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Stocks and Economy: Holiday Season Concerns and Deals

Strategic Insights

— 2 min read

In a tumultuous holiday season, financial markets were rocked as Amazon.com shares fell 13 percent due to concerns that Internet retailers' sales may be lower than forecast. Meanwhile, Diageo PLC and Pernod Ricard SA edged closer to acquiring Vivendi Universal SA's Seagram unit for approximately $8.2 billion, outbidding rival Bacardi Ltd. and Brown-Forman Corp. The news followed concerns expressed by the Original Equipment Suppliers Association about DaimlerChrysler AG's demand for a 5 percent price cut from Chrysler's suppliers.

Key Takeaways:

  • Amazon.com shares plummeted 13 percent due to concerns about holiday season sales, falling to $19.88, the lowest price since October 1998.
  • The stock has lost 74 percent of its value this year, despite the rise in Internet shopping.
  • Visits to Web stores rose 28 percent in the week ended Dec. 10, but slowed down from 31 percent and 40 percent in the previous two weeks, as per research firm Media Metrix.
  • DaimlerChrysler AG demanded a 15 percent price cut from Chrysler's suppliers over the next two years, sparking concerns from the Original Equipment Suppliers Association.
  • Bank of America Corp. plans to fire around 100 people in its corporate and investment-banking unit due to up to $1.2 billion in fourth-quarter losses from bad loans.
  • The bank is aiming to continue hiring executives from other firms and keep compensation costs little changed next year.
  • Laclede Steel Co. has received court approval for its bankruptcy reorganization plan, which includes canceling existing stock and issuing new common stock to creditors and employees.
  • Pyramid Technology Group has acquired the assets of Business Computing Technology Solutions Inc. for undisclosed terms, both companies providing computer services to companies throughout the Midwest.

Statistics:

  • Approximate $8.2 billion cash value of Diageo PLC and Pernod Ricard SA's bid for Vivendi Universal SA's Seagram unit.
  • 13 percent decline in Amazon.com shares, with a price drop of $3 to $19.88.
  • 74 percent loss in Amazon.com shares' value this year.
  • 28 percent increase in Web store visits in the week ended Dec. 10, as per Media Metrix.
  • 15 percent price cut demanded by DaimlerChrysler AG from Chrysler's suppliers.
  • Up to $1.2 billion in fourth-quarter losses from bad loans at Bank of America Corp.
  • 44 percent ownership stake of Pension Benefit Guaranty Corp. in new Laclede Steel Co. common stock.
  • 20 percent ownership stake of Laclede Steel Co. employees in new common stock.

Sources:

  • "Amazon.com shares fall over holiday concerns" by Reuters, dated December 1998 (no exact date provided).
  • "Diageo, Pernod near deal to buy Seagram unit" by people familiar with the matter, as reported by Reuters.
  • "Auto parts makers bemoan cuts sought by DaimlerChrysler" by Reuters, dated December 1998 (no exact date provided).
  • "Bank of America losses lead to selective layoffs" by people familiar with the matter, as reported by Reuters.
  • "Laclede Steel receives OK for bankruptcy plan" by Laclede Steel Co. press release.
  • "Pyramid Technology buys Business Computing firm" by Pyramid Technology Group press release.

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