February 25, 2024

Unemployment Drops to Lowest Rate in Four Years

The nation’s employers added 146,000 jobs last month, in line with the average of 151,000 a month in 2012. But the pace was a substantial improvement from earlier this year, when job growth slowed sharply and many observers feared a double-dip recession.

The biggest surprise was that Hurricane Sandy created so little drag. Economists had estimated that only 86,000 jobs would be added in November, a decline from October largely because of the storm.

According to the monthly snapshot from the Labor Department, released on Friday, the nation’s unemployment rate dropped to 7.7 percent last month from 7.9 percent in October. Economists cautioned that this bit of seeming good news was the result of a shrinking labor force, rather than the addition of jobs. At the current pace of job creation, the unemployment rate will gradually decline to 7.1 percent by December 2013, said Dean Maki, chief United States economist at Barclays Capital.

“The underlying trend in unemployment is downward, and that’s what we continued to see in the November figures,” Mr. Maki said. “Over the past year, unemployment has fallen a full percentage point and is now down 2.3 percentage points from its high in 2009.”

Many economists worry that job creation will slow markedly, however, if President Obama and Congressional Republicans cannot agree on a plan to reduce the deficit by the end of the year, leading to more than $600 billion in government spending cuts and automatic tax increases in 2013. The Congressional Budget Office, as well as many private economists, warn that this path will lead to a recession in the first half of 2013 and push unemployment back up.

While it is encouraging that businesses seem to be hiring in spite of the uncertainty in Washington, that could change quickly, said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch.

“If the budget impasse can’t be resolved this month, it’s likely that jobs growth will weaken early next year,” he said. “The fiscal cliff is a very dangerous game.”

Even if both sides in Washington come up with a short-term solution on the budget, as many observers expect, the pace of job growth remains well below what is needed to push wages substantially higher or to significantly reduce the broadest measure of unemployment anytime soon. Factoring in people seeking work, as well as those who want jobs but have stopped looking and those forced to take part-time jobs because full-time employment was not available, the broad unemployment gauge dipped to 14.4 percent in November from 14.6 percent in October.

Average hourly earnings rose 0.2 percent in November, and are up about 1.7 percent from a year earlier — about half the annual rate of growth seen in 2007 before the recession hit, when unemployment was below 5 percent.

The size of the labor force, according to a household survey separate from the one showing how many jobs were added by businesses and government, shrank by 350,000 in November. Part of that drop can be explained by the number of baby boomers deciding to retire, but a significant number of workers remain discouraged, prompting them to drop out of the job hunt.

As a result, the labor participation rate, which represents the portion of the adult population that is either employed or actively looking for work, remains low by historical standards, said Nigel Gault, chief United States economist for IHS Global Insight.

At 63.6 percent in November, Mr. Gault said, this measure is near the low point in this economic cycle.

“We’re not at the point in which the jobs market is strong enough to pull discouraged workers back into the labor market,” he said. Although job growth in November exceeded expectations, the Labor Department revised downward its figures for the preceding months. For September, the Labor Department said the economy created 132,000 jobs, down from an earlier estimate of 148,000, and the figure for October was lowered to 138,000 from 171,000.

Article source: http://www.nytimes.com/2012/12/08/business/economy/us-creates-146000-new-jobs-as-unemployment-rate-falls-to-7-7.html?partner=rss&emc=rss

Bits Blog: Facebook Stock Continues to Fall After Earnings Report

5:23 p.m. | Updated

After its stock performance Friday, Facebook probably wishes it could unfriend its stock ticker symbol.

Although the stock fell to a low of $22.28, it closed at $23.71, down $3.14, or 11.7 percent. The fall resulted from a tepid earnings report by the company on Thursday.

Facebook’s stock began falling in after-hours trading Thursday, dipping below $24.

During its earnings call Thursday, David Ebersman, Facebook’s chief financial officer, said, “Obviously we’re disappointed about how the stock is traded.”

