Analysis: Expedia Against Everyone Else After Orbitz and Travelocity Deals

After acquiring Travelocity last month and Wotif in Australia a few months earlier, Expedia Inc. cleaned up a few missing pieces and agreed to acquire Orbitz Worldwide, including Orbitz, CheapTickets, eBookers, and HotelClub in a $1.6 billion cash deal.

The announcement of the deal today was a stunner -- although it shouldn't have been. When Expedia initially began running Travelocity's North America sites in late 2013 Expedia stated that it was interested in similar deals.

And last week during Expedia's fourth quarter of 2014 earnings call, Expedia Inc. CEO Dara Khosrowshahi said the company would continue to be acquisitive in 2015. "As far as acquisitions go, acquisitions are a part of our game plan," Khosrowshahi said February 5. "We've had a number of acquisitions over the years and I would say that our technology platforms now and our operating practices now are at a different level where we are good at and have a very strong practice at bringing in and consolidating acquisitions and realizing synergies."

The big four U.S.-based online travel agencies, including Expedia, Travelocity, Orbitz, and Priceline.com, have now just become the big two, with CheapOair rounding out the field.

Given the consolidation in the U.S. travel industry, the Expedia-Orbitz deal could trigger a regulatory fight with the U.S. Justice Department or Federal Trade Commission, although Expedia officials in a conference call today played down that possibility.

It won't just be online travel agency competitors which will be raising eyebrows. The deal makes Expedia-Travelocity-Orbitz even more powerful in negotiating deals with hoteliers around the world

Itty-Bitty Expedia

Expedia CFO Mark Okerstrom argued that Expedia Inc., which would now include Expedia, Travelocity, Orbitz, Hotels.com, Hotwire, Trivago, eBookers, and eLong, among other brands, is a "small player" in the $1.3 trillion global travel industry, commanding overall market share in the single digits.

According to Euromonitor International, Expedia's share of the global travel retail market in 2014 would have been 6.3% if Orbitz' assets are added, compared to Priceline's 4.9%

That's the argument that Expedia will undoubtedly make to regulators. Inferring that there might be a protracted regulatory process, Okerstrom said he doesn't expect the deal to close until "the back half of the year."

A spokesperson for the Priceline Group declined to comment when asked whether the company would fight the Expedia-Orbitz deal on antitrust grounds. CheapOair didn't immediately respond to a request for comment.

There are also break-up fees for each side if the deal doesn't go through, although the details on this haven't been released yet.

What's the Plan?

The plan going forward is that Orbitz Worldwide properties would still operate as separate brands within the Expedia Inc. portfolio, although Orbitz's hotel inventory would be tied into the Expedia technology platform and Orbitz would be able to market Expedia's wider array of global hotel properties.

Okerstrom said the acquisition would be a big revenue opportunity because Orbitz would now be able to offer hotel rooms at "our economics."

Talking financials, Okerstrom said Expedia would be able to achieve $75 million in synergies from the deal, and Expedia Inc. would generate an additional 75 cents per share in earnings in 2015, depending on when the deal closes.

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Euro zone lions' den

ATHENS/BRUSSELS (Reuters) - Greek Finance Minister Yanis Varoufakis headed for a showdown with euro zone finance ministers on Wednesday after his new leftist-led government won a parliamentary confidence vote for its refusal to extend an international bailout.

The former academic said he was ready for a clash with euro zone paymaster Germany and its allies over Greece's determination to scrap austerity measures, end cooperation with the "troika" of EU/ECB/IMF officials overseeing the bailout program and demand a "haircut" restructuring its debt.
"If a debt can no longer be paid off then that leads to a haircut," Varoufakis told German magazine Stern in an interview released on Wednesday. "What is critical is that Greece's debt cannot be paid off in the near future."

German Finance Minister Wolfgang Schaeuble has said that if Greece is not willing to request an extension of its 240 billion euro bailout - the biggest in financial history - "then that's it", ruling out further assistance or debt forgiveness.

