Unemployed vote split down the middle

2:30 PM middle, split, Unemployed No Comments

Steve Liesman , CNBC

In an election that was supposed to be about jobs, jobs and jobs, the unemployed vote appears to be a dead heat.

In an exclusive look at how the unemployed will likely vote, CNBC found 26 percent of the public report either they or someone in their household has lost a job in the past four years.

But this group splits 48 percent to 48 percent in their presidential choice, similar to the broader population, which splits 48 percent to 47 percent for President Obama.

If the respondent was unemployed, the break is 50 percent for Obama vs. 45 percent for Republican challenger Mitt Romney. If only a person in the household lost a job (not the individual respondent), the split is 51 percent for Romney vs. 48 percent for Obama.

With a 7.9 percent unemployment rate in October, Obama stands for reelection with the highest jobless rate of any president in the post-war era.

Of the four other incumbents who ran with unemployment rates above 7 percent — Gerald Ford, Jimmy Carter, GHW Bush and Ronald Reagan — only Reagan won back the White House.

Significantly, while the unemployment rate under Reagan was 7.4 percent in the October before the election, it had fallen 1.4 percentage points in the prior 12 months.

Under Obama, unemployment has fallen by 1 percentage point in the past year.

The data raises several questions that can only be answered by actual election results, including whether the change in the unemployment rate is more or equally important than the level of joblessness.

It could be that the positive momentum in the rate, added to the power of the incumbency, is sufficient to keep Obama in the White House. It could equally be that the high level of unemployment is a key factor in winning Romney the job.

However, the split support among the unemployed suggests Romney was not overwhelmingly successful in winning the support of those who have personally experienced joblessness. That could be because his message on jobs was not strong enough or because other factors — race, political leaning and especially income level — were more important.

The demographics of the unemployed skew slightly less white than the broader population. But it’s hard to attribute the split among the unemployed to ethnicity.

White voters overall break 57 percent to 38 percent for Romney. White voters who have experienced unemployment break 57 percent to 42 percent for Romney, which is not a statistically meaningful difference. But it shows that Romney was not successful in gaining significantly more support among whites who have experienced unemployment compared to those who have not.

Of course, the actual election results will almost certainly differ significantly from the polls and it could turn out that unemployment is the front-burner issue it was cracked up to be. Indeed, other polls have shown that for the broader voting population, jobs is a key factor in presidential choice.

How the poll was conducted: The poll, conducted in conjuction with another survey, was based on 1,000 likely voters conducted Nov. 2-3 by Hart-McInturff, a Republican and Democratic polling organization.

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Murdoch’s tough call: Split News Corp. to survive

3:00 PM Murdochs, split, survive, tough No Comments

Oli Scarff / Getty Images

Rupert Murdoch has reportedly been against splitting up his News Corp. media empire.

Rupert Murdoch’s driving ambition may have finally met its match.

On Tuesday, his News Corp. media empire confirmed reports that it is thinking of restructuring into two separate, distinct, publicly traded companies -- a move that would effectively bring to an end Murdoch’s decades-long drive to pull together the disparate strands of his empire into one coherent company.

Harder still for Murdoch would be the fact that a division of the media giant would almost certainly mean cordoning off the newspaper business that once was the core of his company, which he has grown from a single Australian newspaper he inherited in the 1950s.

“This is a sign of the times,” Barton Crockett, an analyst with Lazard Capital Management, told CNBC.

“A lot of us were surprised that they're actually taking this step, because Rupert’s ties to newspapers are so strong and so historical, I was doubtful they’d go there as long as he was calling the shots. But they are, and I think that’s showing he’s evolving with the times, and the company is,” he added.

The restructuring of News Corp. would, according to a report in The New York Times, likely cleave its more profitable entertainment unit -- driven by News Corp.’s movie studio and powerful television networks -- from the smaller, less profitable, publishing business that includes The Wall Street Journal, The Times of London, The New York Post and the HarperCollins book business.

Rob Enderle, an analyst with Enderle Group, said the main motivation for dividing News Corp. in two is likely the protection of the Fox movie studio and television networks that are now the most profitable parts of the media empire.

Murdoch is likely to want to insulate this part of the business from the fallout from the phone hacking scandal that has led to the closure of the News of the World tabloid in the U.K., halted Murdoch’s BSkyB takeover bid and prompted the arrest of several key figures, he said.

