort Index reached a five-month high in December.

“We can tell that something is clicking if jobless claims are down and confidence is up,” said UBS’s Harris, who projects the U.S. economy will grow 2.1 percent in 2012.

Maki, chief U.S. economist at Barclays Capital in New York, forecasts 2.5 percent growth next year, up from 1.7 percent in 2011. The euro region will contract 0.2 percent after expanding 1.5 percent, he said.

Europe a ‘Headwind’

“We are diverging significantly as we move into 2012,” Maki said. “Europe is a headwind for the U.S., but we don’t think a European recession necessarily drags the U.S. into a recession.”

One reason is that consumer spending, which accounts for about 70 percent of the economy, has held up this year even as confidence slumped amid growing concern about Europe, the threat of a government shutdown during the mid-year debate on the U.S. debt limit and the downgrade of U.S. Treasury securities by S&P, Maki said.

Housing and auto sales, two areas which slumped during the recession, will probably improve.

Economists at Toronto-based BMO Capital Markets, led by Sherry Cooper, forecasts U.S. home construction will add to gross domestic product in 2012, led by the building of apartments and townhouses. Residential construction detracted from growth from 2006 through 2010 and was little changed this year.

The auto industry will strengthen as Americans replace aging and scrapped vehicles after delaying purchases since the recession, according to economists at Nomura Securities International Inc. in New York. For the number of cars per adult to hold at current levels, sales will need to climb to about a 16 million annual rate in coming years, the group led by Lewis Alexander wrote in a Dec. 5 report.

Auto Sales

Vehicle sales ran at a seasonally adjusted annual rate of 13.6 million in November, according to Autodata Corp.

“We’re encouraged by the industry’s recent performance and the developments that we’ve seen in the economy,” Don Johnson, GM’s vice president for U.S. sales, said on a conference call this month.

The U.S. economy’s ability to weather the mid-year slump in equities and confidence means it will overcome a European slowdown next year, said Vincent Reinhart, chief U.S. economist at Morgan Stanley in New York.

“The most important source of contagion is through financial markets, and we have already felt that,” said Reinhart. Morgan Stanley projects the U.S. will grow 2.2 percent in 2012 while the euro countries shrink 0.2 percent.

“There is a recession in Europe right now, but we aren’t forecasting a full-blown crisis and the euro hangs together,” Reinhart said. “Conditional on that, then the U.S. gets by.”

--With assistance from Chris Middleton in Washington. Editors: Carlos Torres, Vince Golle

To contact the reporters on this story: Bob Willis in Washington at bwillis@bloomberg.net; Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net

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LED Technology Transforming Lighting Market

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Jobless Claims in U.S. Drop to Three-Year Low in Past Month

December 29, 2011, 9:04 PM EST By Bob Willis

(Updates with markets in fifth paragraph.)

Dec. 29 (Bloomberg) -- Fewer Americans filed applications for unemployment benefits over the past month than at any time in the past three years, a sign the U.S. labor market is on the mend heading into the new year.

The four-week moving average for claims, a less volatile measure than the weekly figures, dropped to 375,000 last week, the lowest level since June 2008, Labor Department figures showed today in Washington. Applications rose for the first time in a month in the week ended Dec. 24, climbing by a more-than- forecast 15,000 to 381,000.

The jump in claims last week may say more about their volatility during this time of year than about the state of the job market, according to economists like Ryan Sweet. Their recent decline has stoked speculation the world’s largest economy was on the cusp of showing bigger gains in employment.

“Though claims data can bounce around near holidays, they continue to trend lower,” Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Layoffs have slowed, but there is little improvement in hiring.”

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.3 percent to 1,247.8 at 8:32 a.m. in New York.

States Estimated

A Labor Department spokesman said there was nothing unusual in the state-level data last week. Claims were estimated for six states and the District of Columbia as the holiday-shortened week prevented offices from completing their counts, the spokesman said. The estimates are usually close to the actual figures and therefore rarely lead to large revisions, he said.

The median forecast of 32 economists surveyed by Bloomberg News projected an increase to 375,000 from 364,000 initially reported for the prior week. Estimates ranged from 350,000 to 385,000. The government revised the previous week up to 366,000.

The number of people continuing to receive jobless benefits rose by 34,000 in the week ended Dec. 17 to 3.6 million. Those figures do not include the number of Americans receiving extended benefits under federal programs.

The number of workers who’ve used up their traditional benefits and are now collecting emergency and extended payments fell by about 7,800 to 3.5 million in the week ended Dec. 10.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, climbed to 2.9 percent from 2.8 percent, today’s report showed.

State Breakdown

Twenty-three states and territories reported an increase in claims, while 30 reported a decrease. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to fall as job growth -- measured by the monthly non-farm payrolls report -- accelerates.

The economy generated 150,000 jobs in December, economists forecast the Labor Department’s monthly jobs report on Jan. 6 will show.

Financial services providers are among companies still trimming staff. Morgan Stanley, the investment bank that said this month it will cut 1,600 jobs globally, may eliminate 580 of those positions in New York City, according to a filing this week with state labor regulators.

The “rolling layoffs” began Dec. 15, the New York-based firm said in paperwork submitted to the state’s Department of Labor.

Americans will be helped by Congress’ decision last week to pass a two-month payroll tax cut extension and continue expanded unemployment benefits. Yet fiscal policy uncertainty remains over whether the tax cuts will be extended for the full year and as debate continues over cutting the budget deficit by $1.2 trillion over 10 years.

--With assistance from Chris Middleton in Washington. Editor: Carlos Torres

Company News

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Sumitomo Mitsui Will Maintain Support for Olympus, Miyata Says

December 30, 2011, 12:39 AM EST By Shigeru Sato and Takako Taniguchi

Dec. 30 (Bloomberg) -- Sumitomo Mitsui Financial Group Inc., Olympus Corp.’s biggest shareholder, will maintain support for the world’s largest endoscope maker and help it keep its global lead, as the camera maker reels from a $1.7 billion accounting fraud, the bank’s president said.

“Olympus has developed one of Japan’s most vital technologies,” Koichi Miyata said in an interview on Dec. 21. “We’ll stand by the company as its most intimate lender because it is important to protect the technology, where Olympus has 70 percent of the market.”

Miyata’s remarks follow those of Katsunori Nagayasu, chairman of the Japanese Bankers Association, on Dec. 15 expressing continued lender support for the manufacturer. Japanese prosecutors raided Tokyo-based Olympus’s offices on Dec. 21, more than a month after the company admitted to hiding investment losses over more than a decade.

Olympus on Dec. 14 restated more than five years of earnings to avoid being automatically delisted from the Tokyo Stock Exchange after admitting to the 13-year cover-up. The company inflated fees to advisers on the 2008 acquisition of Gyrus Group Plc and overpaid in purchasing three Japanese companies with the intention of increasing goodwill, an independent panel investigating the fraud said Dec. 6.

While being a listed company is a key to Olympus’s access to financial tools for its recovery, Sumitomo Mitsui’s financial support for the company wouldn’t be changed if it was removed from the exchange, Miyata said.

Olympus President Shuichi Takayama has said he will consider all options to restore capital after slashing net assets 70 percent following the restatement.

The camera maker’s long-term loans with Sumitomo Mitsui totaled 153.7 billion yen ($1.98 billion) as of Sept. 30, according to an Olympus document distributed at its meeting with banks on Nov. 16.

--Editor: James Gunsalus

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net.

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net.

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Top Technology 'Shake Ups' of 2011

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Patent Technology Landscapes

U.S. Technology Firms Are Seeking Israeli Startups

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Recanted Letter Says Hurd Pursued Sex

December 30, 2011, 12:38 AM EST By Aaron Ricadela

Dec. 30 (Bloomberg) -- Former Hewlett-Packard Co. Chief Executive Officer Mark Hurd tried to persuade Jodie Fisher to have sex and kissed and touched her inappropriately while she was a company events contractor, according to a much-contested letter that was ordered to be released by a court yesterday.

