brought to you live from london, singapore, and around the world, this is "worldwide exchange." welcome to the program. the headlines today from around the globe, confirms an approach from commodities trading house. shares are huge moves as a result. incoming new ceo promises a big turnaround for sony. shell, unilever seeing shares slip on earnings

disappointments. facebook sets the wheels in motion filing for a $5 billion ipo and giving the public a first glance at how it makes money from friend requests and the like button. okay. so welcome to the program. today we're going to focus right off the top on earnings and m&a activity. europe is one hour into the trading day. advances equaling decliners on the dow jones stoxx 600. it's about the detail of the earnings and the m&a news. we'll be digging into deutsche bank. cac is down. bond auction out of france today. ftse mib down 58 points as well. in terms of sector performance

right now that xstrata/glencore boosting their stock. chemicals, financial services are firm here. we have seen disappointment from the licks of unilever, the trend seems to be weakening. we'll hear from paulman as well l. shell is weaker. that's dragging oil and gas down. here is the key thing as well. auctions not only from france but spain today so we'll keep our eyes on ten-year government bond auctions. they have three, four, and five year maturities they're selling. we saw another tick-up in spanish unemployment, the economy looking very, very weak. the good thing here, christine, is we're not going to talk about eurozone debt crisis until 20 minutes into the show. wow. yeah, well, i don't know whether we can promise the same thing tomorrow, though. we'll have to see. today here in asia it's a good

picture. take a look at the bourses. all green. optimism about the global economy. a couple of things, we had strong erdos pmi coming out of the eurozone as well as from asia so that seems to be fueling markets here. also a better economic across the region. the shanghai composite late surge up 2%. we had the financials leading the rally because of a report that a dividend payout will be cut easing the capital constraints. that pushed shares of chinese financials listed in hong kong up 2%. bear in mind most of the earnings have largely missed expectations but a lot of people are saying that has been factored into the market. 0.8%. we are focusing on sony. troubling numbers from the consumer electronics maker. we have a new ceo as a result. the kospi up 1.3% higher. a lot of buying into this

particular market. taiwan weighted index extending gains 1.4%. the australian market up. marginal gains. overall a pretty decent session, ross. and boosting us is the news around miners. xstrata is in talks with glencore, a deal which combines the biggest trading commodities house with the biggest coal and copper miner could combine at $52 billion pounds. xstrata said it may or may not lead to an offer by glencore. the deal could happen as early as next tuesday. xstrata shares up on the news strongly 10% higher. glencore stock as well was firmer, too. joining us for the next 40 minutes sore so, the head of socgen. a good man to have on a heavy

earnings day. we'll get to the earnings. your thoughts on whether this deal will go ahead. people have been looking at this. they earned a chunk. >> glencore owns 34% of xstrata. you want to realize the maximum amount of money for it. the institution shareholders that hold the shares. i think a lot of talking. more interestingly what it does with the rest of the sector is what we see when two big players get together, everyone looks around and thinks, my god, i don't have a date for the party and they start running around. this could lead to another outbreak of m&a activity. >> are you happy with your holdings? >> there are a lot of money shares. it could look interesting because xstrata has a stake.

people are going to look around and think actually mining shares have lagged massively. it will fall dramatically. this could be a precursor to more activity in the sector which is good news for the market. >> let's move on to commodity prices. people have looked to this freight index, 25-year low. is that a precursor of falling demand out of china? i know we've come out of the lunar new year. is it indicative there will be weakness in commodity prices? a lot of ships around. >> i think we have to be a bit careful with these sort of one indicator shows all analysis, but what i would say and what's going on more deeply in china we are seeing a substantial slowdown in the property sector and that, of course, does feed right through to commodity demand so it does make sense that some of the leading

indicators would be pointing to demand out there and i do think that we are in a less favorable commodity environment. >> the two or three key things you look at to decide that, you have one off index, freights, what are the key bonds you look at? >> that's where i think, indeed, we have to be careful with the one index. i try to look at the macroeconomic numbers, and one of my big numbers is, of course, just looking at the global gdp growth. that's an important number for modtist. and then i look at what's growing in different sectors of different economies. and in china i think the property sector, the infrastructure investments are really the key elements. now that doesn't mean that commodity demand falls through because there is some infrastructure spending going on but that boom in spending, if we look in nominal terms we've been running at close to 30%. we actually see a very substantial slowdown closer to

the 15% mark this year and that's really the point we're looking at. >> christine? >> i want to follow up on that. when you talk about a slowdown in china, people are fearful we could see a sharp property correction. do you see that happening? do you see the property bubble bursting in china? >> i think there are two different stories we are discussing here. i think the first one is what kind of demand are we seeing for commodities, and we have to keep in mind that though infrastructure investment is slowing in china, the governments do still have quite a large social housing project going on which is why i don't see demand completely falling off a cliff. now the second element with the chinese property sector, of course, links into financial and the shadow banking sector and i think that's more of a concern, but what we see is when we look at china we see the government does control about 70% of all financial assets in the economy. to our mind the government cannot avoid the pain of a

slowdown but can spread that pain out and avoid that crash landing that would otherwise follow if they weren't able to ease the policy control there. >> okay. stick around. plenty more to come from you both. deutsche bank a posted fourth quarter loss today. investor banks wilted. joseph ackerman, the ceo, is speaking at the moment in frankfurt. we'll monitor that. patricia will join us to give us her thoughts from frankfurt. before that, plenty of earnings out in the uk. shell has posted an 18% jump in fourth quarter profit which missed analyst expectations. it said the results were a downturn in refining margins. shell kept its dividends steady at 42 cents a share but expects to grow it this year. this is what the ceo peter voss had to say early. >> top refining. i think marketing will recover, will see some growth. not as much as we would hope for. i think a tougher quarter on the downstream side but positive.

>> shell, bp, any of them, some of them? >> we're very long because as the oil price goes up and oil is harder to find then oil services, you've seen a boom not just in what you'd expect the rigs but the whole shell gas situation in the u.s. and has spread out and companies exposed to that seems very strong. >> but not the majors. >> half of the majors. the oil price goes up. i know you have problems in refinir refini refining. bp is a better bet. >> uniis lever will be difficult because of a tough economic environment reporting a small rise in underlying sales last year. they hiked prices so increasing demand from emerging economies. uniis lever had a good run. it has this exposure. is that run coming to an end or not? >> unilever loved it around 20

pounds. no one loved it when it was 13 or 14. the management job has done a good job getting the margins up. they've been looked upon as a poor relation to some of the other stocks. you've seen an improvement. now you're paying 15 times for 5% gross and uni lever was a great place to hide. is it really going to be as people become more can -- as their appetite increases unilever will lag? >> i'd like to jump in. you talked about unilever and we know it makes a lot of its growth, betting a lot of its growth on emerging markets, consumer demand. michala, are you seeing anything that could suggest that growth in these emerging markets will continue to grow despite what's going on in the rest of the world? >> with well, unfortunately, i

think we're really in this scenario where growth in the emerging markets will be much, much softer. so we're looking for chinese growth of 8.1%. it's not a hard landing but it is much more of a softer outlook which ties in with our global outlook as well. >> but when you have a growing middle class, that seems to be growing. the wealth factor seems to be growing. surely that must be supportive of companies like unilever. >> well, i think there are two different stories going on. there is structural development which is a growing middle class and a cyclical overlay of what's happening on the global cycle. maybe i should turn back to andy here for what he sees from this at the micro level. >> these companies have had a fantastic boost. you could be luxury goods companies, uniis lever, et cetera, et cetera, instead of emerging markets. but one of the concerns i have

is raw material prices and i think these companies have a boost to their margins because i've seen that ramp up in demand and the raw material prices creep up. can you pass that on to an affluent middle class in all these countries? okay, great, the middle class are going to keep spending but their incomes will be under pressure as well. and a lot of these countries, fuel subsidies, if they start coming off, a lot of pressure on consumers and i think you're probably better off out of these shares for the time being because i feel that if we are going to be moving up the risk curve then actually the shares with the return. >> julia has been out talking to unilever paul portman. we'll bring you that interview. we heard from astrazeneca. the stock up about a percent.