“There has been a lot of concern about how broad the company’s holdings have become, and that if something were to happen to any one part of it, it could bring down the whole of it,” said Enderle.

The split is also likely driven by shareholder unrest over the direction of the company.

Less concerned about journalistic ethics and more worried about the company’s bottom line, News Corp. shareholders have become more vocal since the hacking scandal broke, and they are more likely to want the company to focus on its more productive entertainment assets, which generated $23.48 billion in revenue in the year ended June 2011, nearly three times the $8.83 billion in revenue generated by the publishing business.

There were also concerns that the size of the company could raise antitrust concerns if it wanted to engage in corporate acquisitions, Enderle added. A split would realign the company and enable it to focus it on each core operation, he said.

“This split is clearly along functional lines,” Enderle said. “The resulting companies should be easier to manage and focus, because it really did look as if News Corp. was losing track of each unit’s focus.”

News of the potential plan to split the media empire in two has certainly won the approval of the market, with shares of News Corp. rising more than 8 percent in trading Tuesday.

Media conglomerate Viacom took a similar path in 2005 when it split into two companies, leaving the television company CBS as a standalone company. Both companies have thrived since the move.

Murdoch has reportedly been against splitting up News Corp., but may have been swayed by the views of his second in command, Chase Carey, who is said to regard the publishing industry as mature and unlikely to yield substantial profits. Earlier this year, Carey made it clear that the company’s management team has considered a split.

“For Murdoch it has been all about empire building, about maximizing power and control, but the only thing that leaves you with is something unmanageable,” Enderle said, adding that it’s rare to see someone like Murdoch, who is clearly oriented toward status and power, step in and break up a company.

“The board is subordinate to Murdoch, so it probably really took a real and present threat to the overall entity for him to step back and realize there’s a need to restructure,” he added.

The outlook for Murdoch’s beloved newspaper business remains gloomy, Enderle added.

“By providing more focus for the unit they might be able to turn it into something more profitable, or find a buyer that will do something else with it, but the trend right now is away from publishing,” he said.

Crockett noted that the phone hacking scandal presented an opportunity for News Corp. to rethink its operations and improve the situation for shareholders. A division of the business will lead to a stronger company, he said.

“We’ve gone from lemons to lemonade,” said Crockett. “I think it’s something that will make News Corp. a stronger business and a better stock.”

How would investors be impacted if News Corp. split?

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Google to split stock; announces dividend

1:24 AM Announces, dividend, Google, split, stock No Comments

Google, explains its stock split. Also, what the company is doing to maintain the passion of a startup, with CNBC's Jon Fortt. David Garrity, GVA Research, also weighs in on some of the highlights from the call.

Google announced plans to give investors a stock dividend on Thursday, as the search giant reported first quarter that met Wall Street estimates.

Google said its board of directors has approved a dividend of stock to existing shareholders that it calls a 2-for-1 stock split, preserving its corporate and control structure.

The announcement came as Google co-founder Larry Page completed a year after his return as chief executive.

Shares of Google, which finished Thursday's regular session at $651.01, rose to $655 in after-hours trading.

Net revenue, excluding fees paid to partner websites, totaled $8.14 billion in the three months ended March 31, compared with $6.54 billion in the year-ago period and analysts' average estimate of $8.15 billion according to Thomson Reuters I/B/E/S.

Net income was $2.89 billion, or $8.75 per share, compared with $1.80 billion, or $5.51 a share, in the year-ago period when Google took a $500 million charge to settle a government probe into its advertising practices.

Since taking the reins one year ago, Page has cut back on extraneous projects, launched a social networking service to challenge Facebook, and signed a $12.5 billion deal to acquire smartphone maker Motorola Mobility Inc.

Breaking down the details of Google's earnings announcement and the board's decision to approve a 2-for-1 stock split, with Herman Leung, Susquehanna Financial group analyst; David Garrity, GVA Research principal; and CNBC's Maria Bartiromo and Jon For...

Copyright 2011 Thomson Reuters.

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Is Google getting ‘evil’ with its stock split?

3:20 PM getting, Google, split, stock No Comments

Paul Sakuma / AP

Workers ride bikes outside Google headquarters in Mountain View, Calif.

With its controversial new stock plan, Google may be going against its “don’t be evil” informal corporate motto.

