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Business Roundup: Australia Business Roundup: Australia April 2002 News Corp hit by heavy losses And then there were four Coles tries to limit loyalty damage Interest rates set to rise Qantas announces Australian Airlines News Corp hit by heavy losses Australia's mega-media company News Corp could rack up yet another business record, but this time it would be for posting the biggest loss in Australian corporate history. The media giant, run by Rupert Murdock, is facing a year-end loss of A$5-9 billion after it had to slash the value of its Gemstar stake by $3.77 billion. Gemstar, a US interactive TV guide, lost its shine after announcing that it would take a US$5 billion write-down over the next six months because of a change in accounting rules. Although the write-down will not affect News Corp's bottom line, it does highlight some of the company's poor management issues. Murdock recently said that he was going to pull the News megalith back to its media foundations in an effort to stop any corporate crumbling. And then there were four The Australian Big Five accounting world will lose one of its players in the next month as scandal-hit Andersen merges with Ernst & Young. Andersen has been doubly hit in Australia, with the Enron fallout compounding an already tarnished reputation after the fall of its client HIH Insurance. The merger is expected to be finalized in early May after Ernst & Young secures assurances that Andersen's big clients, which include New Ltd., BHP Billiton and CSL, will make the move. Ernst & Young also wants to be sure that it will not be liable for any present or future legal proceedings taken against Andersen. The merger would make Ernst & Young the second largest accounting firm after PricewaterhouseCoopers and create a group with revenue of A$736 million and over 5,000 staff. Coles tries to limit loyalty damage Large retailer Coles Myer has won the approval of the business community but the wrath of consumers by announcing it will scale back its loyalty program. In an effort to cut costs across the company, which owns Target, K-mart and Myer Grace operations, Coles decided to limit the consumer discount on its loyalty card from 6 to 3.8 per cent. It also announced that any shopper could qualify for its loyalty program, not just people who bought 500 or more shares in the company as previously stipulated. Coles also promised shoppers new special deals linked to its Fly Buys credit card scheme. Although consumers were angry, the wider investment community gave the thumbs up to the cost-cutting measure. Shares closed 7 cents firmer before Easter. Interest rates set to rise A phenomenal year and rosy prospects are sure to push interest rates back up in the next six months from their record lows. Analysts are predicting that rates will have to rise .75 percentage points from the present ultra-low 4.25 per cent because the economy continues to grow. Punters are betting the Reserve Bank of Australia will announce the first hike this week to ensure the economy does not overheat. Economic figures, from retail spending to home starts and the trade balance, indicate the Aussie economy is in good shape. Economists are optimistic that Australia will miss any negative fallout from the US recession and that it will ride the coat tails of its recovery. The Australian dollar also gained some ground to close above US$0.53 for the first time in over a year. Qantas announces Australian Airlines Qantas announced that it would go ahead with its plan to launch Australian Airlines to service international routes that Qantas cannot handle based on its current cost structure. The new airline will also be a competitor for discount Virgin Blue, an airline Qantas has become weary of since the demise of Ansett. The new airline will be based in Cairns, North Queensland. Writer: Jim Plouffe © Copyright 2001. Galt Western Personnel Ltd. Unless otherwise specified, you may reprint this article, quote from it, use it in research or projects, duplicate it or distribute it. Credit of authorship and source MUST be given to galtglobalreview.com. Ownership of Copyright remains with Galt Western Personnel Ltd.     Return to Top      Business News / Business Roundup - Australia / Canada / Europe / United States / Careers / Classified / Information Technology / New Technology / Education News / World Facts / Book Reviews / Archives/Research