losing exclusivity of many top drugs and is shrinking its business. fourth quarter earnings rose 16% in line with expectations. glaxo was the third best performer last year. finally farmers had an o outperformance. was that a one off or do you still want to own astra and glaxo? >> people in equity markets have been obsessed with growth. companies ceos, how can i grow the business, and shrinking is the new growth. so both have sort of been shrinking their share capital. astra in particular saying, actually, we can't really go and buy things or invest huge amounts of money so we're going to get right sized and generate the returns to shareholders. and actually shrinking companies can provide a lot of value. now that can last for one, two, three, four years but at some

point both companies are going to have to go and find some new products because the patent is there. as you go over it you do decline rapidly. meantime, by right sizing your business you can generate with those margins attractive returns for shareholders. >> it wasn't just earnings in europe. we had some out in asia as well, christine. >> that's right. sony -- now we all know this company very well -- reporting a massive third quarter earnings hit after the bell today. the company, once the darling of the consumer electronics world, posting $2 billion operating loss compared to the near $1 billion net profit recorded last year. sony, of course, blaming the yong yen, chronic losses and tough competition from samsung electronics. the japanese firm is hoping to turn things around with the appointment of its incoming chief. >> regardless of what my position is, the first order of business for me that i am

particularly focused on is making sure that we turn the profitability scale for the television business number one. make sure we bring home connectivity. >> hirai will fill the current ceo's shoes coming this april. ross? >> we'll get more into sony later. still to come on the program, we'll talk about deutsche bank. plus, what about the realities of facebook? we're going to get busy poking and liking as we talk about the cold, hard realities of the ipo. we'll tell you why it really is really, really good to be mark zuckerberg right now.

joseph ackerman is talking about deutsche bank, the ceo, after they posted a fourth quarter pretax loss. the investment bank and patricia has more details. >> reporter: hi there, ross. the investment banking business is not going to peak anytime soon. this part of their business, at the same time ackerman says they are trying to gain market share. as far as his comments are concerned, he actually thinks that the reduction in the

complexity program is going to continue. they are trying to look at further savings. these further savings are going to be brought forward, of course, and they actually see themselves well on track to increase efficiencies in 2012. interesting, also, the comments he's making about the eurozone. he actually says that the eurozone economy would stagnate at best but quite a few countries are actually at the brink of a recession. deep recession. nothing new there. the market was very much disappointed by the numbers, a loss of 351 million euros because we already had a lowering of guidance only a few months ago which shocked the market back at that time but the numbers themselves would come in the way they did today did surprise the market nevertheless. at the moment that stock is trading down about 2.5%. on the other hand we have to be balanced here because we had very good numbers coming through today. definitely better than expected.

710 million euros. the dividend is something people did like as well, plus the outlook for 2012 being definitely above the 2011 level is something that gave the market a little bit of confidence at the moment. the stock slightly down. had a fair share as well but all in all really is that the earnings momentum is still quite okay. deutsche bank disappointing, a mini greek definitely beating and sky dodge had a small stock but big movements. i pulled that out for you, up by 8% right now. they came through with very good numbers today. >> thanks for that, patricia. the cfo of munich, greece, saying there's no reason to write down italian debt. we'll be speaking to him in half an hour and get more of his views on that. michala, since we had the ltro back in december things have -- confidence has slightly returned. we've seen this return in bond yields to below 6% at the

moment. what's your expectations for this month's ltro and how it might feed back in terms of sort of confidence in the system. >> well, my hope is actually that the number is not too high -- >> people talk about a trillion, right? >> i would be worried about that because if we think about what happens on a bank balance sheet when you take out the ltro, you are taking out collateral from that bank balance sheet and placing it against it so you are actually reducing the quality of the unsecured lending to the bank through the collateral mechanism. so i would actually prefer to see a slightly lower number. i would feel more comfortable with something around the $200 billion, $300 billion mark. >> is it working as a secondary quantitative easing? shorter data maturities, is any of that money going to majorly make its way into government debt markets? >> i think there are a couple of things going on with the ltro. now the evidence we have and

what the ecb suggested from its most recent monthly report is that the ltro is doing exactly what it was meant to and that is helping the bank funding question. in that case what's probably going on is the banks are taking out the ltro and parking some of that money in the government bond market and that seemed sensible as well because we can see it's the short end of the curve that's shown the most significant reaction to the ltro. some of it is confidence coming back. so the part of it that's related to confidence, i.e., we're not going to have an immediate major funding crisis in europe which some people were very nervous about, that part is a permanent feature of the ltro. however, what at some point is will have to take it back, put it in to cover their fund iing needs and then will no longer be holding it in the government bond market. then the question becomes the investors that had the bank bonds, with where will they then part the money?

it's all a little bit circular but i think it is bank funding rather than back door q/e. >> if you're a bank, why wouldn't you swap all your collateral for the ltro funding? >> well, this is where it becomes a concern. if you say that you take everything and you just use everything for ltro funding, then it actually becomes more difficult to fund the banks at the end of the day. so i actually hope that's not going on because i think that would be a bit of a concern. now the other thing is, of course, the ltro funding is not as cheap as you would expect because there are haircuts on these papers and that means that some has to be funded elsewhere. it's not being funded at as low a rate as people expect. >> we saw 2.7%. >> it depends on which asset we're looking at. each has different haircuts applied to it but the numbers do vary depending on the assets. >> there's an ipo coming apparently, christine. you may have heard about it. >> what ipo? is it facebook you're talking about, ross?

the company filing papers for its much anticipated ipo looking to raise $5 billion which would make it the largest internet offering ever. facebook didn't specify how many shares it's selling or a price range. it will be under the symbol fb but didn't say which exchange. the ipo is expected to happen in april or may. facebook earned $1 billion last year on $3.7 billion in revenue up 88% from 2010. about 85% of that came from advertising and zinger accounted for 12% of total revenue. they have 845 million monthly active users. why it's really great to be mark zuckerberg's dad right now, apparently in 2004-2005, zuckerberg's dad provided them with initial working capital so in consideration for his assistance they are now issuing him an option to purchase 2

million shares. not bad, if you ask me. so the story is, if your child wants to ask for money for a startup, don't be too quick to say no. >> yeah. i can't remember how much he offered him. i think that's not a bad return. i have a feeling that's not going to be quite a good return. here is the thing, andy, would you prefer to be the person listing the shares right now than potentially buying them? >> it feels like deja vu to me. i remember sitting in the cnbc when google said you've got to be barking mad to buy $85 a share. there they are at 588. market cap $180 billion. >> so what does that mean? >> i'd rather be in google than facebook actually. maybe i'm too old.

