Market News

Lloyds Loses £4bn, but Blames HBOS

Lloyds Bank has announced staggering loses in the first half of 2009. However, it blames its loses on HBOS, which is took over in January. Lloyds lost about 4 billion pounds in the first 6 months of 2009.

Lloyds is now 43% state-owned, and took on 13.4 billion pounds of write-downs from other struggling companies, so a loss is not really that surprising. However, the value of HBOS at the time of the takeover was lower than thought.

Lloyds is hoping that the write-downs that it has taken on to its books are past the worse, so hopefully by 2010 it could start making a profit again for the UK. If it can follow in Barclays footsteps then success during these hard times is certainly possible.

“Our first half loss was driven by the high levels of impairment. The core business delivered a resilient performance, despite the weak economy.” Eric Daniels, CEO

During the same period in 2008 Lloyds made a profit of 2.8 billion pounds, so apart from the HBOS takeover and the bad debt, its business appears to be running OK. However, it is a bit cheeky to blame the company that you took over for your loses, as it was the board of directors that decided that a takeover was a good idea at the time.

You can check how news affects Lloyds share price though throughout the day on Google Finance: Lloyds. and other Financial News Websites To Charge for Content

It appears that there will soon be a major shakeup in the way news is presented online. The Financial Times ( has announced that they are planning to start charging internet users for their specialist financial reports and news. They have stated that the current model is not sustainable, and as more people have stopped buying the newspapers to instead keep updated online, the company is seeing a loss in revenue.

It is still not clear how readers will be charged. One report stated that the FT is going to charge £150 per year for access. Other suggestions have been that it will charge on a per page subscription, although how this will be managed is still unclear.

Last week the New York Times suggested that it was going to start a $5 monthly subscription for its content.

So, why has the advertising model suddenly failed? If advertising is no longer paying for the services, then how can the paper expect the consumers to fork out cash for a product that has traditional been free?

Also, what does it mean for their search engine traffic? Many online newspapers now get a lot of traffic from the likes of Google News, who provide commentary on news items from across the world’s popular news media. If the juiciest content is going to be hidden behind a subscription wall, will these papers then lose out on search traffic?

And what about the blog effect? Every search engine expert knows that currently the Google Search Algorithm places an emphasis on links. If bloggers can no longer see then news, then they will not link. Again, reduction in search traffic. Have the newspapers really done their research? A subscription model could see dramatic decline in business, and many smaller websites will move in to the territory previously controlled by the big media players.

Lionel Barber from the FT has made a startling prediction though – “almost all” news organisations will be charging for online content within a year. He admitted that the biggest struggle will be building the website infrastructure to handle the new operating model, but is confident that it will happen.

“How these online payment models work and how much revenue they can generate is still up in the air.”But I confidently predict that within the next 12 months, almost all news organisations will be charging for content.” Lionel Barber, FT Editor.

Financial news will not be the only sector making this change. Rupert Murdoch suggested earlier this year that he wanted to see a move to a subscription based model. This could include many mainstream newspapers that NewsCorp owns, including The Sun, News of the World, The Times, Sunday Times, The Wall Street Journal and New York Post.

It is thought that the mainstream media will start to charge for specialise, unique information, such as celebrity news and sports, but continue to provide for free international news, political and local news. This is certainly good news for many smaller websites who should benefit from this as readers seek out free alternatives.

Also, as many of the large players close their doors, they could see advertising revenues drop at the advertisers look for alternative publishers to place ads with, which again could boost revenue for the smaller underdogs of the online media world.

FTSE Shows Signs of Recovery

A combination in increased mortgage agreements in June and Morgan Stanley’s advice to buy Schroders shares has indicated that the UK market is showing some signs of recovery, albeit small. Those green shoots are still hard to find though. Home loans increased to 47,584 new agreements in June, prompting reports that the UK’s housing market is on the move once more.

Not all good news today, as shares in Rexam fell 8.1 percent to 253.75p after announcing a share sale to raise 351 million pounds, and also cancelled its first-half dividend payment.

Also in the news today was British Airways, who have decided to stop giving lunch on its shorts flights in an attempt to save £22 million a year. Many BA staff have taken pay cuts to help their company weather the economic storm.