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Q2 earnings: Investors flock to companies with visible earnings prospects

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The stock market outlook remains uncertain due to the economic slowdown and elusive corporate earnings revival but that has not stopped investors from lapping up select stocks. As many as 100 stocks on the BSE 500 index have rallied between 50 per cent and 200 per cent from their 52-week lows in the last many months. Stocks like Nippon Life Asset Management, InterGlobe Aviation, Manappuram Finance, Bajaj Finance, Bata India, HDFC Asset Management among others have doubled from their 52-week lows. Investors and traders are betting on them as their earnings growth is expected to remain resilient in this downturn. Some lesser-known mid- and small-cap stocks, too, have recovered between 50 per cent and 100 per cent from their yearly lows because of strength in earnings. For instance, Brigade Enterprises and MAS Financial Services have recovered 80 per cent each from their 52-week lows as they reported over 40 per cent growth in operating profits in the last 12 months. ET has compiled 20 such companies, which as per Bloomberg consensus estimates can potentially gain as much as 70 per cent return over the next one year.





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WeWork May Lay Off Thousands

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WeWork is preparing to cut at least 4,000 people from its work force as it tries to stabilize itself after the company’s breakneck growth racked up heavy losses and led it to the brink of collapse, two people with knowledge of the matter said.

The cuts are expected to be announced as early as this week and will take place across WeWork’s sprawling global operation. Under the plan, the company’s core business of subletting office space would lay off 2,000 to 2,500 employees, one of the people said. An additional 1,000 employees will leave as WeWork sells or closes down noncore businesses, like a private school in Manhattan that WeWork set up. Additionally, roughly 1,000 building maintenance employees will be transferred to an outside contractor. Together, these employees would represent around a third of the 12,500 people WeWork employed at the end of June.

But one of the people said the company could shed as many as 5,000 to 6,000 employees.

The staff reductions will be included in a five-year plan to overhaul WeWork that could be presented to employees as early as Tuesday, said the people, who spoke on the condition of anonymity to discuss the layoff plans.

The layoffs represent the human cost of a remarkable reversal in WeWork’s fortunes. Under its co-founder and former chief executive, Adam Neumann, the company piled billions of dollars into an erratic expansion that included adding huge office spaces in the world’s most expensive cities, offering discounts to lure tenants and buying other businesses. WeWork, which leases office space from landlords, refurbishes it and rents it out to its customers, shelved plans for an initial public offering in late September after investors were put off by the company’s losses and had questions about its corporate governance.



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HP Rejects Xerox Takeover Bid

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HP said on Sunday that it had turned down a takeover offer from Xerox, rejecting a deal that would have brought together two once-formidable printing companies that have faced business difficulties as demand for printed documents and ink has waned.

The cash-and-stock offer from Xerox “significantly undervalues HP and is not in the best interests of HP shareholders,” company officials wrote in a letter to John Visentin, Xerox’s chief executive.

The letter to Xerox called the proposal “highly conditional and uncertain” and expressed qualms about “the potential impact of outsized debt levels on the combined company’s stock.” It also raised concerns about a recent stark decline in Xerox’s revenue.

But the letter left open the possibility of a merger under different terms. “We recognize the potential benefits of consolidation,” it said, “and we are open to exploring whether there is value to be created for HP shareholders through a potential combination with Xerox.”

A Xerox spokeswoman did not respond to a request for comment.

In its proposal, submitted on Nov. 5, Xerox put the total value of a possible transaction at $33.5 billion, or $22 a share — $17 in cash and 0.137 Xerox shares for each HP share. Xerox said a merger would save $2 billion in costs within two years.

HP and Xerox have cut costs significantly in recent months as they have struggled to navigate the accelerating erosion of the traditional printing business.

Over the years, HP has aimed to sell printers at no profit or a loss, while making its profit on selling a steady stream of replacement cartridges, called aftermarket supplies.

But a number of forces are undermining that model: the popularity of smartphones and tablet computers that allow electronic documents to be easily transported; the rise of sharing services that people use to distribute documents in the cloud; and a growing awareness of the environmental effects of profligate printing.

At the same time, companies that collect, clean and rebuild printer cartridges have made steady inroads. And the rise in recent years of Chinese cartridge-clone makers in particular has hurt the sales and profits of both HP and Xerox.



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SEMINAR ON CHINA UAE ECONOMIC AND TRADE COOPERATION

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On the 30th of October the UAE was organizing a seminar on CHINA and UAE Economic and trade cooperation, Held at the Hyatt Regency Dubai.

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