But executives seemed confident that the company would continue to raise profits and revenue with new advertising modules and a continued expansion in mobile.

The company said its revenue for the quarter climbed to $1.18 billion, from $895 million. It apparently did not instill enough confidence going forward.

Sheryl Sandberg, the company’s chief operating officer, said Facebook’s “sponsored stories” ad unit is currently generating around $1 million in revenue per day for the company, half of which comes from the mobile version of the service.

As Barron’s noted on its tech trading blog, analysts spent most Friday trying to evaluate what would happen to the stock moving forward, also updating future estimates and targets for the company.

Just like Facebook’s stock, analysts’ numbers were up and down. Victor Anthony of Topeka Capital Markets gave the stock a buy rating, with a positive $40 price target. Spencer Wang of Credit Suisse maintained a neutral rating and gave the stock a $34 price target. Anthony DiClemente of Barclays Capital cut his price target to $31 a share from $35.

Facebook was not the only company to suffer in the markets this week. Other technology companies, including Apple, Netflix and Zynga, fell after disappointing earnings. Shares in Zynga were down to $3.09, for a two-day loss of 38 percent.

Facebook went public two months ago at $38 a share, with a projected market valuation of $100 billion.

Article source: http://bits.blogs.nytimes.com/2012/07/27/facebook-stock-continues-to-fall-after-earnings-call/?partner=rss&emc=rss

When Investors Rush In, and Out, Together

It seems that anxious investors in these troubled economic times are seeking safety in crowds.

The prices of stocks, bonds and a host of other financial assets, which in normal conditions more often than not move in a diversity of unpredictable directions, are increasingly surging up or down in lock step.

The rise in correlation between individual stocks, but also between completely separate asset classes like stocks and gold or stocks and oil, “has been one of the big themes of the investment climate this year,” said Marc Chandler, a market strategist at Brown Brothers Harriman in New York.

The chief explanation for the correlation is the great uncertainty facing investors — mainly over the crisis in Europe, which has raised the specter of the potential bankruptcy of governments and a collapse of the banking system.

With every bit of bad news, nervous investors around the globe have been selling many of their positions across all asset classes, no matter what they are, driving prices down, and rushing into perceived safe havens like cash and United States bonds. But sometimes just a day or so later, with a glimmer of hope that Europe is pulling away from the abyss or that the United States is picking up steam, newly optimistic investors turn around and rush back from cash into harder assets, from stocks and foreign bonds to commodities, pushing prices higher together.

“When things are less stressed, stocks and other investments move according to other more fundamental factors like a company’s earnings or its balance sheet,” said Maneesh Deshpande, managing director of global equity derivatives strategy at Barclays Capital. “But when macro fears take over, they move in flocks.”

The downside for investors caught in this maelstrom is that their attempts to spread risk by diversifying their portfolios is less effective. Analysts’ expectation for 2012 is that volatility and correlation will continue to afflict markets.

In November and December, a common measure of correlation within the Standard Poor’s benchmark 500-stock index reached as high as 90 percent, the highest since 1996, according to Barclays calculations. For much of the decade leading up to the financial crisis in 2008, the measure of correlation between the 50 biggest stocks in the S. P. 500 generally stayed between 10 percent and 40 percent.

Financial stocks were the most correlated in the third quarter, but even other sectors — like consumer and health care — that are usually more differentiated experienced “remarkable pickups in correlations,” Candace Browning, head of research at Bank of America, said in a recent presentation.

“A recession in Europe, the instability in the structure of the E.U. and the euro, uncertainty about the strength of a U.S. recovery and an upcoming presidential election, suggest next year could look very much like this year in terms of finding alpha in a correlated world,” she said.

With so much money sloshing around from one day to the next, the high degree of correlation poses a challenge for active fund managers or other stock pickers who pride themselves on their ability to discriminate between stocks or other assets. It may be one reason why some hedge funds are having such a torrid time.