He and other euro zone ministers said they wanted to hear Greece's ideas at a Eurogroup meeting beginning at 1630 GMT (11:30 a.m. EST) in Brussels, but they warned that time was short since the bailout program expires at the end of this month and no solution is in sight.

Greek bond yields rose and shares fell before the meeting, with investors concerned that failure to reach a deal in the next couple of weeks could lead to a possible Greek default and exit from the euro currency.
However, most analysts said the odds were on an agreement emerging this month after lots of sound and fury.

"We are once again seeing a kind of chicken race between the new Greek government on one side and the 'troika' on the other," Swedish SEB Bank chief economist Robert Bergqvist said. "Our main scenario implies a compromise that will ease current financial market worries."
European Union leaders will take up the issue at their first summit with Greek Prime Minister Alexis Tsipras on Thursday. EU officials said they would be briefed on the talks but there would be no room for debt negotiation at a summit mostly devoted to the Ukraine-Russia conflict, fighting terrorism and longer-term reform of the euro zone's governance.

Tsipras struck a defiant tone in parliament late on Tuesday, saying that "little Greece" was changing Europe by casting off austerity.
"We are not negotiating the bailout; it was canceled by its own failure," the leader of the hard left Syriza party declared before winning the confidence vote with the backing of 162 lawmakers in the 300-seat chamber. "I want to assure you that there is no going back. Greece cannot return to the era of bailouts."
Tsipras agreed on Wednesday to work on reforms with the Organisation for Economic Cooperation and Development, a Paris-based inter-governmental think-tank, but said they would not be imposed from outside.
OECD chief Angel Gurria appeared to endorse Tsipras's criticisms of the bailout program after they met in Athens, saying it had produced low growth, high unemployment, rising inequality and a loss of trust.

DEBT RENEGOTIATION

Varoufakis has proposed a six-month transition in which Greece would be allowed to issue more short-term debt, receive the proceeds of ECB holdings of Greek bonds and tap unused bank rescue funds while renegotiating its debt. Athens would swap its euro zone loans for GDP-linked bonds and its ECB-held debt for interest-bearing perpetual bonds with no reimbursement date.
EU officials have said the most Greece can expect is a further extension of the repayment deadline for its euro zone loans, a lower interest rate and perhaps a prolonged moratorium on debt service payments, in return for continued reforms under some form of external supervision.
A senior party aide of Chancellor Angela Merkel said "direct provocation" by the new Greek government had diminished the German parliament's willingness to help Athens. Tsipras has talked of seeking reparations for the World War Two Nazi occupation of Greece and personally rebuffed Schaeuble.

Irish Finance Minister Michael Noonan, whose country emerged successfully from its own EU/IMF bailout in 2013 and now has the highest growth rate in Europe, said he was pessimistic about Wednesday's talks and accused the Greeks of double-speak.

"I don't see the basis for a solution emerging yet," Noonan told a parliamentary committee in Dublin. "Many of the proposals that are emanating are, on the face of it, technically impossible."
He said Tsipras and Varoufakis had said different things to their domestic and European audiences.
Austria's finance minister, Hans Joerg Schelling, said he thought a solution could be reached by the end of February if Greece wanted, otherwise things would enter a "critical phase".

"We again have a situation now in which money is being withdrawn from Greek banks. We have a situation that certain debts may not be able to be serviced, and that is of course a critical phase because the reaction on financial markets would be enormous," he told ORF radio.
Greek ministers have talked of possibly turning to Russia or China for assistance if there is a deadlock with the euro zone.

Tspiras discussed deepening cooperation and investment in a telephone call with Chinese Prime Minister Li Keqiang, a Greek government official said. A Chinese Foreign Ministry spokeswoman said she was not aware of any offer of aid to Athens.