you look at dwoog l search, google is not going to take your search and flip you into their facebook equivalent. google on the multiple is less than facebook. i had it wrong last time. >> that is the problem. we'll take a pause. plenty more to come from michala and andy. still to come, of course, lack ahead to the spanish bond auction that will be another test of the markets, three, four, and five year maturities they'll be auctions. we'll get into that as we get more disappoint iing news on th spanish jobless numbers.

this is "worldwide exchange." the headlines from around the globe, an approach from commodities trading house glencore suggesting a merger of equals. both see huge moves as a result. and sony swings to a $2 billion loss and slashes its four-year forecast. incoming ceo kazuo hirai promiseses a big turnaround. shell, unilever and deutsche bank see shares slip on earnings disappointment. and facebook sets the wheels in motion filing for a $5

billion ipo and giving the public a first glance at how it makes money from friend requests and the like but tton. so we've got focus today on spanish auction, is going to auction up to $4.5 billion. that auction is going under way right now so we should get the results out fairly shortly. let's get a view on this and spain also has an auction, the ten-year, among other things. nicholas, first of all, demand for this should be okay. we've seen very good demand. they keep selling more than they planned to. is that going to continue? >> spain has done well getting ahead on its funding program and i to do think we'll see good

demand today. comes back to the confidence coming from the ltro. overall quite a good day today, yes. >> except jobless today up 4%, 4.59 million. probably still shedding jobs at a record rate. how long can this economy go with no growth before we get a bigger problem? >> well, i think this is where we see the different stories. on the one hand we need to have fiscal austerity the to rebuild the confidence around the public finances but too much fiscal us a territory is also a problem because it weighs too much on growth and you end up missing your fiscal austerity targets at the end of the day. so it is clearly a balancing act between a dose of austerity, a dose of structure reform because at the end of the day too weakened economy could undermine confidence. i am concerned that the big question out there continues to be whether we'll get more of a commitment to public funds to potentially help out portugal,

if necessary, and to potentially help out other peripheries. when we look at the greek psi at the moment, that's really the sticking point. it's been agreed the private investors, at least what we're seeing on the headline reports -- >> are we arguing about whether the ecb decides to take a cut or n not? >> well, what matters is it's not really so much whether it's the ecb or someone else. at the end of the day it's public funds. and that's really where we see the resistance especially within the german political group we see a lot of resistance to that, and if we cannot -- it becomes a self-fulfilling problem because if there's not that confidence the funds will be available, then investors will be concerned that things like psi could happen elsewhere. >> contrasting italy with spain because italy has an unelected sort of prime minister. he said, okay, through december,

no -- everyone moves to defined pension scheme and you can't withdraw more than 1,000 euros without being reported and use it for a transaction. so you get the feeling that actually maybe spain might do with a bit of instant decision. you've seen the uk just drags on forever and by the time he comes to make the decision, haven't really saved any money. by the time he looks after everyone's needs and interests, you're back to are where you started. looking at italy versus spain in that regard. >> i think it's an interesting comparison because there are so many different dimensions between italy and spain. italy has a growth problem. spain has been doing better in that respect. if we think about growth, it's probably between two, two and a half. in italy it's between 0.5% and 1

percent. they need to come in and see the structural reform. what we are seeing at the euro area level is we are seeing that shift from focusing just on the austerity to focusing more on the structural reform and this is very much what came out of monday's eu summit. >> whether they get any growth at all. the point is the budget deficits will get worse rather than better. that's going -- we're going to leave it. nice to see you. good to see you for the first time this year. we're in february but we got you in. thank you. andy joining us from schroeder's. chr christine? thanks, andy. thanks, michala. here we're focusinging on german chancellor angela merkel kicking off her three-day trip to china with a long to-do list. here are the details.

>> reporter: hi there, christine. yes, that's right. merkel l really pushed china on doing more to make iran drop its nuclear ambitions and the chancellor says she had, quote, long discussions with chinese leaders, president jintao and wen jiabao on the issue. merkel caught on broader cooperation between germany and china. she said beijing must have protection of its interlek turl property rights to ensure feign access to the mainland's markets. merkel also spoke about the debt crisis in a speech made earlier today she stressed that excessive debt was not only a europe problem but a global issue. >> translator: it is a problem of competitiveness. the currency union is not enough to have a political union. in the future more actions need to be taken. we should be united to help each other because currency needs are a joint protection. we need to have economic harmonization so as to create an advanced economy.

>> reporter: merkel will reportedly meet with wen. >> let's analyze more of this visit. we have, of course, joining us brian jackson, senior emerging market strategist at the royal bank of canada joining us live from hong kong. brian, good to have you with us. what can we ex inspect from merkel's visit to china? >> i'm not expecting any big surprises. she has visited china quite a few times since she became chancellor. generally sending a consistent message of trying to boost the trade between china and germany and more recently pushing for increased chinese support for resolving the euro area debt crisis so i think that's the main theme of this visit as well. >> china, of course, is growing near 8%. good considering the rest of the world is weak. how much access do you think she

can open up for german companies to tap into the growing consumer market in china? >> well, there's -- i think you have to recognize china is always going to move pretty slowly on opening up its markets for both goods and for investment but the kae point to note, i think, in recent months has been what's going on with the exchange rate. the yuan has been flat but big moves around 10% against the r euro. that's the main factor that is driving some of the recent flows going forward. we've seen german exports to china picking up because they're more competitive but we've seen chinese exports to germany weaken due to these exchange rate moves. >> so you think it's still

intact, then? >> i think we'll see the yuan move more slowly than in 2011 because people are concerned about the near term exports. the long-term case for currency appreciation is still intact. but the focus, of course, is generally on the moves against the dollar. but we are seeing bigger moves against the euro in the last six months. >> the other issue, of course, at a time the eurozone is languishing, a lot of people are looking to china to fund the eurozone crisis. do you think merkel is going to make any headway on that front? >> i expect some qualified statements of support from premier wen if they have a joint conference some time soon. i think they are looking to get their house in order before a stronger level of support. they have come out on several

times and said that they want to provide what assistance they can and they have been reportedly vying some of the debt from the european countries but it's still very much a european issue that has to be resolved before beijing can step in and provide assistance. >> what about with german firms? do you see any case where china is willing to plow more money into germany or willing to work more with chinese firms? >> there are synergies. you see a lot of german cars around. so i think there is demand for those high-level products and high-tech engineering capability that they bring to bear. and, of course, there's benefits on the other side, too, from chinese consumers if we see a

greater openness to german trade. >> brian, thank you for your views today. brian jackson, senior emerging markets. he's talking to us -- he's a strategist and michala -- they're gone. i don't know why it's on the prompt, ross. >> they like to leave little things lying around to help you along. still to come, 2012 set to be a tough queer for consumer goods demand according to the unilever ceo. there's nothing worse than going to the post office and waiting in line. i don't have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps.com, you can print real u.s. postage for all your letters and packages. it gives you the exact amount of postage you need the instant you need it. can you print only stamps? no. first class. priority mail. certified. international. and the mailman picks it up.