The company announced a stock split Thursdaydesigned to preserve the control of co-founders Larry Page and Sergey Brin over the world’s leading Internet search engine. It lets Google issue new shares without diluting the two founders’ voting power, creating a new class of nonvoting shares that will be disseminated to existing shareholders in what is basically a 2-for-1 stock split.

Since it first went public in August 2004 in what was one of Silicon Valley’s most anticipated and debated initial offerings of stock, Google has operated with a dual stock ownership structure, where a company issues two classes of shares with different voting and ownership rights. The system allows the company’s founders and management to maintain control, but still solicit investments from the public.

Google’s stock structure has worried corporate governance experts, especially since the format has been adopted by a number of the new Internet technology firms now launching IPOs, including Facebook. Now Google has upped the ante by adding a third class of non-voting shares.

These experts say investors may be willing to ignore the corporate structure now because they are eager to purchase a hot Internet stock. They warn that if there is a crisis for the company down the road, investors will not have much of a say in its fate.

Page and Brin, together with Chairman Eric Schmidt, own about two-thirds of Google’s voting power. The company’s Class A stock has less voting power. The new type of shares, Class C, will have no voting rights at all.

“If you’ve invested in Google, you’ve known from the beginning that you’re a second class shareholder,” Mark Mahaney, an analyst with Citigroup, told CNBC Friday. “They’ve just made that a little more apparent.”

Wired Magazine’s Senior Writer Steven Levy said the stock plan may be Google’s way to send a signal to the market that it is ready to take on the new crop of internet companies now coming to market, especially Facebook, Levy said.

“Google is trying to send a message,” he told CNBC. “They’re saying we do have tricks.”

The stock structure adds to the lack of decision making on the part of investors Google, and it would likely have to be approved by Google’s board, Levy said.

“But Google’s board may be less independent than others,” he said, noting that Page and Brin hold 70 percent of the voting rights.

“Anything that happens at Google happens because [Larry] Page and [Sergey] Brin agree on it,” he said.

Google said Thursday it instituted its original dual-class structure to help it build a company designed for stability over long time horizons. That takes time and requires stability and independence, the company said.

“We recognize that some people, particularly those who opposed this structure at the start, won’t support this change -- and we understand that other companies have been very successful with more traditional governance models,” the company said in a letter to shareholders.

“But after careful consideration with our board of directors, we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users,” Google said.

Google shares were down about $21, or 3 percent, in midday trading after the announcement, to about $630 a share.

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European Union split over treaty to save euro

3:13 AM European, split, treaty, union No Comments

Prime Minister David Cameron speaks during a news conference at an European Union summit in Brussels.

BRUSSELS — The 17 countries that use the euro, plus nearly all of their European Union partners, agreed Friday to an ambitious treaty tying their finances together in the hopes of solving Europe's debt crisis. Yet opposition led by Britain created a deep rift in the union.

In drafting a new treaty, the countries hope to help European nations struggling with giant debts over the long term, and in that sense there were early indications of success. Such an agreement is considered necessary before the European Central Bank and other institutions commit more money to lowering the borrowing costs of heavily indebted countries like Italy and Spain.

“It’s a very good outcome for the euro area, very good,” ECB President Mario Draghi said in Brussels. “It is going to be the basis for much more disciplined economic policy for euro-area members. And certainly it is going to be helpful in the present situation.” 

Even after Friday's long-awaited deal, watched by governments and markets worldwide, European leaders have huge hurdles still ahead. They are meeting again later Friday to work out what exactly their new treaty will contain and how violators of its strict budget rules will be policed. They want it written by March.

Asian stocks — already trading when the Europeans announced their 11th-hour deal — tumbled Friday as investors grew increasingly pessimistic that European leaders would conclude this week's crucial summit without finding a solution radical enough to fix the debt crisis.

Britain, which doesn't use the euro, led the push against a treaty tying all 27 EU countries to tighter fiscal union, arguing that it would threaten sovereignty and London's esteemed financial services industry. Germany and France, the eurozone's biggest economies, had pushed for a 27-nation accord.

U.K. prime minister blamed
French President Nicolas Sarkozy laid the blame at the feet of British Prime Minister David Cameron.

