A new chart issued Thursday by Morgan Stanley’s Katy Huberty in a report to clients shows the impact of the iPad and other tablets on the broader gadget market — and it looks like the netbook growth curve is falling off into oblivion.

According to the chart, sales growth of low-cost, low-powered netbooks peaked last summer, with an amazing 641 percent year-over-year growth rate.

But after January — the end of the holiday shopping season and the beginning of the march of new products, courtesy of the Consumer Electronics show — growth dropped, big time.

It dropped again in April.

Yes, as you might have been guessing as you read this: the iPad was announced in January (albeit the 27th) and launched in April.

Philip Elmer-DeWitt notes on Fortune’s Apple 2.0 blog that the theory isn’t all that far-fetched.

In support of her theory, she offers a Morgan Stanley/Alphawise survey conducted in March that found that 44% of U.S. consumers who were planning to buy an iPad said that they were buying it instead of a netbook or notebook computer.

What other devices did that survey suggest might get cannibalized by the iPad? According to Exhibit 2, below, the iPod touch is next in line.

The diagram in question:

I certainly buy into the theory that slate tablet-style devices are relegating netbooks back to a niche audience, though I’m not sure if consumers have simply had enough of the devices (i.e. the fad has run its course) versus the iPad actually taking away interest.

The iPod touch theory is also fair, but it won’t completely cannibalize those sales, since the iPod touch is a web browser to some and a music player to others. for example, I use my iPod touch for both features, so it’s unlikely that I won’t buy a replacement iPod touch just because I may buy an iPad.

(Plugging headphones into the iPad? possible, but not convenient for listening on the morning commute.)

Apple iPad: netbook killer, iPod cannibalizer or both?

Report: Apple iPad devouring netbook sales; iPod touch next?

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Fitch downgrades, assigns LS ratings and Rating Outlooks to the following classes:

–$5.4 million class H to ‘BB/LS5′ from ‘BB+’; Outlook Negative;

–$4.3 million class J to ‘B/LS5′ from ‘BB’; Outlook Negative;

–$2.2 million class K to ‘B-/LS5′ from ‘BB-’; Outlook Negative.

In addition, Fitch downgrades and assigns Recovery Ratings (RRs) to the following classes:

–$2.2 million class L to ‘CCC/RR1′ from ‘B+’;

–$2.2 million class M to ‘CCC/RR1′ from ‘B’;

–$2.2 million class N to ‘CCC/RR1′ from ‘B-’.

In addition, Fitch affirms the following classes and assigns LS ratings and Outlooks as indicated:

–$34.7 million class A-2 at ‘AAA/LS1′; Outlook Stable;

–$53 million class A-3 at ‘AAA/LS1′; Outlook Stable;

–$550.5 million class A-4 at ‘AAA/LS1′; Outlook Stable;

–Interest-only class X-1 at ‘AAA’; Outlook Stable;

–Interest-only class X-Y at ‘AAA’; Outlook Stable;

–$29.1 million class B at ‘AA/LS3′; Outlook Stable;

–$22.7 million class C at ‘A/LS3′; Outlook Stable;

–$6.8 million class D at ‘A-/LS5′; Outlook Stable;

–$9.4 million class E at ‘BBB+/LS4′; Outlook Stable;

–$5.4 million class F at ‘BBB/LS5′; Outlook Stable;

–$4.3 million class G at ‘BBB-/LS5′; Outlook Negative.

Fitch does not rate class O.

The downgrades are due to an increase in Fitch expected losses (1.6% of the current deal balance) upon the disposition of specially serviced assets along with expected losses from Fitch’s prospective review of potential stresses. Outlooks reflect the likely direction of any changes to the ratings over the next one to two years.

There are 123 of the original 129 loans remaining in the transaction, seven of which have defeased (15.4% of the current transaction balance). there are two specially serviced loans of which, one is 90+ days delinquent, and one is non-performing matured.

The largest specially serviced asset (1.7%) is a 85,753 square foot mixed-use property in Coral Spring, FL. The loan transferred Jan. 28, 2009 due to maturity default. a two-year loan extension proposal was presented to the borrower. Counsel has been engaged.

The second specially serviced asset (0.3%) is a 105-unit multifamily property in Middle Island, NY. The loan transferred Aug. 6, 2007 due to monetary default. Payments for October 2009 and on are currently delinquent. The loan will remain in special servicing until three consecutive monthly payments are made.