Foreign Minister Nikos Kotsias held talks in Russia on Wednesday but there was no mention of financial assistance from Moscow at a joint news conference with his Russian counterpart.
The new government meanwhile confirmed that it has halted plans to privatize the main ports of Piraeus and Thessaloniki, in which China's Cosco had been a contender.

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The poor China trade

TOKYO (Reuters) - Asian shares wobbled on Monday after dismal Chinese trade data eclipsed a strong U.S. jobs report, raising concerns about a deepening slowdown in the world's second-largest economy and sending the Australian dollar sliding.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.8 percent while U.S. stock futures also shed 0.4 percent. Japan's Nikkei share average bucked the trend and rose 0.2 percent on the back of a weaker yen.

Data published on Sunday showed China's trade performance slumped in January, with exports falling 3.3 percent from year-ago levels while imports tumbled 19.9 percent, far worse than analysts had expected. The data highlighted deepening weakness in the Chinese economy.

"The data shows that an economic slowdown is becoming a reality. If the government brings down its growth target next month, the markets will take it even more seriously," said Shuji Shirota, head of macro strategy at HSBC in Tokyo.

The Australian dollar, often used as a proxy for bets on the Chinese economy because of the country's trade links to China, fell 0.4 percent in early trade to $0.7775.

The poor China trade figures took some of the shine off robust U.S. payroll gains of 257,000 in January. Hourly wages also rebounded, increasing 12 cents last month for a 2.2 percent increase from a year earlier, the largest such gain since August.

As the data put a mid-year rate hike from the Federal Reserve back on the table, U.S. debt yields shot up, with the benchmark 10-year yield hitting a four-week high of 1.965 percent on Friday.

Money market futures have fully priced in a rate increase by September with some chance of a move as early as June.

The prospect of an earlier U.S. rate hike is weighing on many assets that have benefited from low interest rates in the United States while underpinning the dollar.

The U.S. dollar's index against a basket of six major currencies maintained most of its 1.1 percent gain on Friday and stood at 94.519, not far from an 11-year high of 95.481 hit last month.

The euro remained vulnerable as new Greek leader Alexis Tsipras rejected the bailout, setting himself on a collision course with European partners.

In his first major speech to parliament since storming to power last month on Sunday, Tsipras listed a range of proposed reverses of reforms imposed by European and International Monetary Fund lenders.

The euro traded at $1.1325, little changed but near last week's low of $1.1280.

The yen hit four-week lows of 119.23 to the dollar on Friday on the back of rising U.S. bond yields. It last stood at 118.73.

Oil prices steadied on Monday as falling U.S. oil rig counts and conflict in producer Libya were balanced by a slump in Chinese imports, which pointed to lower fuel demand in the world's biggest energy consumer.

Brent oil futures gained 0.9 percent to $58.33 per barrel, clinging near six-week high of $59.06 touched on Friday.

Gold rebounded slightly from a three-week low of $1,228.50 touched on Friday as share prices eased. It last stood at $1,213.80 per ounce.

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This Week's Economic Horizon On 8 Points

1. The swing in the pendulum of expectations back toward a mid-year Fed rate hike is one of the key developments that will shape the investment climate. The data in the week ahead, including the broader measures of the labor market, like the Fed's new index (Labor Market Activity Index) and JOLTS (Job Opening and Labor Turnover Survey), and core retail sales will strengthen the view. The rise in US interest rates will lend the dollar support and allow the appreciating trend to continue after consolidating over the last few weeks. Equity investors need to adjust to the rise in interest rates. High dividend payers and utilities are vulnerable. US companies have expanded overseas more by direct investment than exporting. That means that while they earn revenues in foreign currencies they also incur local costs. In addition, many producers price and invoice in dollars. In any event, in a strong dollar environment, many look for the small caps, which are more domestic, to fare better, even though they may face steeper international competition.

