What's Important in the Financial World (2/15/2012) Smartphone Sales Surge, Yahoo! Ends Talks

Chinese central bank leader Zhou Xiaochuan told European officials that his country will provide funds to aid the struggling nations of the eurozone. The money could come through the International Monetary Fund of the European Financial Stability Fund. Either way, it shows China will throw its considerable financial support behind Europe. The reaction to the news was almost entirely positive. China is one of the few nations that can afford to provide aid. As it does, other investors will likely take heart, and the flow of money into the sovereign debt of troubled nations should rise. That should push down borrowing costs. China, more than any other nation, may provide a solution to the EU crisis.

French and German GDP

The news about fourth-quarter gross domestic product in France and Germany, the two pillars of the eurozone economy, was mixed. Germany’s economy contracted a modest 0.2%. France’s GDP was up 0.2%. Each number was better than the consensus forecast of economists. Some said that the numbers are a sign Europe may avoid a recession. That is unlikely. Most other large economies in the region have stalled or are contracting. This is particularly true of the ones that face deficit and debt problems — Greece, Spain, Portugal and Italy. The fact that Germany and France are not in a rapid spiral down does not mean they have the resources to aid the balance of the region. Up 0.2% and down 0.2% are not signs of prosperity.

Yahoo! Talks Stall

The long, long road to an agreement for Yahoo! (NASDAQ: YHOO) to sell its stakes in Yahoo! Japan and China e-commerce company Alibaba just got longer. Press reports from as recently as two days ago said that a transaction was almost done. New reports say that the talks have broken down. That pushed Yahoo! shares lower by about 5%. One reason the sell-off was not greater is that many investors may believe the end of conversation is only a pause, meant as a tactic by one side or the other to get better terms.

Soaring Smartphone Sales

Smartphone sales soared in the final quarter of last year, according to research firm Gartner. Smartphones sales reached 140 million during the period, up 47% from the same quarter of the previous year. No one should be surprised about which companies benefited the most from the improvement. The market share of Apple’s (NASDAQ: AAPL) iOS rose to 23.8% from 15.8% in the fourth quarter of the previous year. Sales of smartphones powered by Google’s (NASDAQ: GOOG) Android OS rose from a share of 30.5% to 50.9%. Android is used on products from many manufacturers while Apple’s iOS only runs on iPhones. Apple and Samsung also increased the share of their handset sales, leaving the competition to fight for an increasingly smaller piece of the market.

Douglas A. McIntyre