During dinners, hotel-room visits and other meetings in cities such as Los Angeles, Atlanta, St. Louis and Madrid between 2007 and 2009, Hurd kissed and embraced Fisher, brushed his hand against her breast and attempted to initiate an affair, according to the letter sent to Hurd on June 24, 2010, by Fisher’s lawyer, Gloria Allred. Hurd, who is now a president at Oracle Corp., wasn’t found to have committed sexual harassment by Hewlett-Packard, and Fisher herself later said the document contained inaccuracies.

“You had designs to make her your lover from the onset using your status and authority as CEO of HP,” Allred said in the letter to Hurd, the contents of which were first reported by Bloomberg News. “At times you would behave professionally seemingly ‘getting’ that she was not going to have sex with you. At other times, not, and you would relentlessly attempt to cajole her into having sex with you.”

The letter, which sought a settlement for sexual harassment, was obtained after a ruling by the Delaware Supreme Court that it should be unsealed as part of the evidence in a shareholder lawsuit against the Palo Alto, California-based company. Hurd’s relationship with Fisher led to his resignation as CEO on Aug. 6, 2010, after a company investigation found he had violated its standards of business conduct. Hurd settled with Fisher the week he resigned.

Hurd’s Aftermath

Since Hurd’s departure, Hewlett-Packard has struggled to revive sales and seen its stock tumble 45 percent. He was replaced last year by Leo Apotheker, who himself was ousted on Sept. 22 and replaced by Meg Whitman.

Allred and Michael Thacker, a Hewlett-Packard spokesman, declined to comment.

In settling with Hurd last year, Fisher and Allred said there was no romantic or sexual affair between the two. Hewlett- Packard’s investigation found that he didn’t violate the sexual- harassment policy.

Fisher told Hurd in a 2010 letter, also obtained by Bloomberg News, that the Allred document had “many inaccuracies in the details” and that the CEO’s behavior didn’t hurt Hewlett-Packard or its reputation.

Contrasting Views

The Allred “letter was recanted by Ms. Fisher,” said Ken Glueck, a senior vice president for Redwood City, California- based Oracle. “She admitted it was full of inaccuracies.”

Allred’s letter portrays Fisher as being nervous in Hurd’s presence because of his advances. In contrast, e-mails from Fisher to Hurd show her enthusiastically discussing her job. The messages, also obtained by Bloomberg News, depict her politely inquiring about Hurd’s family and describing him as “fun” to work with.

The eight-page letter from Allred to Hurd portrays a two- year romantic pursuit of Fisher, an actress and former contestant on the reality show “Age of Love.” She worked as a greeter at Hewlett-Packard events around the world. Her job was to introduce key customers to Hurd at the events.

According to Allred’s letter, Hurd, who is married with two daughters, made sexual advances toward Fisher during dinners and other meetings. During an October 2007 visit to her hotel room at the Ritz Carlton in Atlanta, Hurd twice touched Fisher’s breast and asked her to stay in his room for the night, the letter said. Two months later in a hotel room in St. Louis, he embraced her and quickly kissed her on the lips.

‘Major Strings Attached’

At another meeting, Hurd told Fisher he had girlfriends in New York and San Francisco, according to the letter. He also told her that many women were “crazy about” him, including singer Sheryl Crow, the document said. Jay Cooper, a lawyer at Greenberg Traurig LLP who represents Crow, said he’d never heard her name in connection with Hurd.

At a final meeting in Boise, Idaho, in October 2009, Hurd “grabbed and kissed” Fisher, the letter said. The meetings made her nervous and worried about her employment status, according to the document.

“She felt tired, irritated and depressed, sad and mad with the growing unbending realization that her great new job had some major strings attached,” said Allred, who works at Allred Maroko & Goldberg in Los Angeles.

EDS Deal

Hurd also told Fisher of plans to buy technology services company Electronic Data Systems Corp., a deal that was ultimately completed in 2008 for $13.9 billion, according to the letter. During a meeting in Madrid in March 2008, Hurd walked Fisher to an ATM and showed her his checking account balance of more than $1 million to impress her, the document said.

Amy Wintersheimer, an employment attorney for Hurd at the firm Allen Matkins, said in an e-mailed statement that she sought to keep the letter confidential because it is “filled with inaccuracies.”

“The truth is, there never was any sexual harassment, which HP’s investigation confirmed, and there never was any sexual relationship, which Ms. Fisher has confirmed,” Wintersheimer said.

Hewlett-Packard shareholder Ernesto Espinoza sought the letter, along with company books and records, in a suit aimed at investigating possible corporate wrongdoing in conjunction with the payment of Hurd’s severance package of as much as $40 million, according to court papers.

After Hurd received Allred’s letter, he turned it over to Hewlett-Packard’s general counsel. Espinoza’s lawyer has said publicizing the letter would help “air out” details of Hurd’s departure from the company.

This week’s court decision followed Oct. 12 arguments in Dover challenging a ruling in March by Delaware Chancery Court Judge Donald Parsons Jr. that most of the letter should be released.

--With assistance by Phil Milford and Sophia Pearson in Wilmington, Delaware. Editors: Nick Turner, Michael Hytha

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

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

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SEC Questions Groupon CEO's Leaked Memo

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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7 Wireless Technologies That Make the World Go Round

Google Steps In to Back Israeli Entrepreneurs

December 30, 2011, 12:39 AM EST By Jonathan Ferziger and Gwen Ackerman

Dec. 30 (Bloomberg) -- The Google Inc. executive with his bright yellow vest was impossible to miss in the middle of the Israeli startup owners seeking cash in a rusty boathouse at Tel Aviv’s Jaffa port.

David Lawee, Google’s mergers and acquisitions chief, used the early November session, called Garage Geeks, to round out his contact list. “I’ve met about 100 Israeli companies in two days and that’s, like, super-efficient,” he said between conversations at the corporate speed-dating-style event arranged by startup promoter Yossi Vardi that introduced local businesses to multinationals.

Google set up a funding program two weeks later for Israeli entrepreneurs, part of an acceleration in U.S. technology companies’ backing in late 2011 that has included Apple Inc. buying a company in the country for the first time, according to business newspaper Calcalist.

The foreign investments are important to Israel, where the high-tech industry accounts for 47 percent of manufactured exports, and could be a new source of innovation for giants like Google because of the Mountain View, California-based company’s strength in technology startups.

Money from Google and others is making up for a decline in local financing that Avi Sasson, Israel’s state research-grant provider, says could hurt industry growth.

Venture Capital Slump

“The minute the Israeli venture-capital funds aren’t helping in the early stage, there won’t be a new generation of companies for the foreign investors to invest in three or four years down the road,” said Koby Simana, head of the Israel Venture Capital Research Center, in an interview. “Israeli startups won’t exist if there is no Israeli venture capital.”

Of the $522 million raised by Israeli technology companies in the third quarter, $96 million came from domestic venture- capital funds, a drop of 40 percent from the second quarter and 12 percent from a year earlier, according to the research center. The proportion coming from Israel, at 18 percent, was the lowest since the center started covering the industry in 1999, Simana said.

Many Israeli venture capital funds, hurt by the global recession, have been unable to raise money, and 2012 will be “crucial” for their recovery, Simana said. “For some, it will be a make or break year because they haven’t raised funds since 2007 or 2006 and if they don’t raise any money this year or next, many will cease to operate,” he said.

State Funding

The Israeli government’s annual research-funding allocation has been cut by 1 billion shekels ($262 million) over the past decade, Sasson, who oversees the Ministry of Industry and Trade’s development financing for local companies, said this month at a conference in Tel Aviv. That represents a decrease of 56 percent to a yearly budget of about 800 million shekels.