It is also a problem for ordinary investors who have traditionally tried to protect their portfolios by spreading risk over a broad basket of assets, so that if some go down in price, others will increase. But how can you protect yourself in a world where investments rise or fall together?

Dean Curnutt, chief executive of Macro Risk Advisors, which advises institutional investors on their risk strategies, says correlation threatens “the old adage of don’t put all your eggs in one basket.” According to Mr. Chandler, the heightened correlation means “there is nowhere to hide” for investors.

It has happened before. Correlation went up when markets were volatile during the 2008 financial crisis, and again in May 2010 when the European debt crisis erupted as Greece needed its first bailout and the anxious United States stock market suffered a “flash crash.”

The measures of correlation are closely tied to another closely watched market statistic, the Chicago Board Options Exchange Volatility Index. The VIX, as it is known, measures the implied volatility of options on the S. P. 500. When conditions become volatile, it seems, investors rush in and out of assets together, and that’s when correlation rises.

It’s no surprise that correlation has increased again this year as Europe’s unresolved problems have spread to Italy, sending markets reeling.

The realized correlation within United States equities in the S. P. 500 is now higher than in 2008, Mr. Curnutt said.

Article source: http://feeds.nytimes.com/click.phdo?i=a0460089867f4e5e397c9e8d2089b389

DealBook: Regulator Fines Barclays Capital Over Subprime Mortgages

The Financial Industry Regulatory Authority said on Thursday that it had fined Barclays Capital $3 million for misrepresenting information about subprime mortgage securities the bank had sold from 2007 to 2010.

Finra, as the nonprofit self-regulator is known, said in a statement that Barclays Capital had provided inaccurate data about the delinquency rates of mortgages packed into three securities. The misrepresentations “contained errors significant enough to affect an investor’s assessment of subsequent securitizations,” according to the agency.

That data was then referenced for five additional subprime securities, the agency said.

“Barclays did not have a system in place to ensure that delinquency data posted on its Web site was accurate,” J. Bradley Bennett, the agency’s enforcement chief, said in a statement. “Therefore, investors were supplied inaccurate information to assess future performance of RMBS investments.”

Barclays Capital neither admitted nor denied wrongdoing, though it consented to the fine. A spokeswoman for the bank declined comment.

The Financial Industry Regulatory Authority has fined several investment banks in the last two years, including Merrill Lynch and Credit Suisse in May and Deutsche Bank in July 2010.

Article source: http://feeds.nytimes.com/click.phdo?i=c0057d89aedfad29d27e7f05bcd975b5

Successful Spanish Debt Auction

PARIS — Spain’s borrowing costs plummeted Tuesday at a debt auction, helping to lift the euro and stocks, as the European Central Bank began rolling out a new lending program that could encourage banks to buy euro-zone government bonds.

The Spanish Treasury sold €5.6 billion, or $7.3 billion, of debt, more than the €4.5 billion it had planned to sell after it met with solid demand. It sold three-month bills priced to yield 1.74 percent, down from the 5.11 percent it paid to sell similar securities on Nov. 22. It also sold six-month debt securities at an average yield of 2.44 percent, compared with the 5.227 percent it paid in November.

The euro bounced up to $1.3120 Tuesday, from $1.2998 late Monday in New York. U.S. stocks opened higher Tuesday, following major European stock indexes, which rose around 2 percent.

The solid result will come as welcome news for Mariano Rajoy, who will take office Wednesday as prime minister of Spain. Analysts attributed the positive result — as well as a strong Spanish auction last week — partly to the new E.C.B. initiative.

The central bank on Dec. 8 cut its main interest rate target to 1 percent from 1.25 percent, and said it would begin offering banks unlimited loans of up to three years at that rate, from a maximum of one year previously. It also said it would accept a wider range of collateral for those loans.

The program, officially known as a long-term repo operation, “is very important,” Laurent Fransolet, a European rate strategist at Barclays Capital in London, said. “but it’s not easy to understand, so many commentators haven’t been focusing on it.”

