IBM "disappointed" in earnings report, investors to try on Reebok, and Lufthansa grounds Monday and Tuesday flights in advance of a pilots' strike. Read about these and more of the morning's top business news stories.
IBM to Shed Microchip Manufacturing Unit , Earnings Fall Short
International Business Machines Corp. announced early Monday it will pay Globalfoundries Inc. $1.5 billion over three years to take on its unprofitable chip-manufacturing unit, Bloomberg reports. Globalfoundries will be IBM’s exclusive provider of specific Power processors for the next decade in exchange for access to IBM’s intellectual property, according to the Bloomberg report. IBM also posted earnings that fell far below analysts’ expectations. The company reported earnings excluding items of $3.68 a share on revenue of $22.40 billion. It had been expected to post earnings excluding items of $4.31 a share on revenue of $23.37, CNBC reports. “We are disappointed in our performance,” IBM chairman, president and CEo Ginni Rometty said in a statement.
Investors Looking to Try On Reebok
The Wall Street Journal reported Sunday that an investor group that includes Jynwel Capital and funds affiliated with the Abu Dhabi government is launching a bid to buy Reebok from Adidas AG for about $2.2 billion. Jynwel Capital, a Hong Kong-based private equity investment and advisory firm run by Jho Low, and the Abu Dhabi government-affiliated funds planned to make the offer imminently in a letter to Adidas directors, the Journal reported. The investors are expected to argue that Reebok would do better if it were managed independently, the Journal reported. Germany-based Adidas, the world's second largest sport apparel firm, bought the U.S.-headquartered Reebok in August 2005 for $3.8 billion.
It’s Time—Microsoft to Launch Smartwatch
Forbes reported Sunday that Microsoft is preparing to launch a smartwatch within the next few weeks. The smartwatch would track a user’s heart rate and work across different mobile platforms, Forbes stated. Apple Inc. unveiled its smartwatch on Sept. 9. It will go on sale early next year. Samsung unveiled its Galaxy Gear smartwatch in September 2013.
“Tanks” a Lot: Fury #1 at Box Office
The box office war never ends but the battle for No. 1 film at the box office went to "Fury,” which outgunned “Gone Girl” with $23.4 million. “Gone Girl,” No. 1 for the last two weeks, came in second with $14.8 million. “The Book of Life,” a new animated film that earned strong critical reviews, earned a solid $16.6 million, while “Alexander and the Terrible, Horrible, No Good, Very Bad Day” earned around $12 million. Rounding out the top five was the new Nicholas Sparks tearjerker, “The Best of Me,” which got the worst of the critics’ reaction, but still earned $10.2 million.
Borrowers to Get a Break?
Bloomberg and The Wall Street Journal reported over the weekend that Fannie Mae, Freddie Mac and private mortgage lenders are closer to an agreement that may lower restrictions on borrowers saddled with poor credit. Programs under consideration would make it easier for lenders to offers mortgages with down payments of as little as 3 percent for some borrowers. More restrictive credit requirements were out in place after the economic collapse in 2008. The changes, which could be announced this week, are “an effort to boost lending amid a tepid housing recovery,” USA TODAY reports.
Lufthansa Grounds 1,450 Flights
A planned strike by pilots on Monday and Tuesday has led Lufthansa to cancel around 1,450 flights, comprising two-thirds of planned services, Reuters reports. The airline said around 2,150 flights and more than 200,000 customers would be impacted by the strike. Pilots have been located that are willing to take care of 700 flights. The cancellations will mainly affect short and mid-length domestic flights. The strike is the eighth this year.
Ukraine and Russia Reach Gas Accord
The Ukrainian president announced that Russia has agreed to supply Ukraine with natura gas through March 21, the Associated Press reports. Russia cut off gas supplies to Ukraine in June over unpaid bills. President Poroshenko said he expected the deal to be signed during the next round of European Union-mediated gas talks, to be held Tuesday in Brussels. Following Europe-brokered talks in Italy on Friday, Poroshenko and Russian President Vladimir Putin reported progress on both a definitive peace settlement in eastern Ukraine and on settling the gas dispute.