Israel, with a population similar to Switzerland’s at 7.7 million people, was dubbed the “startup nation” in a 2009 book of that name by Saul Singer and Dan Senor. It has 64 companies on the Nasdaq Stock Market, the most of any country outside North America after China, with 56 percent focused on technology.

Google’s investments in fledgling Israeli companies in the past two years include takeovers of LabPixies, a developer of game applications, for $25 million, and Quiksee, which makes software for posting three-dimensional video online, for an undisclosed price. Other U.S. investors that have acquired Israeli assets include social-networking site Facebook Inc. and online marketplace EBay Inc.

Netanyahu on Twitter

Apple agreed to buy semiconductor designer Anobit Technologies Ltd., Calcalist reported Dec. 20. On the same day, Prime Minister Benjamin Netanyahu’s office posted on its Twitter account a message congratulating Apple “on your first acquisition here,” without naming the target company. Mark Regev, a spokesman for Netanyahu, declined to elaborate.

Anobit, founded in 2006 and based in Herzliya Pituach, and investor Pitango Venture Capital declined to comment. Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment on “rumor and speculation.”

International investments may not be the answer to the needs of Israel’s startups because the smaller number of local financiers poses a risk to the industry’s independence, said Abraham Peled, executive chairman of Staines, England-based digital-television coding developer NDS Group Plc.

“The minute Israeli high-tech is primarily based on development centers of major companies, their fortune will be tied to that of those companies so that, if they are cutting staff, they will cut in Israel as well,” Peled said.

‘Nimble’ Startups

Israel’s “nimble” startup model can still thrive even as government funds drop because Internet companies only need small amounts of money, Vardi said. The city of Tel Aviv recently opened a working space called the Library for young technology entrepreneurs, he said.

The hour-long Garage Geeks event closed the Tel Aviv part of Digital Life Design, an international technology industry convention held in Munich. The Israeli edition attracted 300 visitors from outside the country, Vardi said.

“Somehow the word is out that this is where everyone has to be,” said Vardi, co-chairman of the global conference and a founding investor in the former Mirabilis Ltd., which developed the ICQ online-chat system.

Top executives from Seattle-based Amazon.com Inc., Paris- based Alcatel-Lucent and Russia’s Yandex NV were among nine potential benefactors at Garage Geeks who donned yellow vests. About 300 startup founders, clustering in groups as large as 30, roamed from suitor to suitor making appeals under loose rules that urged “short” presentations.

“When you make a connection with an entrepreneur who’s really excited, whether you do a deal with him or not, that’s kind of the juice of the job,” Google’s Lawee said.

--With assistance from Julie Cruz in Frankfurt, Tal Barak Harif in New York and Peter Burrows in San Francisco. Editors: Tom Lavell, Kenneth Wong, John Brecher

To contact the reporters on this story: Jonathan Ferziger in Tel Aviv jferziger@bloomberg.net; Gwen Ackerman in Jerusalem at gackerman@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Andrew J. Barden at barden@bloomberg.net.

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Takeovers Slump to Lowest in Year as Europe Saps Confidence

December 29, 2011, 10:54 PM EST By Serena Saitto

(Updates year-to-date figures starting in second paragraph.)

Dec. 29 (Bloomberg) -- The value of global takeovers dropped to the lowest level in more than a year this quarter, and dealmakers say Europe’s debt crisis may hamper a recovery in 2012 as cash-rich companies hold off on major purchases.

Mergers and acquisitions have slumped 15 percent from the previous three months to $464 billion, making the fourth quarter the slowest since mid-2010, according to data compiled by Bloomberg. For the year to date, announced takeover volume has risen just 3.2 percent to $2.26 trillion after regulatory hurdles scuttled AT&T Inc.’s bid for T-Mobile USA, which would have been 2011’s biggest deal.

Tightening credit markets, the risk of a euro-zone collapse and stock-market swings have deterred companies from pursuing transformational deals that would spur sales growth, M&A bankers said. Earlier in 2011, more favorable conditions emboldened acquirers to part with stockpiled cash, such as Johnson & Johnson’s $21.3 billion bid for Synthes Inc. and Express Scripts Inc.’s $29.1 billion offer for Medco Health Solutions Inc.

“There’s definitely pent-up demand for M&A as well- capitalized companies continue to focus on opportunities for strategic acquisitions,” said Yoel Zaoui, co-head of global M&A at Goldman Sachs Group Inc. “The key driver for M&A, however, is confidence, and in Europe, at the moment, that is lacking.”

Seven of the year’s 10 biggest deals were announced before August, when European markets fell the most since October 2008 amid a global stock rout and Standard & Poor’s cut the U.S. credit rating. Goldman Sachs is the top adviser on global takeovers for 2011, with $537 billion of deals this year, followed by JPMorgan Chase & Co. and Morgan Stanley, Bloomberg data show. This year’s growth in M&A volume compares with a 24 percent jump in 2010.

‘Wait and See’

Europe’s financial crisis will stifle lending, push the region into recession and weigh on the U.S. economy through early 2012, Jan Hatzius, Goldman Sachs’s chief economist, said on a Nov. 30 conference call. The euro zone’s unemployment rose to 10.3 percent in October, the highest since the currency began in 1999.

As the European crisis deepened, “dealmakers entered a wait-and-see mode, and that’s where we are now,” said Paul Parker, global head of M&A at Barclays Plc in New York. “Offsetting forces such as companies’ cash piles and low valuations should drive the recovery of M&A activity in the second half of the year.”

The MSCI World Index of about 1,600 companies trades for 12.6 times reported earnings, showing equities in developed economies are cheaper than they’ve been more than 95 percent of the time since 1995, according to data compiled by Bloomberg. Those companies are also sitting on $5.3 trillion in cash, the data show.

Antitrust Hurdles

Companies that did tap funds this year may not be able to complete their purchases as regulatory scrutiny threatens to derail more takeovers. Express Scripts’s offer for Medco, which would create the largest U.S. manager of pharmacy benefits for employers, insurers and union health plans, has prompted state inquiries over whether the combination would command too much market power.

AT&T abandoned efforts to buy T-Mobile USA from Deutsche Telekom AG this month after the U.S. Justice Department sued the companies in August, saying a combination would substantially reduce competition. Companies contemplating similar deals may hold off until the next presidential election in the hope that a Republican White House would make it easier to win approval for big transactions, said Jeffrey Silva, a Washington-based policy analyst with Medley Global Advisors.

European Deals

Deutsche Boerse AG and NYSE Euronext this week delayed the deadline for completing their merger until March 31 as the exchange operators try to persuade European Union regulators to approve the deal. While the U.S. cleared the combination, the EU has told the companies that concessions they offered to allay antitrust concerns don’t go far enough, two people familiar with the talks said this month.

Dealmaking involving European companies rose 2.6 percent this year, bolstered by the first half. For the fourth quarter, announced volume sank 13 percent from the previous three months to $162.6 billion. Valuations have also dropped, making the MSCI Europe Index even cheaper than the MSCI World Index at 10.8 times earnings. That may create opportunities for buyers from nations such as China.

“Chinese companies have been very successful at buying natural resources in emerging markets, and they are now very supportive of buying industrial assets in Europe,” said Thierry d’Argent, global head of M&A at Societe Generale SA in Paris.

Asia Pacific

French dairy-product maker Yoplait and the aviation unit of Royal Bank of Scotland Group Plc both attracted interest from Chinese bidders this year, according to people with knowledge of those negotiations.