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the spanish bond auction results just hit. spain has sold 2.5 billion. the yield set at 2.898% lower than october's 3.38%. they've sold 9.48 million. the yield 3.55. in january that was 4%. the yield is lower there. just over 1 billion in 2017 bond. the yield set at 3.7. yields are lower across the board. this is my mental math.

excuse me. 3.5 billion plus -- they have to weigh the maximum amount they wanted, just over 4.5 billion. that's what they were looking for. yields lower across the board. we're waiting now for the bid to cover on the 2017 was 2.7. 3.6 in 2016. and 1.6 on the 2015. bid to cover healthy yields lower and they've solved the amount that they wanted across the board. stocks, of course, have been pretty flat going into this. there's not quite the concern, of course, that we've had over these auctions. bear in mind at the beginning of the year spain had already sold 19% of their scheduled gross issuance for the year so they haven't oversold today as they have in the early auctions. they haven't oversold. they got away with what they wanted at lower yields with pretty decent bid to cover.

they didn't take a lot more necessarily than they were planning to do. so i'd say it was another pretty good result. since we had that ltro things have gone smoothly. not a bad result for the spanish auction. 4.56 billion is the total. that's what they're looking at. the yield and bid to cover healthy. >> i was impressed with the way you did your calculations. you passed your math, i can tell that, ross. good job. here in asia green across the screen as you can tell. lots of people are more optimistic about the global economy. we had better economic data from the u.s. and a batch of stronger pmi. so that spurred some risk taking across the region today. the shanghai market of financials were clearly in play. we had a report that said that the dividend payout will be cut easing some of the capital constraints over in china and that pushed the shanghai composite up almost 2%. chinese financials listed in hong kong also saw a rally and that pushed the hang seng up 2%

as well, moving above the 200 day moving average, 20,739. yesterday we were talking about the key 20,000 level. now clearly above that. the nikkei 225 earnings continue to be in focus. we had sharp and sony announcing losses, the new ceo for the company, we'll be talking about that as well. the kospi up. people are buying into the south korean market. extending gains as well. new zealand up 0.54. india 0.7% so overall a pretty decent session here in asia. a lot of risk appetite is picking up. apparently over in japan technical glitches over in tokyo today but things got back to normal with trading volume at its highest since january 20th. equities managed to end in the green for the third straight day despite earnings results. >> reporter: hi, christine. sony said today that it expects to post a net loss of nearly $2.9 billion for the year ending

march more than double the loss of its initial forecast and its fourth straight year in the red. tv sales plunged while its digital camera business took a hit in thailand. it also expects to mark an operating loss of about $1.2 billion, the first in three years. sony announced yesterday that it plans to replace the howard howard stringer and an executive in charge of the gaming business. he expressed determination in recapturing the top position in the global market. >> regardless of what my position is, i think the first order of business for me that i am particularly focused on is making sure that we turn the profitability scale for the television business number one and number two make sure that we really bring home the messaging in terms of our connectivity. >> reporter: investors welcomed the management shift but many were shocked by the poor earnings report and stocks finish

finished 2.6% lower on heavy volume. gentlem japan's fifth largest automaker also downgraded its forecast for the year ending march to a net loss of $1.3 billion. sales have suffered from the march 11th quake and the strong yen. the japanese prime minister said the bank of japan governor also voiced concerns saying the central bank was watching the yen's impact on the nation's economy. he also warned that the biggest risk for 0 the global economy continues to be europe's debt problem and the possibility of it spreading to the rest of the world. and that's all from the nikkei business report. back to you, christine. >> thank you very much from the nikkei. let's talk more about this now with our next guest, the director. good to see you. >> thanks. >> how much of sony's problems can be blamed on the sluggish ex terrible environment and how much can be blamed internally within the company? >> well, christine, i think we've been talking about this

many, many times but there is a structural problem in sony of a managerial feature and no doubt about that. no one can blame everything on mr. stringer but the company is very rigid in their structure. they are not talking with each department meaning they can't create sinner jichl like they used to. they are always falling behind the curve. they used to be ahead of the curve. now they are always falling behind it. in addition we had japanese exporters slowing down the worldwide economy, the strong yen, after the tsunami and then you have the thailand flood iin which basically had been as well but i think behind it all there definitely is a structural problem that sony is facing and has not sold yet. >> now we have a new ceo for sony, howard stringer tried to fix its rigid structure, the structural problem this new ceo, what do we know about him?

does he have what it takes to really turn the company around and return it again? >> well, i think at least he's trying to make a scrap and build process, he's made it very clear he wants to utilize the strength into areas like medical which depicts a direction that's different from the past in the sense that we all know they can't be apple. at the same time they have to find a place in the market, and they did not do that well in creating synergism and they are trying to define the problem rather than hiding it. >> does it still make sense for sony to stay in the tv business? >> that's a very good question, i think. i do think they're not the first runner anymore and you can see the business structure as a whole is changing. other companies including sharp posted a very big loss and very big reduction. so you can see the structure of the tv business itself is making

that -- is at a transitional state at the moment and you can see that you don't need that many japanese players. in saying that sony does have an edge as far as brand name is concerned. but i think that would be the most focal point that sony has to tackle as far as their future direction is concerned. >> now how big a drag will the strong yen be for this particular company in a time it's trying to change its fortunes around? what bad timing. >> that's very, very true. it's also the time when they are facing competition and, as we said earlier, it's also the time when they were hit with various truncation of network. of course the strong yen is hindering them significantly. unfortunately, what sony used to do was ahead of the curve. they used to be the beneficiary in the new era but they are not doing that. that's why they're being riddled with all this problem that is staying and basically giving them nightmares year after year.

>> and you mentioned the brand and that's what that sony brabd stood for. it's not just sony. it's other i.t. companies. can you see them getting back to re-establishing what japanese tech brands meant which was innovation, market leading ideas. >> well, there still is a strong edge, ross, amongst the japanese players in this field except is that sony? if you are asking that, unfortunately, i don't think so. and that's probably one of the reasons why they are thinking of diversifying or basically skewing their target to a different area. that is utilizing the conventional strength in electronics and getting to the medical side which is not being eroded by other players that are competing. so i really think they have to find a new spot of target rather than the conventional sony image. >> blockbuster they say, right? they need to come up with something like that.

thank you very much for your time today. good talking to you, as always. the director. earnings topping the agenda. we have the breakdown for us live from seoul. rhie. a net loss of $213 million, that's the second consecutive quarter for the chip giant. but for the fiscal 2011 they did manage to stay in the black for three years in a row. they have been under immense pressure and shrinking demand for pcs and has suffered supply disruption from the flooding in thailand. the company expects demand to remain in q1. a rebound in q2. hynix hopes to spend more than half of its budget on the developing chip to feed the insatiable demand for smart phones. sk telecom, the largest mobile carrier by subscribers, released its numbers today. fourth quarter net profit fell more than 60% on the year to