Fitch stressed the cash flow of the remaining non defeased loans by applying a 10% reduction to 2008 fiscal year end net operating income and applying an adjusted market cap rate between 7.5% and 10% to determine value.

Similar to Fitch’s prospective analysis of recent vintage CMBS, each loan also underwent a refinance test by applying an 8% interest rate and 30-year amortization schedule based on the stressed cash flow. Loans that could refinance to a debt service coverage ratio of 1.25 times or higher were considered to payoff at maturity. Fifty-four loans did not payoff at maturity, and 16 loans incurred a loss when compared to Fitch’s stressed value.

Additional information on Fitch’s amended criteria for analyzing recent vintage U.S. CMBS is available in the July 7, 2009 report, ‘Surveillance Methodology for recent Vintage U.S. CMBS,’ which is available at ‘fitchratings.com’ under the following headers:

Structured Finance then CMBS then Criteria Reports

Additional information is available at ‘fitchratings.com’.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM’. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE.

SOURCE: Fitch Ratings

Fitch Ratings Michael VanderVelde, 312-606-2326, Chicago Adam Fox, 212-908-0869, new York or Media Relations: Sandro Scenga, 212-908-0278, new York Email: sandro.scenga@fitchratings.com

Copyright Business Wire 2010

Fitch Downgrades Morgan Stanley 2004-IQ7; Assigns Outlooks & LS Ratings

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Meanwhile, rival Goldman Sachs Group Inc (GS.N), which seems to have weathered the worst of the political storm over its post-bailout earnings bonanza, is poised to report another quarter of out-sized profits.

Both firms plan to report results later this month.

Goldman reported record earnings for 2009 as its trading desk led the charge. Morgan Stanley posted a full-year loss as it reduced risk after the financial crisis, ultimately causing it to miss out on much of the windfall trading profits.

Morgan Stanley also remade its management team in 2009, putting Co-President James Gorman at the helm as chief executive. it focused on integrating top retail brokerage Smith Barney, which it bought from Citigroup Inc (C.N), and hired hundreds of traders.

“Morgan Stanley ceded a lot of ground that it shouldn’t have in 2009,” said FBR Capital Markets analyst Steve Stelmach. “The assumption is that Morgan Stanley will start to gain some of that back in 2010. Time is going to tell.”

Goldman had an unusually strong year from its fixed income trading operation in 2009 as wildly fluctuating markets triggered high trading volume. this generated hefty profits and fueled the firm’s rebound from the financial crisis.

That trading spree slowed in the fourth quarter, making way for an uneven first quarter. Trading activity surged in January, faded in February, but picked back up in March.

As with Morgan Stanley, analysts have lowered first-quarter estimates for Goldman because of uncertainty about fixed income trading results.

Analysts are estimating a profit of 58 cents per share for Morgan Stanley, compared with a year-earlier loss of 57 cents. for Goldman, they expect earnings to show a rise to $4.02 from $3.39.

Analysts recently have gained comfort from signs that fixed income trading is trending upward. Swiss bank UBS (UBSN.VX) gave credence to those hopes last week when it said it expected solid first-quarter fixed income revenue.

Buckingham Research Group analyst James Mitchell said in a recent research note that trading activity had been solid and big banks had benefited from rallying credit markets, stronger debt underwriting activity, continued stable housing data and increased interest rate derivatives activity.

But Mitchell also said trading was likely to be lower than a year earlier.

Goldman has been positioned to continue its strong trading performance even as conditions weaken, while Morgan Stanley — which is rebuilding its trading ranks — is finding it more of a struggle, analysts said.

“Goldman has got the best trading operation in the world, bar none,” said Rochdale Securities analyst Richard Bove. “The Morgan Stanley people are trying to get there, and it will take four or five years to get where Goldman Sachs is.”

For now, Morgan Stanley is looking at a “very messy” first quarter, Bove said.

The “substantial loss” of its $1.2 billion investment in the Revel casino in Atlantic City is likely to impact the company’s first-quarter results. [ID:nN02174858] Still, a $775 million settlement with Discover Financial Services to settle old claims should partly offset that loss. [ID:nN12234506]

Both Goldman and Morgan Stanley are likely to report less-than spectacular investment banking results as both the initial public offering and merger markets remained soft.