The value of acquisitions involving Asia Pacific companies rose 4.2 percent to $701 billion this year, according to Bloomberg data. The biggest deal was Nippon Steel Corp.’s proposed takeover of Sumitomo Metal Industries for about $22 billion, including debt. That was followed by BHP Billiton Ltd.’s purchase of Houston-based oil and gas explorer Petrohawk Energy Corp.

Foreign buyers also spent more on Asia Pacific in 2011 than any year since 2007, according to the data. The largest overseas bid was SABMiller Plc’s $10 billion takeover of Australian beer maker Fosters Group Ltd., the data show. Among Asian countries, Japan overtook China as the biggest acquirer of foreign assets for the first time since 2008 after the March 11 earthquake spurred companies to retrench.

Japan’s Takeovers

“Japanese industries had been shrinking, and companies needed growth drivers,” said Kenji Fujita, head of M&A advisory at Mitsubishi UFJ Morgan Stanley Securities Co., the Tokyo-based investment banking venture of Morgan Stanley and Mitsubishi UFJ Financial Group Inc. “The earthquake raised the urgency for that.”

Japan’s Kirin Holdings Co. bought Brazilian beermaker Schincariol Participacoes e Representacoes, and China Petrochemical Corp., or Sinopec, agreed to purchase a 30 percent stake in Galp Energia SGPS SA’s Brazilian unit.

Still, after a record-high volume of $161 billion in 2010, the volume of announced deals involving Brazilian companies tumbled to $99.6 billion this year as the Brazilian real strengthened while the country’s economy slowed.

“I’m glad to leave 2011 behind,” said Flavio Tavares Valadao, head of corporate finance at Banco Santander do Brasil SA, based in Sao Paulo. “Deals are difficult to make and companies are worried for the future.”

Brazilian Deals

Santander worked on Telefonica SA’s merger of its Brazilian fixed line unit, Telecomunicacoes de Sao Paulo SA’s with its mobile unit, Vivo Participacoes SA. The Spanish bank also advised Spain’s Iberdrola SA on the acquisition of Brazil’s Elektro Eletricidade & Servicos SA for 1.77 billion euros ($2.3 billion).

Dealmakers predict that technology, industrials, natural resources and health care will continue to be the sectors most actively consolidating, especially if European policy makers can prevent financial turmoil from spreading to more countries.

“Companies need to have more confidence that we aren’t going to have a break-up of the euro,” said Mark Shafir, global head of M&A at Citigroup Inc. “If you got that cleared up, then the first half of next year could be a lot better than the second half of 2011 has been.”

--With assistance from Aaron Kirchfeld in Frankfurt, Jeffrey McCracken in New York, Takahiko Hyuga in Tokyo, and Jacqueline Simmons and Matthew Campbell in Paris. Editors: Julie Alnwick, Jennifer Sondag

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

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Tweney on Top Technology Gadgets of 2012

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Outlook for Technology M&A in 2012

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Technology - Prosperity

Siano Eyes U.S. Mobile-TV Market

By Olga Kharif

(Bloomberg) — Siano Mobile Silicon Ltd., an Israeli maker of TV chips for mobile devices, is planning a push into the U.S. next year, presaging an initial public offering filing as early as 2012.

Siano, whose chips let gadgets receive digital TV signals, has had conversations with bankers and is weighing a U.S. filing next year or in 2013, Chief Executive Officer Alon Ironi said in an interview. The company hasn’t set a date for the move, and the timing may depend on how quickly digital mobile TV takes off with Americans, he said.

Siano, the largest provider of digital mobile-TV receiver chips in China and Latin America, is preparing to make inroads in the U.S. in 2012. The effort will get a boost from broadcasters, which are planning to introduce a service that lets consumers watch shows on phones and tablets, as well as in cars. Siano aims to overcome a dim perception of the technology in the U.S., hurt by Qualcomm Inc.’s failed Flo TV service.

“We need to see the creation of a positive perception of the mobile-TV market in the eyes of the financial community,” Ironi said. “It’s almost a condition for going public. Right now, if you talk to an average analyst, all they know about mobile TV is it failed.”

The global market for mobile-TV receiver chips may reach 159.4 million units in 2015, up from 99 million chips this year, according to research firm Forward Concepts Co. While Asia currently leads in mobile-TV adoption, success in the U.S. is key for holding an IPO here, Ironi said.

After years of companies promoting the idea, only 24.7 million Americans watch video on mobile devices, according to IE Market Research Corp. Qualcomm’s Flo service, which required a subscription, was shuttered earlier this year.

Still, other companies look to re-energize the market. MobiTV Inc., a maker of software that lets smartphone users watch live television, filed for an IPO in August. The Emeryville, California-based company posted a sales gain of 24 percent in the first nine months of 2011 to $59.9 million. Its loss in the period narrowed to $10.9 million from $13 million.

“For MobiTV to do well would be a huge positive for the industry,” Tom Taulli, an independent IPO analyst, said in an interview. The introduction of new services also would help, Taulli said.

The Mobile500 Alliance—an organization of 48 broadcasting groups, including McGraw-Hill Cos. and Gray Television Inc.—will begin testing mobile TV technology in Seattle early next year, Executive Director John Lawson said. Trial participants will be able to access TV broadcasts by attaching a special gadget, with Siano’s chip, to their mobile devices, he said. Consumers will be able to watch free, local programming without having to pay for a wireless data plan.

The Mobile Content Venture—an industry alliance comprised of about a dozen broadcasting groups, including Fox Entertainment and NBC Universal—has its own effort. The group has encouraged TV stations blanketing half the country to add mobile TV transmitters. It will start rolling out devices that can receive the signals next year, said Salil Dalvi, a co-general manager at Mobile Content Venture.

The question is whether Siano can succeed in a market where Qualcomm failed, said Will Strauss, president of Forward Concepts. Qualcomm, based in San Diego, is the world’s largest maker of mobile-phone chips and the Flo service was a bid to get Americans to use their devices in new ways. Qualcomm even promoted Flo TV during the Super Bowl in 2010.

“I am a skeptic,” Strauss said. “Qualcomm got out of it—it may be a clue.”

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China Seeks ‘Independence’ From GPS With Own Navigation Service

December 29, 2011, 4:45 AM EST By Bloomberg News

Dec. 28 (Bloomberg) -- A Chinese satellite navigation system began providing services yesterday as the nation seeks to end its “dependence” on the U.S.’s Global Positioning System, or GPS, the official Xinhua News Agency reported.

China’s Beidou Navigation Satellite System began providing initial positioning, navigation and timing operational services for the nation and surrounding areas, Xinhua reported yesterday, citing Ran Chengqi, director of the management office of the China Satellite Navigation System. Work began on the Beidou system in 2000 with a goal of creating a global position service by 2020, according to Xinhua.

The U.S.-owned GPS system is the world’s primary source of satellite navigation data that provides directions for drivers, tracking systems for emergency rescue teams and also positioning services for U.S. military vehicles and munitions. The U.S. Air Force operates the more than 30 satellites on which the system is based.

China has already launched 10 satellites for the Beidou system, the most recent of which entered orbit earlier this month, Xinhua reported. Six more satellites will be launched in 2012 to further improve the system and expand its coverage to most of the Asia-Pacific region, Xinhua quoted Ran as saying. The system is compatible with the world’s other major global navigation satellite systems, according to the report.

Civilian Service

Civilian service provided by the U.S.’s GPS system is freely available to all users on a continuous, worldwide basis, according to the service’s website. The service is made up of space, control and user segments, of which the U.S. Air Force develops, maintains, and operates the space and control segments.

GPS is also “critical to U.S. national security,” according to its website. Its applications are integrated into almost every facet of U.S. military operations and almost all new military equipment, it said.

The Air Force manages the constellation to ensure the availability of at least 24 GPS satellites 95 percent of the time, according to the website. The Air Force flies 31 operational GPS satellites, plus three or four decommissioned satellites that can be reactivated if needed.