$175 million mainly on high investment spending costs. the cut late last year was brought on by the government to fight inflation also heard numbers. the company expects a turnaround this year and will continue to grab nearly half of the market share. back to you, christine. >> rhie, thank you very much for that live from seoul. ross? vladimir putin is currently speaking in russia pour up. we're keeping our eyes on that, what he has to say out of that. and as far as stocks are concerned, that's a big focus for investors. unilever one of the biggest losers this morning, is warning of challenging times ahead. you can see the stock down 3%. only beaten at the moment on that downward slide by as tra zen ka. julie has been out speaking to the ceo. what does he have to say for himself? >> he was quick to point out the slight drop that we saw in operating margins is

significantly better than we've seen from a number of their competitors. he reiterated the growth just under 55% of the business. of course he did warn on the consumer outlook. and that's where the headlines are focused today. you can see the stock priced down 3% but you should put that in perspective after double digit outperformance versus the ftse over the last 12 months. now i did ask him about the consumer obviously and started by saying just what impact is the debt crisis going to have in europe and will they focus their attention on the emerging markets? >> we have 25% of our business now in europe and 500 million people in europe are going to be 9 billion people in the world so it's not surprising that other parts of the world are going to take more of an importance. we are already deemerging market company with most of our business there. i'm glad, though, despite that we are showing slight growth in europe in a market that is stable or down and so that's a

good performance. but the role of europe increasingly, as you can see here, is to continue to finance the fast expansion in the emerging markets. >> we'll have that interview in full later in the show. now, jackie, what else is coming up? good morning. good morning, ross. a lot coming up on the show. we'll it continue our analysis of the biggest ever internet ipo. one who says facebook is grossly overvalued.

good morning and welcome to the show. the headlines from around the globe this morning, in the united states facebook sets the wheels in motion filing for a $5 brl ipo and giving the public a first glance at how it makes money from friend requests to the like button. glencore has had an approach from trading house glencore suggesting a merge earp of equals. stocks in both have seen big moves as a result. talking about sony, the company is swinging to a $2 billion loss slashing its forecast but incoming new ceo kazuo hirai promises a big turn around.

shell, unilever and deutsche bank seeing earnings slip. good morning and welcome back. you're watching "worldwide exchange" with christine tan, ross westgate, and i'm jackie deangelis. great to have you with us this morning. let's start by taking a look at the u.s. futures and see how we're setting up for trade. it looks like it could be a mixed session with the dow down by 7 1/2 points. the nasdaq up by 2.3 and the s&p with a flat line. we saw an 83-point increase on the dow jones. we were higher on the s&p and nasdaq as well so it's shaping up to be an interesting morning. >> yeah, it is. european stocks are mixed but the focus really is very much on earnings and m&a news. xstrata in a deal that would combine the biggest trading x d

commodities house with the biggest coal and copper miners might combine at 52 billion pounds. xstrata says the deal may or may not lead to an offer being made by glencore. it could happen as early as before xstrata's earnings next tuesday. xstrata stock up heavily this morning, up 9.3%. glencore has been trading a little bit higher. glencore owns around 34.5% of the stake already in xstrata. we've been waiting for this for a while to come out. we'll get more on the sector in just a second. we've seen a successful italian bond auction in the last half hour. they raised the money they wanted. yields lower across the board and debt to cover pretty good. france has sold some of its debt, $1 billion. the yield set at 2.44. 1.25 billion in 2020. unit set at 2.9 the. and then a key ten year. this was the important one.

5 pie.96 billion of the yield on that set at 3.13%. so they've sold effectively five, six, seven, nearly 8 billion is what they've sold. pretty much what they were targeting. so i think that auction looks fairly okay as well. so that auction looks pretty good along with the spanish auction. back to the commodity story. the chief north american economist at paribas. we see auctions here in europe go well. spain again today particularly got the money they needed. yields lower across the board. how much confidence have you taken from this ltro which we're going to see again this month. how much is that feeding through confidence? >> well, i think it's been key to greater confidence. the ltro took some of the tail risks we were worried about off

the table. really that was the chief risk, were these bond auctions failing and the ltros have effectively neutralized that risk so it has brought a lot of confidence. hasn't solved all the structural problems. there's still a lot of remaining questioning for the yeurozone bt has eased worries to start the year. >> and, julia, let's talk about some of the future issues, maybe calmer for now. how does the eurozone continue to grow and push forward and how do you worry this situation and the crisis we are dealing with kind of goes unresolved for the next, what, three months, six months? how long before we know that we have some certainty that we're on the right path? >> well, it could be a while. the l ittros could mean we get fundamental change we're looking for. we see spain and italy implement fiscal tightening, that hurts their economies, and this growing divide between the

periphery and the core countries and that's not a great development. it's going to be a difficult year for the eurozone economies. >> do you worry, for example, that the trouble we're seeing in the eurozone will impact us globally when we talk about commodities and some of the other space not having that demand, not having that strength coming out of the eurozone? how will that play out? >> the eurozone is one of the major economic regions so if it's slipping and/or struggling it will affect the global economy. at the same time it looks like asia may be bottoming. we don't necessarily look for a v-shaped rae covery out of the asia slowdown but it does look like stimulus and china may be forming a bottom here so that would maybe provide some offset from the drag to europe. >> yeah, and julia, we were talking about xstrata and getting together with glencore. they're talking getting together. we've also seen at the same time this baltic index at a 25-year low. what is the outlook for

commodity demand as you see it? we're never quite sure about that dry freight index. it could mean there are a lot more ships into the market. what's your view? >> right. we don't see commodities as setting up for a big correction despite some of the worries and the weak economic performance we're looking for in the eurozone. there's a lot of supply issues t. again. it will be more driven by the dynamics out of asia and if, in fact, we do get a soft landing out of china and that's what we're looking for and, in fact, dat at that has been tracking good for that scenario, commodities should have a down side risk here not that there's a lot of upside potential in a global economy that's struggling to find its footing but i think the down side risks are limited. >> all right. fantastic. l let's move on. of course we'll talk about-face book. a big story this morning. facebook filing papers for its

much anticipated ipo looking to raise $5 billion. facebook didn't specify how many shares of its selling price range but will be trading under fb and it didn't also say on which exchange it would trade. the ipo is expected to happen in april or may so we're going to be watching closely for that. facebook earned $1 billion last year on $3.7 billion in revenue up 88% from 2010 and about 85% of that came from advertising and zynga accounted for 12% of total revenue. facebook has 845 million monthly active users. zuckerberg says facebook will continue to build great services versus making profits. julia, i want to talk to you about-face book. exciting it's coming to the market and hopefully will drive the momentum going forward. some say this is overvalued. when you look at it compared to its peers, compared to a company like google, the valuation is

staggering. what's your take on that? >> it does feel like the late '90s with these tech ipos. there's a lot of enthusiasm and the need to put cash to work so the tech sector looks like it's a reasonably good sector exposed to the global economy and people are snapping these shares up. the valuations look optimistic. >> it's something investors will be thinking about and watching for as we get closer. meantime, ben bernanke is heading up to capitol hill today. the fed chairman testifies before the house budget committee at 10:00 a.m. eastern and will be speaking about the economy. the hearing is expected to last two and a half hours and comes a week after the fed announced it would keep interest rates near record lows until at least 2014. julia, let's talk about the fed. what do you expect to hear from chairman bernanke today? he has left the door open for more qe3. do you think that's something he'll address? >> we will look for more clues. we just heard from him last week, a very extensive press conference. i don't think the tone will be much different. he wasn't shy hinting they

certainly wouldn't hesitate to do qe3 and i think it will be more focused on housing and mortgages. i think he will lay out the case for why the unconventional policies have been a good idea. he will face tough critics in the house but i think he'll lay out the case for why housing needs to be the focus of both fiscal and monetary policy. >> any clues on whether we get more sort of qe or not? they left that fairly open in the last set of minutes. >> yes, the way they've been laying out the logic is the u.s. economy is unlikely to achieve an above trend recovery, a robust recovery, without housing. and so housing naedz to be supported. housing was a zero on growth in 2011. we need some contribution from housing. they've laid out a number of fiscal policies they'd like to see. he should reiterate those. in a presidential election year, the likelihood of getting these fiscal policies is very low so that leaves the fed as the only game in town and they haven't been shy. i mean, two years -- the past