Morgan Stanley earnings could fall 3.7 percent below Wall Street estimates for the first quarter, according to StarMine’s SmartEstimate, which weights estimates according to analysts’ track records.

The SmartEstimate for Goldman is an upside surprise of 1.8 percent.

While Goldman saw robust profits in 2009, it was dogged throughout the year by public outrage over its ballooning bonus pool. Analysts said they would keep a close eye on the firm’s compensation accrual, as Goldman now acknowledges that political risk could hurt its bottom line.

In 2009, the scrutiny over pay led Goldman to cut off employee compensation accrual after three quarters and boost shareholder returns.

“Given a second year of scrutiny over pay,” said FBR’s Stelmach, “maybe they’ll readjust again.” (Reporting by Steve Eder; Editing by Lisa Von Ahn)

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Under the terms of the two-year agreement, JPMorgan and Cheniere will jointly look into buying opportunities in the global LNG marketplace, combining Cheniere’s existing LNG assets with the buying power that JPMorgan has.

JPMorgan Chase will now have import rights for up to 2 billion cubic feet per day of natural gas at Cheniere’s Sabine Pass import terminal in Louisiana. the deal should allow Cheniere to buy more LNG and give JPMorgan access to an asset like Sabine Pass, which gives the bank a firm foothold on the LNG Market.

“We can buy much larger quantities of LNG with the help of JP Morgan than we could by ourself,” said Charif Souki, chief executive officer of Cheniere Energy, to Reuters. “They have a balance sheet and we have assets, which is a pretty good match.”

JPMorgan is one of many banks looking to enter into LNG commodities trading, following Morgan Stanley, Citigroup and Barclays Capital.

“We see a market changing very rapidly and we see a greater need for intermediaries,” said Paul Polosi, head of Global Power, Gas, Coal and Emissions at J.P. Morgan to Reuters.

JPMorgan Chase & Co (NYSE: JPM) To Enter Liquefied Natural Gas Market

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((Reporting by Denny Thomas; Editing by Chris Lewis))

((denny.thomas@reuters.com; +852 28436358; Reuters Messaging: denny.thomas.reuters.com@reuters.net)) Keywords: BARCLAYS/LEVEN(If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)

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(AFX UK Focus) 2010-03-01 03:36 UPDATE 1-Barclays hires former Goldman banker Leven

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Although most of the stakes were small, China Investment Corp., the government’s $300 billion investment fund, now owns stock in some of the best-known American brands, including Apple, Coca-Cola, Johnson & Johnson, Motorola and Visa, David Barboza and Keith Bradsher report in the new York Times.

The detailed list, which contained holdings totaling $9.6 billion as of Dec. 31, was disclosed Friday in a filing with the Unites States Securities and Exchange Commission; it lists stakes only in companies traded in the United States.

The filing offers a glimpse of how China is trying to diversify its more than $2 trillion in foreign currency holdings with stock, rather than investing almost entirely in United States Treasury bonds and other debt securities issued by governments and by government-sponsored enterprises like Fannie Mae.

Prime Minister Wen Jiabao of China and other officials have repeatedly expressed worry about how the country’s holdings of U.S. Treasury securities could be hurt by inflation or by mounting United States debt. By buying the securities of international companies, China is trying to spread its fast-growing wealth more widely. It is also seeking to acquire strategic stakes in companies that could feed its hungry economy with a wide range of commodities.

C.I.C., already one of the world’s largest sovereign funds, was formed in 2007 with about $200 billion. It now has assets of nearly $300 billion and, according to state-run news media, is expecting another large injection of funds.

A spokeswoman for C.I.C., which is based in Beijing, did not return e-mail messages or phone calls seeking comment. But analysts said the filing showed that the fund had invested only a small portion of its $300 billion in American stocks, and the fund seemed to be following a cautious strategy to diversify globally after initially having put its biggest investments into shoring up the capital of Chinese banks.

“This is still a relatively small amount compared to the total size of the fund,” said Chang Chun, a professor of finance at the China Europe International Business School in Shanghai.

The sovereign wealth fund got off to a rocky start in 2007 and early 2008 by acquiring a $3 billion nonvoting stake in the American private equity firm Blackstone and paying another $5 billion for a 9.9 percent stake in Morgan Stanley.