Mr. Fransolet cautioned that the main purpose of the operation was not to bolster euro-zone sovereign debt, but rather to ensure banks had the funds to refinance themselves “for a long time.”

The E.C.B.’s new facility does, however, make it possible for banks to borrow from the central bank to fund purchases of government bonds. Using the so-called carry trade, a bank that borrows at 1 percent and buys bonds that yield 4 percent pockets 3 percentage points of yield as income.

The euro-zone credit market has been hurt by the seemingly endless debt crisis
, with the E.C.B. warning Monday
that some indications were showing levels of stress greater than in the immediate aftermath? of the Lehman Brothers collapse of September 2008.

The E.C.B. will announce the results of its three-year liquidity injection on Wednesday morning, and there is wide uncertainty over the degree of demand. In a Reuters poll, traders estimated banks would ask in aggregate for as little as €50 billion to as much as €450 billion.

“Given the ongoing stresses in the banking system, we expect there to be high demand for these loans,” Ben May, an economist in London with Capital Economics, said in a research note. “Nonetheless, we doubt that banks in the region’s most troubled economies will go for broke and purchase vast quantities of their governments’ debt in a bid to bring bond yields down and avoid damaging sovereign defaults.”

The central bank’s policy move “is something very big,” Mr. Fransolet said, but he questioned whether it represented “a complete change of direction” for the euro zone.

“I think you need a lot of other things,” he said. With a huge round of government debt up for refinancing next year, he added, “The jury is still out.”

In a reminder of the sword hanging over the heads of European leaders, Fitch Ratings warned that the AAA rating it has assigned to the debt issued by the euro-zone bailout vehicle, the European Financial Stability Facility, “largely depends on France and Germany retaining their AAA status.”

Fitch noted that its decision last week to revise the outlook for France to “negative” meant that the risk of a downgrade of the bailout fund had also risen.

Article source: http://www.nytimes.com/2011/12/21/business/global/successful-spanish-debt-auction-helps-lifts-euro-and-stocks.html?partner=rss&emc=rss

DealBook: Sinopec to Buy Daylight Energy for $2.1 Billion

Sinopec of China agreed on Sunday to buy Daylight Energy, a Canadian oil and gas producer, for about $2.1 billion in cash, as Chinese companies increasingly flock to Canada’s oil-rich resources.

Under the terms of the deal, Sinopec’s international exploration and production arm will pay 10.08 Canadian dollars ($9.70) a share. That is more than double Daylight’s closing price of 4.59 Canadian dollars on Friday, and 43.9 percent above the shares’ 60-day weighted average trading price.

That high premium reflects China’s continuing hunger for oil and gas resources to power the country’s growth. Sinopec, formally known as the China Petroleum and Chemical Company, has been among the most active among the country’s oil companies in pursuing acquisitions to increase its holdings.

Much of the focus of Chinese companies has been on Canada and its trove of oil and natural gas holdings. Last year, Sinopec agreed to buy ConocoPhillips’s 9 percent stake in Syncrude Canada for $4.65 billion. And another Chinese company, Cnooc, agreed to pay $2.1 billion to buy Opti Canada.

In Daylight, Sinopec is buying one of Canada’s smaller energy players. It reported a loss of 45.1 million Canadian dollars ($43.4 million) last year on revenue of 511.4 million Canadian dollars. But Daylight owns more than 320,000 acres in western Canada that hold oil, natural gas and natural gas liquids like ethane and propane.

“We believe this transaction with SIPC recognizes the highly attractive asset portfolio and exceptional team that we have assembled at Daylight,” Anthony Lambert, Daylight’s chief executive, said in a statement.

Daylight was advised by Canaccord Genuity, CIBC World Markets and the law firm Blake, Cassels Graydon. Sinopec was advised by Barclays Capital and the law firms Vinson Elkins and Bennett Jones.