"David Cameron made a proposal that seemed to us unacceptable, a protocol to the treaty that would have exonerated the United Kingdom from a great number of financial service regulations," Sarkozy said shortly before dawn, after what he called a "difficult" dinner meeting had dragged through the night.

"We couldn't accept this. We consider to the contrary that part of the troubles of the world come from the lack of regulation of financial services," Sarkozy said. "If you want an opt-out clause to not be in the euro and ask to participate in all decisions of the euro ... and even criticize it, this is not possible."

Cameron defended his stance.

"What was on offer is not in Britain's interest so I didn't agree to it," he told reporters in Brussels.

"We're not in the euro and I'm glad we're not in the euro," he said. "We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up."

The French president said work was proceeding on an "intergovernmental accord" among the 17 countries that use the euro plus as many as six others, not counting Britain, Hungary, and so-far undecided Czech Republic and Sweden.

Swedish Prime Minister Fredrik Reinfeldt signaled after the meeting it was unlikely his country would join the accord.

"It would be very odd signing up to a treaty pointing out as if we were a eurozone country," he told The Associated Press. "And that was never the aim."

Intervention into national budgets
The governments signing onto the new treaty will have to agree to allow unprecedented intervention in national budgets by EU-wide bodies.

Yves Herman / Reuters

Spain's outgoing Prime Minister Jose Luis Rodriguez Zapatero, left, talks to France's President Nicolas Sarkozy, right.

According to a statement issued after the meeting broke up, governments participating in the agreement will need to have balanced budgets — which is counted as a structural deficit no greater than 0.5 percent of gross domestic product — and will have to amend their constitutions to include such a requirement.

The treaty will include an unspecified "automatic correction mechanism" for countries that break the rules, the statement said.

In addition, countries that run deficits larger than 3 percent will face sanctions.

To prevent such deficits, countries will have to submit their national budgets to the European Commission, which will have the authority to request that they be revised. Countries will also have to report in advance how much they plan to borrow.

But Cameron threatened to complicate the new 23-member treaty.

"The institutions of the European Union belong to the European Union, belong to the 27" member states, he said. The new treaty would rely on the European Commission and the European Court of Justice to enforce its rules.

"One step forward, two steps back," Alan Clarke, U.K. and eurozone economist at Scotia Capital, said before the first day of summit talks concluded. "The eurozone leaders might as well not bother. Pack their bags, go home, enjoy the weekend and do their Christmas shopping."

Despite the challenges ahead, European Central Bank chief Mario Draghi said it was a good result for the eurozone, and German Chancellor Angela Merkel praised it.

"I have always said the 17 states of the eurogroup have to regain credibility," she said. "And I believe with today's decisions this can and will be achieved."

Marathon negotiating session
The summit meeting in Brussels was viewed as a critical step in the effort to save the euro. The currency is losing the trust of the international financial markets, who fear that some debt-laden euro countries may ultimately be unable to pay their debts.

That doubt means that the governments of countries viewed as in a precarious state must pay higher interest to borrow the money they need to carry on — and that, in turn, makes their budget deficits even worse and can be unsustainable in the long run.

EU officials believe that one way of regaining market trust is to beef up the financial governance overseeing the eurozone countries and their budgets. Any intergovernmental treaty will be an effort to ensure that national budgets are brought into balance and large debts are not run up again.

And the officials believe another way to regain the trust of investors is to have enough money on hand to guarantee that eurozone countries won't default on their debts.

Toward that end, Herman Van Rompuy, president of the European Council, said the eurozone, together with some other EU countries, would provide up to €200 billion ($268 billion) in extra resources to the International Monetary Fund, to be used to help countries in dire straits. Non-euro countries Sweden and Denmark already said they would contribute some extra money.

Sarkozy also said the EU's two bailout funds, meant to rescue countries having trouble refinancing their debts — the European Stability Mechanism, or ESM, and the European Financial Stability Facility, or EFSF — would be managed by the European Central Bank, though the details still need to be worked out.

The failure to get agreement among all 27 EU members came despite a marathon negotiating session. The 27 EU presidents and prime ministers began their talks at 7:30 Thursday evening and continued past 4:30 a.m.

A Reuters poll of economists found that while 33 out of 57 believe the eurozone will probably survive in its current form, 38 of those questioned expected this week's summit would fail to deliver a decisive solution to the debt crisis.

The Associated Press and Reuters contributed to this report.

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