two years we've seen the u.s. economy stumble as the recovery was getting its legs underneath it and i don't think they want to take that chance again. i think they will err on the aggressive side. >> julia, christine here. as to a housing recovery, what time frame are we looking at? >> well, you know, given the wall of supply and every time i look to update these estimates how much supply in terms of the foreclosures, in terms of vacant homes is still left to be absorbed, it's staggering. easily two to five years of excess supply of existing homes, so you'd really need to see quite a rebound in demand to absorb those and lead to new buildings. so i think it's going to be a gradual recovery no matter what, but what we would like to see is more strength in the demand for housing. and that just has -- despite record low mortgage rates, we are still struggling to see demand for housing. >> that's a great point and

something obviously we will have to see a pickup before we can expect anything else before we come together. thank you so much. we'll leave it there for now. julia will stay with us, the chief economist at bnp paribas. >> vladimir putin, the prime minister, is speaking at the moment in russia. the russian forum where we have a crew there. he says russia has completed the post-soviet stage of its development and they're aiming for 4% inflation in the next few years. this is the key phrase. the russian investment climate disgraceful. doesn't he have some responsibility for that? we'll take a pause. more to come from him and us. munich re will be here. aren't you getting a little industrial? okay, there's enough energy right here in america. yeah, over 100 years worth. okay, so you mean you just ignore the environment. actually, it's cleaner. and, it provides jobs. and it helps our economy. okay, i'm listening.

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welcome back to the show. time for your global markets report. let's start with the futures and how we're he setting up trade. it is very early. it looks like a mixed picture with the dow opening down 9 1/2 points. the nasdaq higher by four and the s&p 500 just under the flat line there this after a strong day yesterday, ross. the dow up by 83. we saw all s&p sectors posting gains yesterday. saw some excitement from the facebook ipo. also saw some good earnings after the bell as well but it looks like the picture is changing a little bit this morning. how do things look over in

europe? >> we had strong gains here up 2%. if you take the average, the ftse 100 is just down 2%. really all the information in the detail in terms of stocks. there's a heavy reporting day. xstrata shares are now that they're in talks with glencore. elsewhere, the looks of shell and uni with earnings. those stocks are down. down about 1.68% this morning. refining margins with cuts and that's into the profits against expectations. unilever down 3.5%. the full year is in line but there's concerns the trend may be weakening for the global c consumer products group. deutsche bank had a fourth quarter loss. the investment bank going into a loss. 4.4% but even as tra ztrazeneca out. how have we fared in asia?

>> we're looking pretty good for a thursday. take a look at the gains across the region. there seems to be optimism creeping into the markets about the global economy. a couple of things we had better than expected economic data from the u.s. better pmi from europe and asia. so that's spurring some risk taking here in the region. shanghai, it's all about the financials. we had a report that said a dividend payout will be cut easing the capacity constraints or capital constraints pushing this wall higher 2%. the financial firms also seeing the hang seng lift about 2% holding on to its key level, moving average over in japan earnings continue to be in focus. sonys had a new ceo announcing troubling results. how will the company turn itself around? that's the billion dollar question. the korean market up. the taiwan market extending gains again of 1.4%. australian market up 1%. new zealand marginal gain. in india 0.8%.

it's a pretty good session. that's it for me. i'll be back tomorrow, friday, with the news moving markets here in asia. all right, christine. we're hearing more from angela. the ecb should buy more bonds and contribute to cutting the greek debt stock. that discussion is on going. more earnings as well out of europe. munich re saw a net profit including minorities with 710 million euros compared with 608 million. tax effects from big damage claims. the german insurer plans to keep the 2011 dividend steady at six euros. joining us for more jborg schneider. last year we had a lot of

disasters but what's what happened with rates? what's your forecast for this year? >> good morning from munich. our forecast for the year is very optimistic. this is not only due to the fact that we had extreme losses in 2011 but also we have a lot of supporting secotors and, therefore we look back to renewal for the contract the first of january, 2012, where we are already satisfied and look forward to even better terms for the incoming renewals. >> so current renewal talks, how are they going? >> they are dominated from very technical aspects. that means people are looking at the exposure in the respective areas. we have in some areas of the

world increase coming from concentration of risk along the shoreline. we have new models which have been discussed between the various parties and, overall, it's leading into the right direction that it's establishing and increases which are also, by the i way, necessary to compensate for the lower income in the more low yield environment. >> you've been obviously writing down your greek sovereign debt, the nominal value in the fourth quarter, do you have any thoughts about whether you might have to write down any other debt in the peripheral besides greece, portugal, italy? any thought that may have to be done at some point? >> for the time being no trigger because we do not have any disturbances of the payments of these countries and we are also in general optimistic about the stabilization of the eurozone because on the one hand the

right steps have been taken in their respective countries. that is everything which is necessary not only to stabilize fiscal policy but competitiveness that is key for the future, competitiveness. and so we are optimistic with that regard and, therefore, we expect the situation to slowly and in a volatile way to stabilize over time. >> a slow, volatile stabilization. jorg schneider, we'll take a short break. strong demand for spanish bond auctions has pushed yields lower and good demand as well for french debt. but is spanish debt now looking a bit overcooked?

pretty healthy bond auction today from france and spain. france, first of all, had 8 billion raising 7.6 billion but were offered 19 billion. very good demand for that. that's for france. spain three, four, and five year maturities today. they raised the amount they wanted. they got 4.56. the yield cover okay. bid to cover pretty good. peter is the interest rate strategist with his own reactions.

peter, spain has now raised 25% of its annual target and here we are in february, february the 2nd, and a sharp decline in yields. is this about as good as it gets? >> you can't argue with that, can you? i think there's nothing to say from a macro perspective. this is really good progress and so you can see the effect that the ltro, the improved confidence is having on the debt crisis. >> it has been pointed out, though, the difference between the average price and the lowest price is getting ever larger particular on the three year. does that suggest we're getting to a flaw here for yield? is this as low as we're going to go? >> perhaps this is just a pause in the rally. showing the market is a bit overcooked. the yield curve is still steep. so perhaps it just indicates that the market has done enough now in the three year and the focus can move out to other maturities and perhaps other parts of the peripheral market. >> you are not going to get ltro

money beyond the three year, are you? you're not going to get that carry. >> you still can. it still has an influence there but it's not so explicit. but you can still take the longer dated maturities and hedge it and it still has the same effect. it's just not quite as explicit. >> julia? >> peter, i have a question for you. so the ltro has certainly helped the bond auctions go well and banks more willing to bid in the auctions. what about the traditional bond buyers? what about the insurance companies and the asset managers? are they coming back yet? how are they feeling and are we seeing that structure of the market recover? >> yeah, that part of the market is still reluctant, i would say. there are signs of it returning on really the domestic front but there's still a large majority

of the market which is still unwilling or just not willing to take the risks which they perceive are associated with peripheral debt but i think that will change as time goes on and if the market stays in this reduced volatility state. i think the carry chase part of the market so those who really are looking to measure it against the benchmark, they'll increasingly be force d into these markets but that's the much longer term structural part of the way the market heels. >> the frieench auction has bee downgraded by s&p but 19 billion bid for just under 8 billion. >> it's just back to normal, the ten-year, really, the new ten year has had a really big allocation. very strong bids there. i think it bodes well. so that's a good yield. and i think french debt looks

attractive because it benefits from the market activity but it's also lower volatility. so while bunds are still susceptible to the risk on and off mentality, in french debt you have something of a middle ground so i think you get an increased carry but you suffer lower volatility than you do in bunds so i think it's a nice compromise. >> peter, good to talk to you as always. thanks for that, the snapshot of the latest bond auction. good to chat. jackie? and coming up on the show, ross, there are some pretty rough seas in the shipping market as a key indicator hits a record low. but is this just a reflection of the sluggish economy or a sign of choppier waters ahead? ♪ ♪ you and me and the big old tree ♪