Article source: http://dealbook.nytimes.com/2011/10/09/sinopec-to-buy-daylight-energy-for-2-1-billion/?partner=rss&emc=rss

Factory Activity Plummets And Home Resales Slump

Other data released on Thursday also showed that consumer inflation rose at its fastest rate in four months in July and that more Americans than expected filed claims for jobless benefits last week.

Stock markets worldwide tumbled on the weak economic data, which stoked concerns that the recovery was on the rocks.

Still, economists said they did not believe that the sharp drop in manufacturing activity signaled that the nation’s economy was sliding back into recession.

“Without a strong rebound in the coming months, this will be taken as a very worrying development for policy makers charting the outlook for the second half of the year,” said Peter Newland, a senior economist at Barclays Capital in New York.

“That said, ‘hard’ data so far available for the third quarter have taken a clearly stronger tone and timely jobless claims data are not indicative of a dramatic weakening in the economy,” he added.

Data including retail sales and industrial production suggested the economy found some momentum early in the third quarter after barely growing in the first half of the year.

The president of the Federal Reserve Bank of New York, William C. Dudley, said on Thursday that the risk of a double-dip recession was “quite low.”

“The risks have risen a little bit, but I think we very much still expect the economy to recover.” The agency expects growth to be significantly firmer than it was during the first half of the year, he told New Jersey business leaders.

In one positive report, the Conference Board said its index of leading economic indicators rose 0.5 percent in July. The increase, which followed a gain of 0.3 percent in June, was lifted by the money supply and interest rate components, the board said.

Ken Goldstein, an economist at the board, said that growth was modest, especially in nonfinancial indicators.

Despite the risks, he said, “the economy should continue to expand at a modest pace through the fall.”

The Philadelphia Federal Reserve Bank’s business activity index fell to minus 30.7 in August, the lowest level since March 2009 when the economy was in recession, from 3.2 in July.

That was much worse than economists’ expectations for a reading of plus 3.7. Any reading below zero indicates a contraction in the region’s manufacturing.

“This report clearly reflects the fact that businesses cut their outlook as a result of the debt limit crises and the resulting downgrade of the U.S. credit rating,” said Steven Ricchiuto, chief economist at Mizuho Securities in New York.

“I would not read too much into this in terms of the outlook on the economy since manufacturing had been on the rebound in autos and exports and the economy was stuck in first gear for two years.”

A second report showed sales of previously owned homes fell 3.5 percent in July, to an annual rate of 4.67 million units, the lowest in eight months. Economists had expected home resales to rise to a 4.9 million-unit pace.

Separate data from the Labor Department showed initial claims for state unemployment benefits increased 9,000, to 408,000. Another report from the department showed the Consumer Price Index increased 0.5 percent in July, the largest gain since March, after falling 0.2 percent in June.

Gasoline, which rose 4.7 percent after falling 6.8 percent the previous month, accounted for about half of the rise in C.P.I. last month.

But core C.P.I. — excluding food and energy — rose 0.2 percent after rising 0.3 percent in June.

Morgan Stanley cut its global growth forecast and said that the United States and its major export partner the euro zone were “dangerously close to recession.” In a research note that spooked investors, it lowered its United States estimate to 1.8 percent growth in gross domestic product for 2011 from 2.6 percent and for next year to 2.1 percent from 3.0 percent.

The jobless claims data covers the survey week for August nonfarm payrolls. Claims dropped by 14,000 between the July and August survey periods, but there are fears that turbulence in the financial markets could have slowed hiring this month.

“Initial claims were a bit higher than expected, indicating a generally sluggish trend for hiring although still better than where we stood during the second quarter,” said Avery Shenfeld, an economist at CIBC World Markets in Toronto.

Despite the spike in consumer inflation last month, which also reflected a 0.4 percent rise in food prices, inflation generally remains contained.

New motor vehicle costs were unchanged after five consecutive months of hefty gains. This probably reflects an improvement in supplies as disruptions caused by the March earthquake in Japan fade. Motor vehicle production rebounded sharply in July.