--Edmond Lococo. Editors: John Liu, Terje Langeland

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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Munster Says Apple Shares May Rise to $607 in 2012

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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RFID: The New Technology

Global M&A at Lowest Level Since Mid-2010

December 29, 2011, 6:34 AM EST By Serena Saitto

Dec. 29 (Bloomberg) -- The value of global takeovers dropped to the lowest level in more than a year this quarter, and dealmakers say Europe’s debt crisis may hamper a recovery in 2012 as cash-rich companies hold off on major purchases.

Mergers and acquisitions have slumped 16 percent from the previous three months to $457.1 billion, putting the fourth quarter on course to be the slowest since at least mid-2010, according to data compiled by Bloomberg. For the year to date, announced takeover volume has risen less than 3 percent to $2.25 trillion after regulatory hurdles scuttled AT&T Inc.’s bid for T-Mobile USA, which would have been 2011’s biggest deal.

Tightening credit markets, the risk of a euro-zone collapse and stock-market swings have deterred companies from pursuing transformational deals that would spur sales growth, M&A bankers said. Earlier in 2011, more favorable conditions emboldened acquirers to part with stockpiled cash, such as Johnson & Johnson’s $21.3 billion bid for Synthes Inc. and Express Scripts Inc.’s $29.1 billion offer for Medco Health Solutions Inc.

“There’s definitely pent-up demand for M&A as well- capitalized companies continue to focus on opportunities for strategic acquisitions,” said Yoel Zaoui, co-head of global M&A at Goldman Sachs Group Inc. “The key driver for M&A, however, is confidence, and in Europe, at the moment, that is lacking.”

Seven of the year’s 10 biggest deals were announced before August, when European markets fell the most since October 2008 amid a global stock rout and Standard & Poor’s cut the U.S. credit rating. Goldman Sachs is the top adviser on global takeovers for 2011, with $537 billion of deals this year, followed by JPMorgan Chase & Co. and Morgan Stanley, Bloomberg data show. This year’s growth in M&A volume compares with a 24 percent jump in 2010.

‘Wait and See’

Europe’s financial crisis will stifle lending, push the region into recession and weigh on the U.S. economy through early 2012, Jan Hatzius, Goldman Sachs’s chief economist, said on a Nov. 30 conference call. The euro zone’s unemployment rose to 10.3 percent in October, the highest since the currency began in 1999.

As the European crisis deepened, “dealmakers entered a wait-and-see mode, and that’s where we are now,” said Paul Parker, global head of M&A at Barclays Plc in New York. “Offsetting forces such as companies’ cash piles and low valuations should drive the recovery of M&A activity in the second half of the year.”

The MSCI World Index of about 1,600 companies trades for 12.6 times reported earnings, showing equities in developed economies are cheaper than they’ve been more than 95 percent of the time since 1995, according to data compiled by Bloomberg. Those companies are also sitting on $5.3 trillion in cash, the data show.

Antitrust Hurdles

Companies that did tap funds this year may not be able to complete their purchases as regulatory scrutiny threatens to derail more takeovers. Express Scripts’s offer for Medco, which would create the largest U.S. manager of pharmacy benefits for employers, insurers and union health plans, has prompted state inquiries over whether the combination would command too much market power.

AT&T abandoned efforts to buy T-Mobile USA from Deutsche Telekom AG this month after the U.S. Justice Department sued the companies in August, saying a combination would substantially reduce competition. Companies contemplating similar deals may hold off until the next presidential election in the hope that a Republican White House would make it easier to win approval for big transactions, said Jeffrey Silva, a Washington-based policy analyst with Medley Global Advisors.

European Deals

Deutsche Boerse AG and NYSE Euronext this week delayed the deadline for completing their merger until March 31 as the exchange operators try to persuade European Union regulators to approve the deal. While the U.S. cleared the combination, the EU has told the companies that concessions they offered to allay antitrust concerns don’t go far enough, two people familiar with the talks said this month.

Dealmaking involving European companies rose 2.2 percent this year, bolstered by the first half. For the fourth quarter, announced volume sank 14 percent from the previous three months to $161.4 billion. Valuations have also dropped, making the MSCI Europe Index even cheaper than the MSCI World Index at 10.8 times earnings. That may create opportunities for buyers from nations such as China.

“Chinese companies have been very successful at buying natural resources in emerging markets, and they are now very supportive of buying industrial assets in Europe,” said Thierry d’Argent, global head of M&A at Societe Generale SA in Paris.

Asia Pacific

French dairy-product maker Yoplait and the aviation unit of Royal Bank of Scotland Group Plc both attracted interest from Chinese bidders this year, according to people with knowledge of those negotiations.

The value of acquisitions involving Asia Pacific companies rose 3.8 percent to $698.4 billion this year, according to Bloomberg data. The biggest deal was Nippon Steel Corp.’s proposed takeover of Sumitomo Metal Industries for about $22 billion, including debt. That was followed by BHP Billiton Ltd.’s purchase of Houston-based oil and gas explorer Petrohawk Energy Corp.

Foreign buyers also spent more on Asia Pacific in 2011 than any year since 2007, according to the data. The largest overseas bid was SABMiller Plc’s $10 billion takeover of Australian beer maker Fosters Group Ltd., the data show. Among Asian countries, Japan overtook China as the biggest acquirer of foreign assets for the first time since 2008 after the March 11 earthquake spurred companies to retrench.

Japan’s Takeovers

“Japanese industries had been shrinking, and companies needed growth drivers,” said Kenji Fujita, head of M&A advisory at Mitsubishi UFJ Morgan Stanley Securities Co., the Tokyo-based investment banking venture of Morgan Stanley and Mitsubishi UFJ Financial Group Inc. “The earthquake raised the urgency for that.”

Japan’s Kirin Holdings Co. bought Brazilian beermaker Schincariol Participacoes e Representacoes, and China Petrochemical Corp., or Sinopec, agreed to purchase a 30 percent stake in Galp Energia SGPS SA’s Brazilian unit.

Still, after a record-high volume of $161 billion in 2010, the volume of announced deals involving Brazilian companies tumbled to $98.3 billion this year as the Brazilian real strengthened while the country’s economy slowed.

“I’m glad to leave 2011 behind,” said Flavio Tavares Valadao, head of corporate finance at Banco Santander do Brasil SA, based in Sao Paulo. “Deals are difficult to make and companies are worried for the future.”

Brazilian Deals

Santander worked on Telefonica SA’s merger of its Brazilian fixed line unit, Telecomunicacoes de Sao Paulo SA’s with its mobile unit, Vivo Participacoes SA. The Spanish bank also advised Spain’s Iberdrola SA on the acquisition of Brazil’s Elektro Eletricidade & Servicos SA for 1.77 billion euros ($2.3 billion).

Dealmakers predict that technology, industrials, natural resources and health care will continue to be the sectors most actively consolidating, especially if European policy makers can prevent financial turmoil from spreading to more countries.

“Companies need to have more confidence that we aren’t going to have a break-up of the euro,” said Mark Shafir, global head of M&A at Citigroup Inc. “If you got that cleared up, then the first half of next year could be a lot better than the second half of 2011 has been.”

--With assistance from Aaron Kirchfeld in Frankfurt, Jeffrey McCracken in New York, Takahiko Hyuga in Tokyo, and Jacqueline Simmons and Matthew Campbell in Paris. Editors: Julie Alnwick, Jennifer Sondag.

To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

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Elpida Falls in Tokyo on Report It May Seek Repayment Delay

December 29, 2011, 3:25 AM EST By Yuki Yamaguchi

??(Updates with closing share price in second paragraph.)