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welcome to the show. facebook setting the wheels in motion filing for a $5 billion ipo and giving the public a first glance at how it will make money. xstrata and glencore suggesting a merger of equals. stock in both have seen big moves to the upside.

and sony slashes its forecast. the incoming ceo promises a big turnaround. plus, more earnings out of europe, shell, unilever, deutsche bank amongst the big names seeing their stocks slip on disappointment. nice to have you here with us on "worldwide exchange." good morning to you. let's take a look at the u.s. futures and see how we're setting up for trade today on wall street. it looks like a mixed picture right now. the dow looks lower by 13.5 points. the nasdaq looks like it's going to be slightly higher by two and the s&p 500 steepening its decline there looking to be down more than one point at this point. of course we did see a strong session yesterday. lots of excitement, ross, around the facebook ipo. all the sectors finishing higher. the dow higher but looking like we're losing some of that momentum. >> we had pretty good pmi. european stocks up 2% on

average. it's a lot harder ahead of the u.s. open. we're platt for european markets and really concentrating for once on the individual stock news stories. we have those major corporates disappointed a little bit from deutsche bank to unilever to shell. so those have had an impact. it is worth pointing out, of course, that xstrata and glencore are now in talks. xstrata up over 10%. so it's in the detail in the individual stocks rather than the general mood, jackie. >> that's how it seems to be shaping up on our end as well. now times have been tough, ross, on the high seas. shipping rates as measured have hit a record low on weak demand for iron ore, poor weather conditions in several mining regions and a glut of capacity as well. the index has fallen for 32 straight sessions to a level not seen since december 2008 during the depths of the financial crisis. joining us now to discuss it

more is hank smith, chief investment officer and with us is julia coronado at bnp paribas. hank, i want to start with you. the baltic dry index is one data point in many that we're looking at now. but if you read a little bit further into those numbers, it's really not a positive picture. do you see this improving anytime soon? >> well, look, in aggregate if you look at all the data it suggests we are in a slow growth economy, and we know that europe has tilted over into a recessionary environment so this shouldn't be too much of a surprise looking at the total picture and i think going forward that's where we're stuck. a below average slow growth environment as julia pointed out earlier in the show and it is unlikely in a political year that we get fiscal policy changes that's going to shift that.

so we are dependant on monetary policy and we know that from ben bernanke who has indicated it will stay that way for at least two or three more years. >> yeah, actually that's a great point. i think it's important to remember that we are in a world of extraordinary monetary policy and that's one of the reasons that markets are performing so well. the baltic dry index is certainly a worrisome indication for the risk they are focused on. the slowdown in europe will take a bite out of shipping activity and asia has been in the midst of a slowdown for some months now. no, not a terrible surprise but, yeah, an indication of the risks that policymakers are focused on. >> when we look at the data we have and the negative interkators, at the same time we've been seeing the markets are doing quite well. in terms of january we saw the

markets hitting a 15-year high. how do you correlate, hank, between the negative data points, the crisis in europe, but yet the positive returns and things that we're seeing out of the he can wet side of the market? >> sure. jackie, the crisis in europe has been with us for 18 to 24 months. so there's no external shock there. there's nothing really new. incrementally it's better. the economy faced three external shocks -- arab spring, the japanese tsunami, adverse weather in the midwest. this year if we don't get those extraordinary external shocks, it is very likely we will not have the threat of a double dip recession as we did in the summer and early fall of last year. and actually the year before as well. and so we might have a less

volatile situation and confidence might be restored and we might see more money to take advantage of these great valuations that we see terrific earnings and awesome balance sheets. >> hank, a comment from you on the news coming out. premier wen said they are considering greater involvement in the efs and the efs, stability funds here in europe. every time we've had a suggestion out of china they may put some money in, of course it's been fairly supportive. i suppose, julia, it's whether we believe that they'll get -- suggesting it is one thing and the euro/dollar spiked on it. following through is something different. >> absolutely. we've seen the chinese hint at greater involvement off and on. they're not going to jump in until they feel it's a good investment, the fundamentals are

lining up in the right way but absolutely china is a force to be reckoned with. we saw that last summer when china steps into the spanish bond auction. for example, that really changes the dynamic and people start to feel a lot more at ease about some of those down side risks. so i think it's significant but, yeah, we'll have to see if they put their money where their mouth is. >> hank, it's added 50 cents on euro/dollar, those comments. >> well, yes. look, i agree rhetoric is one thing. action is obviously much more important but i think it's a sign that china realizes they're a global player and they need to be part of global solutions so i view it as a positive. >> okay. >> thank you so much for that. thanks, hank. hank smith at haverford investments. julia will stay with us and given us more of her insight. still to come, a huge day on the global earnings calendar. after the break we'll run you

through all the surprises including big misseses from sony and deutsche bank.

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plenty of news this side of the pond. if you've just woken up state side. xstrata is in talks for a merger

with glencore, combining the largest trading commodity house with the iron ore. xstrata says the deal may or may not lead to an offer being made by glencore. it could happen before xstrata's earnings. xstrata's stock up sops. 9.5%. other news we're tracking, jackie? yeah, mf global, the former chief risk operator plans to tell congress he soubded the alarm about exposure a year before the company collapsed but was overruled by superiors. michael roseman and several other former and current mf global employees and ratings agency executives will testify before the house oversight committee. former ceo jon corzine will not make an appearance today. amr, the parent of american airlines, is seeking to cut 13,000 jobs or 15% of the workforce as it works through

bankruptcy. the company wants to cut $2 billion in annual costs. measures include terminating its pension plans which would amount to the largest pension default in u.s. history. amr which failed for chapter 11 in november has lost $12.5 billion since 2001. sony has reported a massive third quarter earnings miss today after the bell. the company wants the darling of the consumer electronics world to post more than $2 billion operating loss compared to the near $1 billion net profit recorded last year. sony's blamed the strong yen. chronic losses from its tv unit and tough competition from samsung electronics. howard stringer the ceo is going to be stepping down in april. sony will hope to turn things around with the employment of its incoming chief kazuo hirai. also, deutsche bank today posted a surprise pretax loss,