2. The claim that the US is not an economic oasis is a red herring. The fact of the matter is that the US expanded in the April-September period while Japan contracted and Europe nearly stagnated. However, the decline in the euro and yen, and the drop in energy prices and interest rates will help them recover. The preliminary Q4 US GDP estimate may be revised lower after the surge in December imports was reported. Note that the US labor dispute is disrupting trade flows. The eurozone reports its initial estimate of Q4 GDP at the end of the week. If the consensus is wrong with its 0.2% guesstimate, it is more likely to be surprised on the upside than the downside. We note too that the EC revised up its forecast for eurozone growth this year (1.3% from 1.1%) and next (1.9% from 1.7%). Japan does not report its Q4 GDP until early in Tokyo on February 16. It likely returned to growth after contracting in Q2 (-1.7%) and Q3 (-0.5%). The consensus calls for a 0.9% expansion.

3. European officials are trying to snip the Greek rebellion in the bud. In a controversial decision, shortly after Draghi met Varoufakis, the ECB voted to rescind the wavier that allowed the sub-investment grade Greek government bonds and state-guaranteed bonds to be used as collateral. The ECB did allow for the Greek central bank to replace its lending with the Emergency Lending Assistance (ELA) program, under which funds cost 155 bp annualized (vs. 5 bp from the ECB). The ELA loans are reviewed every two weeks. The general sense is that if the ECB were to refuse access to ELA funds, this would be a casus belli and force Greece to take measures that would push it outside of the EMU. It is also understood that the ECB would not make that eminently political decision itself. European finance ministers, who meet on February 11, are giving no quarter to Greece. Eurogroup head Dijsselbloem indicated before the weekend that Greece does not have until the end of the month, when its current aid extension is set to end. Dijsselbloem said that because some governments will need to seek parliamentary authority, the Greek government has until February 16 to seek an extension of the current program. Dijesselbloem said a simple extension is possible, but to keep it simple requires an all or nothing approach.

4. Since the European debt crisis first erupted we have highlighted the potential security issues at stake. A strong NATO requires that its members are broadly economically stable (given the business and credit cycles). Greece is an important NATO member. If it is turned out from the EMU, over what appears to be something on the magnitude of 5-10 bln euros, and rather arbitrarily derived rules that do not have a strong track record of success, it risks injecting a new element into geo-strategic considerations, especially vis-à-vis Russia in Ukraine. There can be little doubt, for example, that Russia and/or China would like to have a port/naval base in Greece if it were to be made available. Those who accept the creditors' narrative may call this blackmail, yet it is simply the logical extension of the pursuit of national self-interest in a post-EMU situation. Greece is not saying forgive our debt or else. We are saying this is a possibility that should be taken into account when assessing the cost/benefit of Greece's EMU membership, which few, including Alan Greenspan, are acknowledging. We are identifying other costs, or externalities if you prefer. We are saying that there will be unintended consequences of a Greek exit, and they are not all unforeseeable. This kind of risk cannot be reduced to a value-at-risk model. Instead, it needs to be understood as credibility times capability. Even if one says credibility is low, the capability is great, suggesting the "cheaper option" for the rational actor.

5. Italian politics is in transition. The election of a new President and the end of the Nazarene Pact between Renzi and Berlusconi has begun what appears to be a realignment of political forces. Securing his left flank, Renzi's PD is gaining support from the center as well. The risk is that Berlusconi shifts to the right with the Northern League the likely ally. The key is whether Renzi has enough support to push through his economic and political reform agenda. At the same time, there are some signs that the economy may be improving, though Q4 GDP (due out February 13) may have still contracted. The EC recognizes the economy likely contracted by 0.5% in 2014, but its news forecasts have the Italian economy expanding by 0.6% this year. The Bank of Italy now says growth may exceed 0.5% this year and reach 1.5% next year. In mid-January, prior to the ECB's new bond buying program, it estimated growth at 0.4% and 1.2% in 2015 and 2016 respectively, The January composite PMI bounced to 51.2 from 49.4. Auto registrations, a proxy for sales, jumped 10.9% year-over-year in January from sub-3% rate in December. Investors have recognized the Spanish recovery for some time, but what is new is the better data from Italy. At the same time, Podemos is challenging the elites the way Syriza did. These considerations suggest Italian assets (stocks and bonds) may outperform Spanish assets.