??Dec. 29 (Bloomberg) -- Elpida Memory Inc., the Japanese computer-chip maker being reorganized with government support, fell in Tokyo trading after the Asahi newspaper said it may seek a delay in repaying public funds. ??Elpida, the nation’s largest maker of dynamic random access memory, dropped 5.1 percent to 351 yen at the 3 p.m. close of trading, the biggest decline since Dec. 19. The company, whose shares have tumbled 63 percent this year, declined to comment in an e-mailed statement to Bloomberg News. ??“If the report is true, the thought that Elpida is having difficulty with financial arrangements led investors to sell,” said Yuichi Ishida, an analyst at Mizuho Investors Securities Co. in Tokyo. ??Elpida received 30 billion yen ($386 million) of public funds through the state-run Development Bank of Japan to restructure its business, in addition to 100 billion yen in loans from private banks. The company will consider asking the Ministry of Economy, Trade and Industry to extend the timeline for repayment of the public funds, Asahi reported today, without citing anyone. ??“We don’t comment on rumors or speculation,” Elpida said in the e-mailed statement. ??Tetsuro Okita, a spokesman at the Development Bank, declined to comment, citing the bank’s policy not to discuss individual company matters.

Yield Spread

??The extra yield investors demand to own Elpida’s convertible bonds due October 2015 over the yen swap rate jumped 418.3 basis points to 1,498 today on the Tokyo Stock Exchange. Elpida has about 240 billion yen of debt due next year, according to Bloomberg data. ??The company reported a net loss of 56.8 billion yen in the six months ended September, compared with a profit of 39.9 billion yen a year earlier, partly due to the worsening market for DRAM chips and the stronger yen, which reduces the value of repatriated earnings from overseas. ??The price of the benchmark DDR3 2-gigabit DRAM fell 52 percent this year to 88 cents, according to data from Taipei- based Dramexchange Technology Inc.

--With assistance from Takako Taniguchi and Yusuke Miyazawa in Tokyo. Editors: Garry Smith, Terje Langeland

To contact the reporter on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy in Singapore at anandk@bloomberg.net

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General Atlantic, Sequoia Invest $108 Million in Mu Sigma

December 29, 2011, 3:19 AM EST By Danielle Kucera

(Updates with comment from General Atlantic in the fourth paragraph.)

Dec. 28 (Bloomberg) -- Mu Sigma, a company that helps businesses make decisions by analyzing data, attracted a $108 million investment, the largest round of private-equity financing in the analytic-services industry.

The funding was led by General Atlantic LLC and followed a $25 million round in April, Northbrook, Illinois-based Mu Sigma said today in a statement. Sequoia Capital led the earlier investment and participated in the new round, raising its stake in Mu Sigma, according to the statement.

Mu Sigma will use the capital to add 600 to 700 employees to its 1,500 within the next year, said Dhiraj Rajaram, chairman and chief executive officer of Mu Sigma.

“The whole area of big data and data analytics and support, we think, is very large and will continue to grow,” Pat Hedley, a managing director at General Atlantic, based in Greenwich, Connecticut, said in an interview. Mu Sigma has a great client base and a strong management team.”

The deal is the largest investment on record by a private- equity or venture-capital firm in the data-processing and enterprise-software services industries, according to data compiled by Bloomberg. The second-largest is Penta Capital LLC’s $94 million investment earlier this year in Six Degrees Technology Group Ltd., a company that specializes in cloud computing.

Board Seat

William Ford, General Atlantic’s CEO, will join the Mu Sigma board.

Mu Sigma’s revenue will increase 35 percent to 40 percent in 2012 and profit will “dip slightly” as the company increases investments in a training program, marketing and services for clients such as Microsoft Corp. and Dell Inc., Rajaram said. The money raised will also be used for hiring and to buy out early investors, he said.

Mu Sigma helps clients analyze larger sets of data than software tools ordinarily are capable of handling. The amount of data in the world is doubling every two years, according to EMC Corp.

“It’s a big problem that we’re trying to solve,” Rajaram said in an interview.

--Editors: Jeffrey Tannenbaum, John Lear

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

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

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Iraq War Innovations Find Wider Use

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Billionaire Ambanis Dancing at Ancestral Home Signals Thaw

December 29, 2011, 6:16 AM EST By Siddharth Philip, Ketaki Gokhale and Rakteem Katakey

(Adds closing share prices in 12th paragraph.)

Dec. 29 (Bloomberg) -- Billionaires Mukesh and Anil Ambani danced and prayed in their ancestral village on the eve of their father’s 80th birth anniversary in the strongest display of bonhomie since ending a feud that split the Reliance empire.

The brothers, who have a combined wealth of $28.5 billion and control the world’s biggest oil refining complex and India’s second-largest phone company, were seen together on Dec. 27 for the first time since they pledged harmony in May 2010. Yesterday, they inaugurated a memorial to the late Dhirajlal Ambani in Chorwad in the western state of Gujarat.

Reliance Communications Ltd., controlled by 52 year-old Anil, climbed to a two-week high on Dec. 27 on speculation that improved sibling relations may help the company clinch a deal to lease mobile-phone towers to Reliance Industries Ltd., run by Mukesh, 54. The elder Ambani operates India’s biggest natural gas field, while Anil needs the fuel for his power plants.

“It will matter to shareholders if it is a business reunion,” said Jagannadham Thunuguntla, strategist at SMC Global Securities Ltd. in New Delhi. “That would be a huge positive rerating opportunity for Anil Ambani group stocks. From Reliance Industries’ perspective, it would be an opportunity to expand their dream of entering into telecom.”

When India’s second-largest business group split in 2005, Mukesh got the Reliance group’s petrochemicals, oil and gas units, while Anil took the power, financial services, telecommunications, and entertainment businesses. Both retained rights to the Reliance name.

Last year the brothers scrapped agreements that prevented them from competing in similar businesses.

Dandiya Dance

Mukesh Ambani and Anil yesterday traveled in separate Mercedes-Benz cars to pray and have breakfast at the local Ambaji Mata temple after spending the previous evening performing the dandiya, a traditional Gujarati folk dance, along with their wives, mother and sister, Bloomberg UTV showed.

The Ambanis attended a discourse on the importance of family values and harmony by Rameshbhai Oza, their spiritual adviser, the Economic Times reported today.

Anil flew in a Reliance Industries helicopter yesterday morning to offer prayers at the ancient Hindu temple of Somnath, Parimal Nathwani, group president for corporate affairs at Reliance Industries, said in an interview in Chorwad yesterday. Security arrangements in the village were managed by the officials from the company’s refinery complex at Jamnagar and 60 local volunteers, he said.

Daljeet Singh, a spokesman for Anil Ambani-controlled Reliance ADA Group, declined to comment.

Brotherly Love

Mukesh and Anil visiting their ancestral home together shows “there is love among the brothers,” the Economic Times cited their mother, Kokila Ambani, saying in Chorwad. The family is “united,” she said, according to a Dec. 27 report.

Reliance Industries shares fell 3.7 percent to 711.9 rupees in Mumbai trading, the lowest since March 20, 2009. Reliance Infrastructure Ltd., the Anil Ambani-controlled builder of a mass rapid transit system in Mumbai, dropped 4 percent to 344.15 rupees and Reliance Communications lost 5.3 percent to 68.1 rupees. the benchmark Sensitive Index declined 1.2 percent.

Shares of Reliance Industries have more than tripled in value since the brothers divided the family business in June 2005. Anil’s flagship Reliance Communications has slumped 78 percent since it started trading in 2006.

$1 Billion Home

Chorwad, a coastal fishing village where Dhirajlal Ambani, known as Dhirubhai, grew up, lies 855 kilometers (530 miles) northwest by road from Mumbai, where Mukesh has built a skyscraper home. The building equipped with helipads and a movie theater cost $1 billion, according to Forbes.