$351 million euros, had forecast a profit over a billion euros. investment banking was where the problem was hit hard by the you' european debt crisis. net revenue down 26%. write-downs from corporate investments and litigation costs also weighed. and shell today posted an 18% jump in fourth quarter profit but that missed analyst expectations. the energy company said results were impacted by a down turn in industry refining margins. shell has kept its dividends steady at 42 cents a share and expects to grow it later this year. also on 0 the ftse today we've heard from astrazeneca as well. its stock slightly lower. they're amongst the losers. along with unilever as well. julia has been out speaking to the ceo this morning. joins us with more. >> thanks, ross. well, quick to point out the slight drop we saw in operating margins around ten basis points is far better than we've seen from a number of their competitors. he also reiterated the growth in emerging markets just under 55%

of the business. of course he did warn on the consumer outlook and that's what's happening the impact on the stock price today and i asked him just with the ongoing debt crisis in europe is that going to accelerate their focus on the emerging markets going forward? >> we have 25% of our business in europe and 500 billion in europe so it's not surprising that other parts of the world are going to take more of an importance. we are already deemerging market company with most of our business there. i'm glad, though, despite that we are showing slight growth in europe in a market that is stable or down and so that's a good performance from our european organization but the role of europe increasingly, as you can see here, is to continue to finance the emerging markets. >> that was paul polman of unilever. a quick check on the price down 3.5% compared to outperformance of over 15% versus the ftse and

competitors like procter & gamble. ross, back to you. >> yeah, maker of dove soap and a whole lot more. julia, thanks for that. hank, i should bring you in here. there's a lot of companies here in europe that haven't quite done what investors were hoping, even the likes of unilever, a company that is betting on growth out of emerging markets. investors are saying they had a good run but the trend may not be quite as good as we thought. >> well, look, emerging market economies are down in their growth rates, still better than developed economies and i think the important point, as you just mentioned, is where have they come from? they have done very, very well, up 15% prior to this report. so you have to take that into context but i think unilever is a great example of a high-quality company on the

defensive side, not exposed to the economic cycle as industrials or basic material companies so it is an important part of the diversified portfolio. >> hank, i want to jump in on this. we had some very good results yesterday out from qualcomm. what's your take on qualcomm's numbers and the sort of global environment for chips right now? >> right. and we own qualcomm and so we were delight ed with that earnings report. it's reflective of the trend in technology and tparticularly in smart phones in which they're participating and so the earnings was not much of a surprise to us, and we think that is a very important area to have some exposure to with

respect to technology, and we're going to see more of that. >> i don't want to let you go until you tell me what you think. >> well, i'm going to echo the sentiments that julia mentioned earlier in the show and what an extraordinary valuation this is more for traders and speculators, in our opinion, and not so much investors at this point. that's not to say down the road with a more reasonable valuation but we're going to take a pass on facebook. >> people thought the google ipo was nuts and look where they are now. julia sticks around. jackie? >> yeah, well, coming up on the

show, ross, we're still going to be looking at facebook's ipo generating a ton of buzz from wall street to main street. our next guest says there's several reasons it will be irrelevant in the long run. is the ipo too overhyped?

european stocks pretty flat today. we've gone through the corporate news. a big difference in the corporate news. on the bond markets, a successful french auction just to bring a note thousand a short while ago that yield on the ten year was below 3% i think since before last summer effectively. so my producer says since december. they just shouted it across. old communication works best,

jackie, just shout it across the newsroom. >> well, we do that here as well, ross, and it is a the lot of fun, of course. some of that mixed sentiment you are seeing in europe right now is trickling over to us as well. the futures look to be slightly turning around right now. the markets were to open now the dow would be under the flat line. the s&p 500 just over the flat line. it was a little bit lower again ahead of the hour. jobless claims are out at 8:30 a.m. eastern time and we're going to be watching closely for those. they're forecast to drop by 7,000 to a total of 370,000. at 8:30 we'll get the first report on fourth quarter productivity expected to rise versus 2.3% in the quarter. unit labor costs are seen rising 0.8%. in terms of earning merck reporting results before the opening bell. we will get some numbers from black stone, kellogg. january same store sales today which are forecast to rise 2%

industry wide. many stores were hurt by the lack of cold weather. it's felt like spring in new york. sifs enjoying it myself. as they try to move their remaining winter merchandise to make room for the new spring lines, of course we're going to see those numbers be a little bit difficult to see an uptrend there. facebook files papers for its ipo looking to raise about $5 billion. facebook didn't specify how many shares it's selling or a price range. it will list under fb but didn't say on which exchange. the ipo is expected to happen in april or may. facebook earned about a billion dollars last year on $3.7 billion in revenue. and about 85% of that came from advertising and zynga accounted for 12% of revenue. 845 million monthly active users. joining us now is peter cohen, president of peter s. cohen and associates and our guest host, julia, stays with us to discuss this as well.

peter, in terms of facebook, i'm just going to put the question to you simply. are we overvalued at these levels? >> we're very overvalued. look at the price/earnings ratio. compare it to google. the best one is apple. compare to 12.5. apple grew its earnings over 100% in the last quarter and its p/e is 12.5 whereas facebook's earnings grew only 65% and its p/e is 75. and that's only under the lower valuation, the $75 billion valuation. if it was valued at $100 billion, the p/e would be $100 billion. it's grossly overvalued. >> yeah, those are staggering numbers when you think about it. but in terms of the growth story for facebook, what would facebook have to do to its business model to make you more convinced it could, in fact, grow? >> well, its growth rate would have to be accelerating rather than decelerating.

between 2008 and 2009 revenue grew 186% and then the next year they grew 154%. and then in the last year they grew only 88%. so the growth is slowing down. so why would you want to be investing in an overvalued company with slowing growth and the only open possibility is they figure out a way of accelerating that growth rate. and i don't know what the answer is to that. it looks to me like a maturing business. >> yeah, peter, i completely agree with you and am struggling to figure out why it's being valued at these kinds of multiples. but then the mention was made in comparing it to the google ipo and that sort of does sober one's view of this. i mean, google pulled it off and despite a lot of people naysaying to the contrary, maybe it is so pervasive, so used,

what do they -- what could they do to really generate revenue and monetize that permation in the economy? >> that's an interesting question. i teach a couple of classes in the boston area and i was talking to my students about this yesterday. all but one of whom are on facebook. and they basically said, look, they can start doing more advertising and selling our data to companies that want to reach us, but then we're going to find it very intrusive and inconvenient to use facebook so we'll use it less because we don't want them spying on us. there's a trekt tradeoff between revenue growth and customer satisfaction. so if they try to increase revenue by boosting advertising, they're going to make their customers unhappy and they're going to leave and they'll stop using it. i mean, it used to be that myspace was the hot thing.

what happened to myspace? i'm not on facebook and i hope to outlast it. it's a colossal waste of time. people looking at pictures of their friends and changes in their status. why not spend their time doing something more productive? >> peter, that's just the old view, right? we're the wrong generation. that's just the old view on that. >> i understand people's great-grandparents are on these things, are on facebook. i don't know what they're doing. they have nothing else to do with their time? >> all right. thank you so much, peter cohan. and of course our guest host julia coronado from bnp paribas. thank you for joining us on the show. and that wraps it up for today's "worldwide exchange." i'm jackie deangelis in the united states. >> i'm ross westgate here in europe. up next, becky, carl, joe, andrew, all the team -- carl is not there anymore. anyway, "worldwide exchange" is finished. "squawk box" up next. have a profitable day. the

good morning. first it turned friend into a verb. now facebook is poised for a historic ipo. we'll see about that. the state of the u.s. economy, meanwhile, key reports on jobs and the consumer and it's ground hog's day. this is gobbler's knob in punxsutawney, pennsylvania. later the world's most famous predictor of weather will either see his shadow or not. it's thursday, february 2nd, 2012. bing! and "squawk box" begins right now. ♪ i've got you babe i've