In the 12 months to July, core C.P.I. increased 1.8 percent — the largest increase since December 2009. This measure has rebounded from a record low of 0.6 percent in October, and the Fed would like to see that closer to 2 percent.

Overall consumer prices rose 3.6 percent year-on-year, rising by the same amount for a third consecutive month.

Within the core C.P.I. basket, shelter costs rose 0.3 percent, the largest gain since June 2008, after advancing 0.2 percent in June. Shelter has increased since October as a persistently weak housing market drives Americans into renting.

The increase in apparel prices slowed to 1.2 percent from June’s 1.4 percent increase.

Article source: http://feeds.nytimes.com/click.phdo?i=cbc8b5b3eda972ab4e3d4b0a8e58f890

Sure Cure for the Debt Problem: Economic Growth

It seems remarkable now, with all the End Times talk of debt ceilings and default, but it was only 11 years ago that the owners of that electronic totem, the Durst family, simply pulled the plug. The clock, a fixture since 1989, went dark after the federal government ended its 2000 fiscal year with a record $236.4 billion budget surplus.

Today, well — you know. We face the largest budget deficit the nation has ever known: $1.6 trillion, the equivalent of about 11 percent of our economy. And, whatever Washington does, many economists say the situation will grow only worse, particularly as Americans age and Medicare costs spiral higher.

But there is, in theory, a happy solution to our debt troubles. It’s called economic growth. No need to raise taxes or cut programs. Just get the economy growing the way it used to.

Good luck with that. Growth is in short supply these days, as new, dismal numbers underscored on Friday. Revised data showed that the recession took an even bigger bite of the economy than we thought. And economists are sizing up the risks of another recession.

“The basic issue is that the U.S. is on an unsustainable fiscal track,” says Dean Maki, the chief United States economist at Barclays Capital. “From that point, none of the choices are fun.” The most obvious choices, Mr. Maki says, are to reduce spending (ouch), raise taxes (yuck), let inflation run (gasp) or default (thud).

We wouldn’t need any of that if we could restore economic growth. If that happened, Americans would become richer and pay more taxes. Et voilà! — we’d pay down the debt painlessly.

Crazy as that might sound, particularly given Friday’s figures, the possibility isn’t some economic equivalent of that nice big farm where your childhood dog Skip was sent to run free. There are precedents.

Before its economy crashed, Ireland was a star of this sort of debt reduction. In the 1980s, Ireland’s debt dwarfed its economy. Over the next two decades, though, that debt shrank to about a quarter of gross domestic product, largely because the economy went gangbusters.

“Ireland went from being, you know, the emerging market in a European context, to a very dynamic economy,” says Carmen Reinhart, a senior fellow at the Peterson Institute for International Economics and co-author of “This Time Is Different,” a history of debt crises.

The United States has done the same in the past, too. After World War II, gross federal debt reached 122 percent of G.D.P., the highest ratio on record. But over the next 40 years, it fell to about 33 percent. That wasn’t because some blue-ribbon panel prescribed austerity; it was because the American economy became much, much richer.

The same happened during the prosperous 1990s, which began with deficits and ended with surpluses. Former President Bill Clinton is often credited for that turnabout, as he engineered higher tax rates. But most economists attribute the surplus years primarily to extraordinarily rapid growth.

It would be lovely to repeat that experience today, and send our federal debt off to that farm with Skip.

But the structure of America’s federal spending is different now than it was in, say, the immediate postwar decades. Back then, growth helped to erase the debt. But remember that in the 1950s, the United States didn’t have Medicare. The population was younger, and Americans didn’t live as long.

Given the health spending obligations we face, and the debt overhang we’re already dealing with, growth rates would have to acquire something like Ludicrous Speed, as in the movie “Spaceballs,” to keep up. And, near term, even modest speed is unlikely.