Dhirubhai founded Reliance Commercial Corp. to trade spices and yarn in 1959, the year Anil was born, and built an empire with businesses ranging from textiles to petrochemicals. His two sons fought for control of the group after he died in 2002 without leaving a will. They split the family business three years later in a settlement brokered by their mother.

In the following five years their battle over the price and supply of natural gas from Reliance Industries’ assets halted plans for a north Indian power plant, while a merger between Anil’s Reliance Communications and South Africa’s MTN Group Ltd. was scuttled after Mukesh said he had the first right to buy shares in his brother’s company.

“It looks like they’ve reconciled to working together, and that could be the best thing for them individually,” said U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai. “Old wounds can’t completely be healed, but they can be stitched. There’s a scar nevertheless.”

--With assistance from Mark Williams in New Delhi. Editors: Amit Prakash, Abhay Singh

To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Arijit Ghosh at aghosh@bloomberg.net

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China Seeks ‘Independence’ From GPS With Own Navigation Service

December 28, 2011, 5:52 AM EST By Bloomberg News

Dec. 28 (Bloomberg) -- A Chinese satellite navigation system began providing services yesterday as the nation seeks to end its “dependence” on the U.S.’s Global Positioning System, or GPS, the official Xinhua News Agency reported.

China’s Beidou Navigation Satellite System began providing initial positioning, navigation and timing operational services for the nation and surrounding areas, Xinhua reported yesterday, citing Ran Chengqi, director of the management office of the China Satellite Navigation System. Work began on the Beidou system in 2000 with a goal of creating a global position service by 2020, according to Xinhua.

The U.S.-owned GPS system is the world’s primary source of satellite navigation data that provides directions for drivers, tracking systems for emergency rescue teams and also positioning services for U.S. military vehicles and munitions. The U.S. Air Force operates the more than 30 satellites on which the system is based.

China has already launched 10 satellites for the Beidou system, the most recent of which entered orbit earlier this month, Xinhua reported. Six more satellites will be launched in 2012 to further improve the system and expand its coverage to most of the Asia-Pacific region, Xinhua quoted Ran as saying. The system is compatible with the world’s other major global navigation satellite systems, according to the report.

Civilian Service

Civilian service provided by the U.S.’s GPS system is freely available to all users on a continuous, worldwide basis, according to the service’s website. The service is made up of space, control and user segments, of which the U.S. Air Force develops, maintains, and operates the space and control segments.

GPS is also “critical to U.S. national security,” according to its website. Its applications are integrated into almost every facet of U.S. military operations and almost all new military equipment, it said.

The Air Force manages the constellation to ensure the availability of at least 24 GPS satellites 95 percent of the time, according to the website. The Air Force flies 31 operational GPS satellites, plus three or four decommissioned satellites that can be reactivated if needed.

--Edmond Lococo. Editors: John Liu, Terje Langeland

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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Taiwan-China Economic Pact Has Little Impact, CEO Survey Shows

December 28, 2011, 1:52 AM EST By Tim Culpan

Dec. 27 (Bloomberg) -- A landmark trade and economic deal between Taiwan and China has had no impact on business, according to a survey of chief executive officers and managers.

About 34.9 percent of Taiwanese business executives surveyed by Taipei-based Commonwealth Magazine said the Economic Cooperation Framework Agreement, signed in June last year, won’t benefit their companies. Of the 349 respondents, 45.5 percent said while the pact has had no impact so far, it may help in the future, the survey showed.

Taiwan President Ma Ying-jeou, who seeks to keep his Kuomintang party in office when he faces voters next month, has staked his re-election on closer ties with China and the economic agreement that his administration engineered last year. Opposition candidate Tsai Ing-wen has said the closer relations with Taiwan’s largest trading partner and military rival threatens its own sovereignty and makes its economy a hostage to China.

The survey of business executives was conducted between Nov. 28 and Dec. 15 and included questions on the economy, competitiveness and investment plans, Commonwealth said in a statement today.

Weaker demand in Europe and the U.S. will be the largest external challenge next year, according to 83.9 percent of respondents, while rising raw material prices and a fluctuating exchange rate were also cited.

More than 48 percent of the executives surveyed said they plan to increase their Taiwan workforce next year, and 55.9 percent expect to raise wages. About 41.9 percent of respondents may boost investment in China, while 10.8 percent plan to expand in Vietnam. About 47.7 percent aren’t planning any increases in investments, according to the survey.

--Editors: Shamim Adam, Janet Ong

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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Google+ May Hit 400 Million Users

December 28, 2011, 12:52 AM EST By Nick Turner

(Updates with Facebook starting in third paragraph.)

Dec. 27 (Bloomberg) -- Google Inc. is adding 625,000 new users a day to the Google+ social-networking service, which may total 400 million members by the end of next year, according to independent analysis of its growth.

The site’s popularity has accelerated in recent weeks, with almost a quarter of its total user base joining in December alone, said Paul B. Allen, the founder of Ancestry.com Inc., who tracks the numbers as Google+’s “unofficial statistician.”

Google, the world’s largest Internet-search company, aims to challenge the social-networking supremacy of Facebook Inc., which has more than 800 million users. Google+ was introduced earlier this year as a test project and then opened up to the public in September. The service had 40 million users in October, Google said at the time.

Google+ may be benefiting from the popularity of Google’s Android mobile operating system, which makes it easy to sign up. As the service gains traction, more people will invite family and friends to join, further accelerating its growth, Allen said in a Google+ posting. Allen works at FamilyLink.com, a company he helped start in 2006 with other Ancestry.com co-founders.

Facebook, meanwhile, is said to be preparing an initial public offering, helping it generate funds for expansion. The company is considering raising about $10 billion in the IPO, which would value Facebook at more than $100 billion, a person with knowledge of the matter said last month.

Google, based in Mountain View, California, didn’t immediately respond to messages seeking comment.

Google shares climbed 1.1 percent to $640.25 at the close in New York. The stock has gained 7.8 percent this year.

--Editors: Stephen West, Nick Turner

To contact the reporters on this story: Nick Turner in San Francisco at nturner7@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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Olympus Auditor ‘Still Investigating’ Gyrus Share Purchase

December 28, 2011, 3:13 AM EST By Mariko Yasu and Takashi Amano

(Updates with committee member’s comments in fourth paragraph.)

Dec. 27 (Bloomberg) -- An Ernst & Young ShinNihon LLC committee said it’s still investigating whether the audit of Olympus Corp.’s accounting was appropriate after the Japanese camera maker admitted hiding investment losses.

Olympus’s purchase of Gyrus Group Plc has complicated links to the company’s overall cover-up and will require more time to probe, the panel said today in a statement.

ShinNihon, which signed off on Olympus’s 2010 results, formed the committee this month to verify an internal investigation that earlier found nothing wrong in its audit of the endoscope maker. Olympus, reeling from a $1.7 billion accounting fraud, restated more than five years of past earnings on Dec. 14, wiping out 70 percent of its net assets.

Olympus’s cover-up started “way before” ShinNihon took over the audit, Toshifumi Takada, a panel member and economics professor at Tohoku University in Miyagi, northern Japan, said in Tokyo today. “We’re probing whether it was possible to point out issues” related to Gyrus before Olympus admitted to the 13-year cover-up, he said.

Olympus is also investigating about 70 executives to answer queries over losses and transactions for acquisitions, including $687 million in payments to advisers in the purchase of Gyrus in 2008 and stake writedowns in three other takeovers. In March 2010, $620 million was paid to buy back Gyrus preferred shares given to its advisers as part of fees.

Inadequate

Japan’s Financial Services Agency is looking into any role the auditors may have played in the Olympus cover-up, Minister Shozaburo Jimi said earlier this month.

