What's Important in the Financial World (1/26/2012) Amazon to Attack Netflix, IMF on Oil Prices

Iran may take the matter of oil exports into its own hands. It has signaled that it will stop shipping crude before sanctions by the European Union and U.S. are in place. The stakes of an end to exports are getting higher. The International Monetary Fund said the drop in oil supplies due to Iran could push global crude prices up by 30%. That would make the sanctions very costly to oil-consuming nations. China already has broken with those nations that think sanctions will press Iran to abandon its nuclear arms plans. The People’s Republic said the sanctions are “not constructive.” South Korea, which relies almost exclusively on imports for its oil, said it is “cautious” about the sanctions. Regardless of what the world’s largest nations by GDP do about the situation, oil prices will soar if there is no settlement with Iran.

NEC Layoffs

CEOs recently told PriceWaterhouse that they are concerned about an economic slowdown and the crisis in Europe. One reaction to such caution may be plans to further cut costs already brought down in the recession. Huge Japan electronics company NEC said weak demand for its products will cause it to fire 10,000 people. But the economy is not solely to blame for the trouble. Like many other consumer electronics firms, NEC has run into the buzzsaw of Apple’s (NASDAQ: AAPL) success. NEC’s smartphone sales are under siege. A bad economy plus harsh competition are more than the Japanese firm can handle.

Amazon vs. Netflix

Netflix (NASDAQ: NFLX) has posted better numbers than predicted for Q4 as it unexpectedly added 220,000 streaming subscribers. That has given it a bit of a reprieve among investors, although its shares are still only a third of their all-time high. The worry about the future of Netflix could rise again quickly. Media reports say that Amazon.com (NASDAQ: AMZN) is about to launch its own streaming service. Its program could hurt Netflix badly because of the e-commerce company’s huge customer base and its Kindle Fire tablet PC platform, which could be tethered to any streaming video product.

Apple vs. Exxon

Apple’s quarterly results were good enough that its market cap briefly passed that of oil giant Exxon Mobil (NYSE: XOM). Both are worth more than $400 billion. Exxon’s price may move higher quickly, though. It is expected to have a boom quarter because of higher oil prices. Apple may have to wait until its next earnings release, or the launch of the iPad 3 or iPhone 5, to get past Exxon again.

Douglas A. McIntyre