Shares of both companies plummeted in 2008 during the financial crisis, leading to a storm of criticism directed at C.I.C. But analysts say the fund performed well in 2009, particularly because it was buying aggressively as the market recovered.

Exactly when C.I.C. bought the shares of various companies was not disclosed in the filing. and C.I.C.’s acquisition of nonvoting units of Blackstone and its early stake of preferred shares in Morgan Stanley are not listed in the filing. the Blackstone and Morgan Stanley stakes are not listed, apparently because they are not traded equities.

The filing indicates that C.I.C. owns about $19 million worth of Bank of America stock, close to $30 million worth of Citigroup shares and about $333 million worth of shares in Visa, as well as holdings in various index funds.

The fund’s largest listed holdings were $1.7 billion worth of shares in Morgan Stanley and nearly $650 million worth of shares in BlackRock, the new York money management fund.

The Morgan Stanley stake was acquired last June, when the investment bank issued about $2.2 billion worth of common shares to help repay the U.S. government under the Troubled Asset Relief Program; C.I.C. acquired about $1.2 billion worth of shares at that time.

Some United States politicians in both parties have been nervous about China’s growing financial reach, and particularly wary that China might seek political influence in the West commensurate with its corporate stakes. Wariness in Washington flared four years ago when Congress discouraged Cnooc, a state-owned Chinese oil company, from buying Unocal.

Most sovereign wealth funds, with the exception of Norway’s, disclose few details about their holdings. But C.I.C. made its list available for the first time on the S.E.C.’s form 13F, which is filed quarterly by institutional investors and mutual funds in the United States.

Ben Simpfendorfer, an economist at Royal Bank of Scotland, said the Chinese sovereign wealth fund’s decision to disclose its holdings could limit concerns about secrecy in government holdings.

“This should help reassure politicians that Chinese sovereign wealth funds can take minority positions responsibly,” he said.

C.I.C.’s holdings outside the United States are substantial and growing. in Canada, it owns a $3.5 billion stake in Teck Resources, a mining and resources company listed in the United States, and a $1 million stake in Research in Motion, the maker of BlackBerry mobile phones.

The sovereign wealth fund has also been buying small stakes in Australia’s biggest banks and paid $646 million last autumn for a stake in Noble Group, a diversified commodities company based in Hong Kong with operations around the world in industries like iron ore mining and sugar mills.

Executives whose companies have accepted investments from C.I.C. tend to defend it as apolitical.

Richard S. Elman, the founder and chairman of Noble, said last month that C.I.C. executives had been businesslike in their approach to the investment.

“They are hugely commercial, and they want results,” he said. “They do not interfere in the day-to-day operations.”

Keith Bradsher reported from Hong Kong.

Go to Article from the new York Times »

Buying Spree Nets China Stakes in Top U.S. Firms

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Virgin Money has announced that Sir Brian Pitman will become the chairman of the Virgin Money Board.

Pitman, former Lloyds TSB chairman and chief executive, will head up the board as the group launches Virgin Bank. Pitman is currently a senior adviser at Morgan Stanley and was recently appointed by the FSA as one of five advisors assisting the regulator on a framework for ensuring effective governance in financial institutions.

Virgin Money recently launched Virgin Bank after buying regional bank, Church House Trust.

Pitman says: “I am impressed with the Virgin Money business and I am looking forward to working with Jayne-Anne Gadhia and her team. Church House Trust provides Virgin Money with the ideal platform to make a significant impact in the UK banking market. Our bank will be well capitalised and managed prudently with a strong focus on serving customers. it will see a much needed return of old fashioned banking principles.”

Virgin President Sir Richard Branson says: “I am delighted to announce Sir Brian Pitman’s appointment to the board of Virgin Money. Sir Brian is one of the UK’s most influential bankers and will be a great asset to the Virgin Money business.”

Norman McLuskie and Colin Keogh will join the board as non-executive directors. McLuskie was deputy chief executive of RBS prior to the takeover of NatWest and he also headed up Tesco Personal Finance. Keogh was formerly Close Brothers group chief executive.

The group has also appointed an executive team of Virgin Money, comprising of Jayne-Anne Gadhia as chief executive, Finlay Williamson as chief financial officer and Roland Russell as chief operating officer.

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