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Impact of Swine Flu on Travel Should Be Less Than SARS, Verizon Q1 Numbers Beat Estimates; India Still Good Investment

April 27, 2009 07:00 PM
by Anne Szustek
Bright spots in business April 27, 2009: An industry analyst says swine flu is not the next SARS, Verizon is the latest communications company to beat earnings projections and a private equity investor feels confident about investing in India’s emerging market economy.

Analyst: Swine Flu Not a Parallel Situation to SARS

Given that East Asia is more of a manufacturing hub than is Mexico, the swine flu poses less of a threat to the airline industry than SARS did earlier this decade. As long as the outbreak remains relatively contained to Mexico, swine flu will have a much smaller impact," Avondale Partners analyst Bob McAdoo told MarketWatch. Passengers traveling to East Asia are generally from more distant departure points, a contributor to SARS’ rapid spread to 35 countries, said McAdoo. Plus, air travel to Mexico was already suffering due to the recent rash of drug-related fighting.

Verizon Tops Expectations

Verizon is the latest tech/communications company to beat first-quarter 2009 projections. The company pulled in net income of $3.21 billion, or $0.58 per share, an increase from $3.05 billion, or per-share net income of $0.57. New York-based Verizon, which acquired cell phone service provider Alltel in January, also posted 12 percent year-on-year growth in revenue. 

Other telecoms and tech companies to post strong first-quarter 2009 numbers include Microsoft, AT&T and Apple. Meanwhile, Verizon is reportedly in “high-level” talks to have the iPhone on its networks as early as next year. AT&T and Apple currently have an exclusivity agreement on the popular smartphone; however, industry analysts say that the deal may expire next year.

Top Private Equity Investor “Reasonably Optimistic” on India

Kohlberg Kravis Roberts recently made a $250 million investment in Indian telecom Bhari Infratel. This isn’t just a vote of confidence in telecoms, however. It signifies trust in India’s emerging market economy. “India is a very special place for us because we really believe in the future of India,” KKR co-founder Henry Kravis was quoted as saying by The New York Times DealBook blog. Some two years ago, KKR also made a $900 million investment in software company Aricent, which was founded in India, but is now headquartered in California. 

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