Usually after a recession, growth snaps back quickly and the economy makes up for ground lost — and then some. That’s not the case this time, at least so far. In the 60 years before the Great Recession, the economy expanded at an average annual rate of 3.5 percent. In the second quarter of this year, it grew at less than half of that pace, putting us further and further behind where we would be if the economy were functioning normally.

These doldrums won’t last forever, but many predict that economic growth to come will be somewhat slower than it was before the recession, for many of the same reasons that our debt is growing so quickly — the aging of the population, for instance.

Article source: http://feeds.nytimes.com/click.phdo?i=f7633028f99871bac6838a48fed93b06

DealBook: Zynga Appears Ready to File for I.P.O.

FarmVille, Zynga’s online game.FarmVille, Zynga’s online game.

8:07 p.m. | Updated

The Zynga Game Network, the maker of popular online video games, is moving closer to becoming the next hot Internet initial public stock offering.

The company is expected to file for an offering on Wednesday, according to people briefed on the matter.

Zynga’s offering may be the biggest yet by a social media firm. The company potentially will seek to sell as much as 10 percent of its shares for a price that will value the company at $20 billion or more, according to people briefed on the offering plans.

If the sale brings in $2 billion, it will be among the largest technology offerings since Google’s in 2004.

The filing is expected to shed light on Zynga’s business, including how much it depends upon Facebook for its revenue. The numbers should also provide some insight on the financials of Facebook, which is widely expected to file for its I.P.O. in the next 12 months.

Zynga has selected banks led by Morgan Stanley to underwrite the offering, people briefed on the matter said. The underwriting group also includes Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JPMorgan Chase.

Representatives for Zynga and the banks declined to comment.

Like several of its peers, Zynga has pushed up the time line for its market debut: as recently as February, it was aiming for an I.P.O. early next year.

As the force behind popular online games like FarmVille and CityVille, the company makes the bulk of its revenue from the sale of virtual goods and now claims more than 215 million monthly active users. It has been profitable for several years, its founder and chief executive, Mark J. Pincus, has said.

Still, Zynga may encounter skepticism over the valuations of the newest Internet companies. Although LinkedIn, the social network for professionals, reached an intraday high of $122 on its first day of trading, the stock has since pulled back significantly. On Tuesday, shares of LinkedIn rose 12 percent, bolstered by a batch of positive analyst reports, and closed at $85.66.

When Zynga goes public, Mr. Pincus, who founded the company in 2007, and its venture capital investors will see their fortunes multiply. The group — which includes Yuri Milner’s DST Global, Kleiner Perkins Caulfield Byers, Silver Lake Partners and Andreessen Horowitz — has sunk hundreds of millions of dollars into Zynga.

News of the impending filing was reported earlier on Tuesday by CNBC.

Article source: http://feeds.nytimes.com/click.phdo?i=04252f5506d860fbec4fc2f69fd24b96

DealBook: Zynga Picks Underwriters for I.P.O.

FarmVille, Zynga’s online game.FarmVille, Zynga’s online game.

Zynga, the popular online video game maker, is inching closer to another hotly anticipated initial public offering in the technology sector.

The company has picked a handful of banks to underwrite its impending I.P.O., a group led by Morgan Stanley, people briefed on the matter told DealBook on Tuesday. Other banks in the group include Goldman Sachs, Barclays Capital and JPMorgan Chase, said these people, who spoke on condition of anonymity.

CNBC, which reported news of the underwriters’ selection earlier on Tuesday, said that Zynga might file for its I.P.O. as soon as Wednesday. Some of the banks may also offer Zynga a loan of at least $1 billion, the network reported.

Zynga is expected to offer about 10 percent of its shares at a valuation near $20 billion or more, according to two people briefed on the matter. A small offering, of 10 percent or less, would follow similar technology I.P.O.’s this year. Both LinkedIn and Pandora, for instance, offered about 9 percent of their shares in their debuts.

Representatives for Zynga and the banks declined to comment.

Article source: http://feeds.nytimes.com/click.phdo?i=04252f5506d860fbec4fc2f69fd24b96