The panel found the handover between KPMG Azsa LLC and ShinNihon didn’t break any rules, according to Nobuo Gohara, a lawyer and committee member.

KPMG Azsa, which signed off on Olympus’s 2009 results after confronting the camera maker over accounting irregularities, and ShinNihon, failed to conduct an adequate handover, Olympus’s investigation panel said earlier this month.

--With assistance from Takashi Amano in Tokyo. Editor: Drew Gibson.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Drew Gibson at dgibson2@bloomberg.net

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2012: Biggest Web IPO Year Since ‘99

December 28, 2011, 5:03 AM EST By Lee Spears

Dec. 28 (Bloomberg) -- Facebook Inc. and Yelp Inc. are set to lead the biggest year for U.S. initial public offerings by Internet companies since 1999, testing demand for IPOs after investors lost money on Zynga Inc. and Pandora Media Inc.

With Facebook considering the largest Internet IPO on record and regulatory filings showing that at least 14 other Web-related companies are planning sales, the industry may raise $11 billion next year, according to data compiled by Bloomberg. That would be the most since $18.5 billion of IPOs in 1999, just before the dot-com bubble burst.

While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility and Europe’s sovereign-debt crisis could temper the pace of global IPOs after a 38 percent decline in 2011. Even Internet companies may cut valuations for their offerings after Zynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year, according to researcher Morningstar Inc.

“Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop,” said David Erickson, New York-based global co-head of equity capital markets at Barclays Plc. “You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market.”

Global Performance

IPOs raised $155.8 billion in 2011, compared with $252 billion a year earlier, and U.S. initial offerings generated $38.8 billion, about 10 percent less than in 2010, Bloomberg data show. In Asia, IPOs this year have raised $79.2 billion, less than half the $176.5 billion last year, Bloomberg data show.

While funds raised in Europe rose for the year, they sank more than 95 percent since August from a year earlier after the worsening debt crisis and a cut to the U.S. credit rating sapped confidence in global markets.

Morgan Stanley took the biggest share of both U.S. and global IPOs for the second year in a row after working on initial share sales by Glencore International Plc, HCA Holdings Inc. and Michael Kors Holdings Ltd. Pen Pendleton, a spokesman for New York-based Morgan Stanley, declined to comment.

The bank also was the lead underwriter on Zynga and Pandora’s IPOs. The stocks’ declines following those public debuts may prompt greater scrutiny of valuations in 2012, said James Krapfel, an analyst at Morningstar in Chicago.

“Investors will take a harder look at the numbers going forward and need to see strong revenue and profit growth,” Krapfel said. Bookings, an indication of deferred revenue, at Zynga have increased more slowly this year, suggesting the company’s IPO price was too high, according to a Dec. 9 Morningstar report.

Zynga, Groupon

Zynga, which raised $1 billion in its IPO this month, has since fallen 2.5 percent after going public at a valuation three times that of rival Electronic Arts Inc., Oakland, California- based Pandora has plunged 36 percent since its June 14 IPO.

Facebook, based in Menlo Park, California, is examining a $10 billion offering that would value it at more than $100 billion, a person with knowledge of the matter said last month. Total sales at Facebook in 2012 may surge 52 percent to 62 percent from this year’s projected $4.27 billion through increased ad revenue, according to Debra Aho Williamson, an analyst at EMarketer. Industrywide, the display ad market may surge 24 percent to $12.3 billion this year.

Yelp, ExactTarget

“Tech offerings generally offer real growth, and investors get very excited when they can’t find growth in the broader market,” JD Moriarty, New York-based co-head of equity capital markets for technology in the Americas at Bank of America Corp., said at a briefing this month.

Yelp, the consumer-review website operator, and e-mail marketer ExactTarget Inc. both filed for IPOs in November. This year, 19 Internet companies generated $6.6 billion in U.S. initial share sales.

Glam Media Inc., a Web-advertising company that targets women, plans to make its first IPO filing by the end of the second quarter, people familiar with the matter said on Dec. 14. AppNexus Inc., the online-ad company backed by Microsoft Corp., may go public in late 2012, Chief Executive Officer Brian O’Kelley said in September. Companies like MobiTV Inc. and Eloqua Ltd., which rely on the Internet to distribute cloud- based software products to clients, may seek an additional $650 million, regulatory filings show.

Europe’s Woes

In Europe, the IPO market has “essentially come to a halt” as the sovereign-debt crisis spread from Greece to Portugal and Italy, said Mary Ann Deignan, New York-based head of equity capital markets for the Americas at Bank of America. In September, Siemens AG suspended an IPO of its Osram lighting unit and Spain pulled the initial public offering of its lottery operator as global stocks headed for a one-year low.

“There are companies that would like to go public, but are waiting for the right market environment to do so,” said Deignan, speaking at a briefing this month. “As long as policymakers and politicians control the headlines, Europe remains a challenge.”

RIB Software AG raised 145 million euros ($189 million) in February, this year’s biggest technology IPO in Western Europe. Yandex NV, owner of Russia’s most popular Internet search engine, raised $1.4 billion in a U.S. IPO in May, while VKontakte, the largest Russian social networking website, also may sell shares in New York next year, people with knowledge of the matter said in June.

Months Behind

“The IPO market in Europe is probably six months behind where we are in Asia and the U.S.,” Brad Miller, New York-based global co-head of equity syndicate at Deutsche Bank AG, said at a briefing this month. The first pickup of stock-sale activity in Europe may come as governments sell state-owned assets to the public through spinoffs, Miller said.

Still, even in Hong Kong, where growth from mainland China will spur demand, a busier calendar may not come until the second half, said John Lydon, co-head of Asia equity capital markets at Deutsche Bank.

Chow Tai Fook Jewellery Group Ltd. and New China Life Insurance Co. both fell on their first day of trading in Hong Kong this month after selling shares at or near the bottom of proposed price ranges. Others such as Perfect Shape (PRC) Holdings Ltd. pulled offerings.

Private-Equity IPOs

IPOs by private-equity firms have also dried up this year, with owners instead pursuing secondary offerings. Last month, firms including Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP raised $613 million from selling shares in Dunkin’ Brands Group Inc., the doughnut chain they took public in July. This year, KKR & Co. and other investors generated $2.1 billion from secondary offerings of stock in Dollar General Corp., whose IPO occurred in 2009.

Private-equity firms seeking to unravel investments made during the record buyout boom from 2005 to 2007 may follow through with IPOs if markets stabilize, said Robert H. McCooey Jr., senior vice president of new listings and capital markets at Nasdaq OMX Group Inc. in New York.

“Given the right market conditions, there will certainly be some of those companies that will be looking to exit into the public markets,” McCooey said. Toys “R” Us Inc., backed by buyout firms including KKR, filed for an IPO in May 2010 and has yet to complete a sale.

Some technology companies have also held off. Travel- website operator Kayak Software Corp. filed plans for a $50 million IPO in November 2010. LivingSocial.com, which considered a $1 billion IPO earlier this year, instead chose to raise $400 million from private investors, people familiar with the matter said this month.

Hot Names

Many Web-focused companies that completed IPOs in 1999, such as EToys Inc. and Drkoop.com Inc., fell victim to the subsequent technology-stock collapse as shareholders abandoned the unprofitable ventures. The performance of new Internet stocks next year will show whether investors are ready to dive back into the Web, said Laurent Morel of Societe Generale SA.

“Technology IPOs are definitely the theme there, with lots of hot names like Zynga coming to the market,” said Morel, the Paris-based global head of equity capital markets. “But if you look at their performance, most of them are struggling. Next year will be the real test.”

--With assistance from Fox Hu in Hong Kong and Zijing Wu in London. Editors: Julie Alnwick, Jennifer Sondag

To contact the reporter on this story: Lee Spears in New York at lspears3@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net

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