What's Important in the Financial World (1/11/2013)
More 787 Dreamliner Problems
Boeing Co. (NYSE: BA) 787 Dreamliners keep flying, despite dangerous flaws and breakdowns. Boeing continues to defend the construction quality of the new-age plane, even though every day brings with it a new problem. All Nippon Airways reported that a Dreamliner developed a crack in its cockpit windshield. The same carrier found an oil leak in another 787. Based on recent incidents, the 787 is leaky. The crack in the windshield should be of more concern, at least to pilots. The incidents have happened often enough, and are serious enough, that Boeing faces more scrutiny from the government. According to The Wall Street Journal:
The Federal Aviation Administration, increasingly concerned about safety and reliability issues surrounding Boeing Co.'s 787 Dreamliner, on Friday plans to launch a top-priority review of the plane focusing on its electrical system and quality controls used in the manufacturing process.
Video Game Sales Slump
The holiday season brought no relief for the embattled video game industry. Traditional consoles and software sales are under siege from new products that run on mobile handsets and tablets, and within social networks like Facebook Inc.'s (NASDAQ: FB). The release of new games and new hardware have done nothing to stop the erosion of revenue in the traditional game industry. According to the Associated Press:
U.S. retail sales of video games and gaming systems fell 22 percent in December, capping a year of declining sales for the industry.
Research firm NPD Group said Thursday that overall sales fell to $3.21 billion from $4.1 billion in December 2011. NPD estimates that sales of new game hardware, software and accessories account for about half of what consumers spend on gaming.
Sales of video games themselves, excluding PC titles, tumbled 26 percent to $1.54 billion. Sales of hardware - gaming systems such as the Xbox 360 and the Wii U - fell 20 percent to $1.07 billion.
The Japanese economy is in enough trouble that the new government has announced a tremendous stimulus package. Japan already has one of the highest debt-to-GDP ratios in the world, and the "investment" is, therefore, a risk. According to Bloomberg:
The Japanese government will spend 10.3 trillion yen ($116 billion) to drive a recovery from a recession ….
About 3.8 trillion yen will be for disaster prevention and reconstruction, with 3.1 trillion yen directed to stimulating private investment and other measures, according to a statement released today by the Cabinet Office. Extra spending will increase gross domestic product by about 2 percentage points and create about 600,000 jobs, the government said.
Filed under: 24/7 Wall St. Wire, Market Open Tagged: BA, FB