6. In this crisis, the shape and size of a central bank's balance sheet have been understood as tools to implement monetary policy. Is there a limit to the size of a central bank's balance sheet? After the SNB's balance sheet swelled to 80% of GDP, some observers argued that the ownership structure (public via the canton governments and private via the listing on the stock exchange) imposed a defacto cap. This forced it—they say—to abandon the franc cap. Yet the latest reserve data shows the balance sheet continued to grow. It appears the SNB spent CHF50-CHF60 bln in intervention last month. The appreciation of the franc conceals the quantity of euros (and other foreign currencies) that it bought. There was a suggestion last weekend in a Swiss paper that the SNB had adopted an informal CHF1.05-CHF1.10 range for the euro. It is thought to have bought euros last week, but the euro still closed the week below CHF1.04. The point is that the SNB's balance sheet has not peaked, and the end of the franc cap was a tactical rather than a strategic decision. Although BOJ officials have indicated they will not respond if a decline in inflation can be traced to the decline in oil prices, it is continuing to expand its balance sheet at a 1.4% (of GDP) a month pace. The new appointment to the BOJ is seen as a dove, thus keep open the possibility (many think probability) that the BOJ does take more measures.

7. The size of the SNB's balance sheet has not been a good predictor of the Swiss franc's exchange value. The SNB has also adopted negative interest rates. Its 3-month LIBOR target range is -0.25% to -1.25%, and it aims at the midpoint (-0.75%). As SNB President Jordan confirmed over the weekend, there is room to take them more negative. The SNB appears comfortable relying on intervention and interest rates. Bloomberg reports that when specifically asked about capital controls, he indicated that it was not on the forefront of considerations. The challenge that is facing Switzerland (and Denmark) is not typical of countries imposing capital controls. Traditionally, capital control are meant to prevent capital leaving one's country. For both countries, their problem is funds entering the countries. Sufficiently negative interest rates are thought to discourage capital inflows. Denmark matched the -75 bp of the SNB, but this too does not appear to be the bottom.

8. Oil prices are correcting higher. While we are not convinced a significant low is in place, technical considerations suggest the correction is not over either. We envision another 10% rally that would lift the March crude oil futures contract to around $60. Output has not been cut. Nor has demand meaningfully increased and inventories are still rising. Baker-Hughes (NYSE:BHI) reports another 83 oil rigs were shut down, leaving 1140. The rig count peaked in October at 1609. Last week was the ninth consecutive week that rigs have been shuttered over the course of 14 of the past 17 weeks. While there are 30% fewer rigs, output remains near its peak at 9.2 mln barrels a day. Rigs are used to drill the well and are only tangentially related to output. However, shale wells have a shorter life span, and the rig count speaks to exploration and future production. The decline in rigs appears to be concentrated among the less productive fields and vertical rigs. That said, through last week, horizontal rig counts have fallen for eleven consecutive weeks. Last week's loss of 80 horizontal rigs is the largest drop since 1991. It leaves 1088 still operating. Seasonal forces peak soon. Meanwhile, the US refinery strike is expanding. This may boost oil inventories if the refinery shutdowns prevent the production of gasoline and distillates, like heating oil.

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Orang Terkaya di Dunia Awal Tahun 2015

Daftar orang terkaya versi majalah Forbes dikuasai oleh Amerika Serikat. Di posisi 10 besar, AS diwakili oleh delapan orang. Berikut lima orang terkaya dunia menurut daftar yang diperbarui pada 22 Desember 2014.

1. Bill Gates

Salah seorang pendiri perusahaan raksasa software komputer, Microsoft, bernama lengkap William Henry Gates II ini dilahirkan pada tahun 1955. Ia merupakan langganan tetap dalam daftar orang terkaya dunia versi Forbes. Dengan jumlah kekayaan sebesar $US 81,2 milyar, ia menduduki posisi pertama sebagai orang terkaya di dunia.

2. Warren Buffett

Pria yang dijuluki Oracle of Omaha atau Wizard of Omaha ini dianggap sebagai investor tersukses pada abad 20 lalu. CEO perusahaan konglomerasi Berkshire Hathaway ini dikenal sebagai dermawan setelah ia menyatakakan akan menyumbangkan 99 persen kekayaannya untuk amal, terutama disalurkan lewat Gates Fondation. Kekayaannya saat ini ditaksir sebesar $US 74.4 milyar.

3. Carlos Slim

Darah bisnis pengusaha asal Meksiko ini didapatkan dari orangtuanya yang imigran asal Lebanon. Sejak usia muda ia sudah bekerja pada perusahaan real estate milik ayahnya. Saham pertamanya ia beli saat berusia 12 tahun. Pria dengan kekayaan sebesar $US 71,1 milyar ini memiliki berbagai proyek amal, diantaranya penyusunan kerangka hukum untuk donor organ.

4. Amancio Ortega Gaona

Kekayaan pendiri grup mode Inditex, yang terkenal dengan label Zara ini ditaksir sebesar $US 61,5 milyar, menempatkan dirinya sebagai orang terkaya ke-4 di dunia. Dilahirkan tahun 1936 di León, Spanyol, pengusaha ini terkenal karena kesederhanaannya. Setiap hari ia minum kopi dan makan siang bersama karyawannya di kantin perusahaan.

5. Larry Ellison

Sampai tahun 2014 ia menjabat sebagai CEO di perusahaan perangkat lunak Oracle Corporation. Pada usia sembilan bulan, ibunya menyerahkan Larry kepada keluarga pamannya untuk diadopsi. Ia baru kembali bertemu ibu kandungnya, saat ia berusia 48 tahun. Pengusaha Amerika Serikat ini terkenal dengan hobinya mengoleksi mobil-mobil eksotis. Kekayaannya ditaksir sebesar $US 56,9 milyar.

1% Orang Kaya akan Kuasai 50% Kekayaan Dunia

Laporan Oxfam menyebutkan bahwa pada tahun 2016 setengah kekayaan dunia akan dimiliki oleh 1 persen dari orang-orang terkaya dunia. Tahun 2014 lalu, jumlah kekayaan kelompok ini sebesar 48 persen dari kekayaan dunia.

Organisasi nirlaba yang berfokus pada pembangunan, penanggulangan bencana dan advokasi, Oxfam yang bermarkas di Inggris,  laporan yang menyebutkan bahwa 1 persen warga terkaya dunia akan menguasai setengah dari kekayaan dunia pada tahun 2016. Perhitungan ini dibuat berdasarkan data yang diambil dari Credit Suisse dan daftar orang kaya yang dirilis majalah Forbes.

Menurut Oxfam, 80 orang terkaya dunia menguasai aset sebesar $ 1,9 triliun. Angka ini setara dengan jumlah harta yang dimiliki bersama oleh sekitar 3,5 milyar orang atau separuh populasi dunia yang tergolong masyarakat berpendapatan paling rendah.

Lebih jauh Oxfam memperingatkan bahwa ketimpangan ini akan menjadi penghambat upaya penghapusan kemiskinan global. Pekan ini, sekitar 2.5000 orang kaya dan berkuasa di dunia akan berkumpul di Davos, Swiss, menghadiri pertemuan Forum Ekonomi Dunia. Pertemuan ini juga akan dihadiri oleh Oxfam, yang akan berupaya untuk mendesak diambilnya tindakan konkrit untuk mengatasi jurang yang memisahkan warga kaya dan miskin.

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