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Dynamic Ventures, Corp. Announces Resignation of Al Cain From the Board of Directors

by on May 27, 2011

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Marketwire – Management Changes:

Company Anticipates Filling His Seat Within the Next Quarter

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Dynamic Ventures, Corp. Announces Resignation of Al Cain From the Board of Directors

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Dennis Santiago: Crunching the Bank Numbers for 1st Quarter of 2011

by on May 27, 2011

Huffington Post…

We received the 1st Quarter of 2011 research dataset from the FDIC at Institutional Risk Analytics yesterday. The computers churned the data overnight so our customers could begin to look at the surveillance analytics for their banks of interest this morning. I’ve been staring at the summary statistics for the industry today and file the following observations for those of you entertained by how this is all playing out. Stress: Forks in the Road There’s a fork in the road for the stressed out TBTF’s. At the end of 2010, we were tracking 545 institutions representing $4,909B in assets that has an IRA Bank Stress Index grade of B. This was the interesting population of “large complex institutions” (LCI’s) dealing with the indigestion of rotting mortgages in their bellies. Come the end of 1Q2011, forty-four of these banks exit the B grade column and look to have split with one group representing maybe $3.1T in assets migrating back up to A stress grade condition and another faction worth approximately $1.6T dropping further down to join other banks in the C column. We are just beginning to look at what commonalities are shared by these two emerging clusters of larger institutions but for me it begins to add a little more clarity to the musing I referred to in the article I filed a couple of days ago, “Bank Fail” Pondering the Unthinkable . There’s another major note in this quarter’s data on the small bank side. A little over 500 of them joined the A+ grade stress silo this quarter, quite a number of them going from F to A+ as they begin to show positive operating income again. The most common strategy we see is an adoption of a mixed business operating profile cutting back on lending and favoring the use of money to put into investment assets made so attractive by quantitative easing. Clearly, the economist’s view that encouraging all banks to migrate towards post Glass-Steagall portfolio management profiles is tickling down. That’s good news for Wall Street. Read on for what it means to Main Street. Deposits: Big Winners The news in bank deposits country for Q1 is that the big banks continue to be the big winners. The over $65B size institutions hold just over $6T in deposits versus $3.6T by all the smaller banks combined. More important, the big banks have grown deposits by $1T since June 2008 while the smaller bank group has stayed flat only moving up $100B in deposits in the same time. More interestingly, this winning formula by the big banks has been happening in the low or no interest paying checking and savings accounts category. Interest paying time deposits are way down at the big banks, a much deeper decline than experienced at the smaller institutions. This means the cost of doing business for these big banks is materially advantaged versus the smaller group. I’m not saying I like it. What I am saying is despite people in America whining about “Too Big To Fail”, the deposits story says Americans still bank there. The big banks have known this all along of course. Now you do too. Lending: Still a Dearth Back in January I filed a blog on the Huffington Post titled “A Deepening Dearth of Lending” . That trajectory towards that dearth remains in effect. Total bank industry lending is now down about $800B since June 2008. Bank willingness to extend commitments to borrowers is down around $2T in the same timeframe. That’s a lot of private capital energy taken out of the economy. The bank’s reluctance to lend manifests as a steady flight to quality. We see them hammering down annualized gross default rates – a measure of operating stress – from a peak of 302 basis points (bp) this time last year to around 211 bp this quarter. That’s still elevated compared to the 127 bp it was in June 2008 so the pressure to stay stingy doesn’t look like it’s gone away just yet. The flight to quality also shows loss given default rates have come down now to 86.8% which is actually below the 90% it was in 2008. The message of these numbers is clearly that you’d better have stellar credit to ask for credit. But you already knew that. Now you have a little better picture of how much it matters to your banker. Distressed Real Estate: The Workout Continues The news is that real estate lending for the banking industry is getting safer. The annualized gross default rate for residential real estate is down from a peak of 212 bp a year ago to 159 bp roughly following the same trend as lending in general. Nationwide R.E. loans have dropped by $634B to $4,161B down from $4,795B in June 2008. Magnitude wise things could have been worse at this point and clearly this apparent stabilization has much to do with the gargantuan efforts of the United States to deliberately spend treasure to buy time. That time continues to be spent working out the excess inventory of our last mortgage boom. Looking at degraded real estate in particular that data shows that work to stem what was a tidal wave of 30-89 day delinquent loans seems to have gotten us back to the same levels of $76-78B today as it was in 2008 when the swan eggs hatched. This doesn’t mean the nest isn’t toxic. Over 90 day delinquent real estate presently stands at $105.5B. It was a mere $19B the day the music stopped. Similar large workout inventory remains in Non-Accrual loans that stand at $186B today and Other Real Estate Owned sits at $52B as of 1Q2011. To see the numbers behind this report go to the IRA Industry Fact Sheet .

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Dennis Santiago: Crunching the Bank Numbers for 1st Quarter of 2011

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Multifamily Investment, Leasing Fundamentals Off to Solid Start In 2011

May 19, 2011

Investor interest in U.S. multifamily properties continued at a healthy clip at the beginning of 2011, as investment sales dollar volume jumped 40% in the first quarter over the same period last year. More deals closed than in any quarter since mid-2005, according to CoStar Group data. Just under 4,000 multifamily sales transactions were recorded in the quarter at a total volume of $9.4 billion, according to preliminary CoStar sales data, compared…

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GM’s Profit More Than Triples On Strong Asia Sales

May 5, 2011

DETROIT: General Motors Co’s quarterly profit more than tripled, beating expectations, driven by a recovery in the U.S. market and strong sales in Asia. The U.S. automaker also said on Thursday it expects its full-year adjusted earnings before interest and taxes to show “solid improvement” from 2010 helped by better pricing and lower fixed costs in North America. Net income in the first quarter rose to $3.2 billion, or $1.77 a share, compared with $900 million, or 55 cents a share, in the year earlier quarter. Excluding such one-time items as its sales of stakes in parts maker Delphi and Ally Financial, it earned 95 cents a share. That was 4 cents better than what analysts polled by Thomson Reuters I/B/E/S had expected. Revenue rose to $36.2 billion from $31.5 billion last year. Analysts had expected $35.59 billion. GM Chief Financial Officer Dan Ammann said GM is set up well to profit from higher gasoline prices with a much more diversified portfolio than three years ago when gas prices last topped $4 per gallon. “We had a very high, robust April, 19.8 percent market share in April with the lowest incentives we’ve had as the new company,” he told reporters. Ammann said GM’s incentives are currently running slightly below the industry average and that they will be at or slightly below the industry for the rest of the year. GM was heavily criticized by Wall Street analysts for its lofty incentives in January and February that cut into profit per vehicle. GM cut back incentives in March and April, but still offers more incentives per vehicle sold than its cross-town rival Ford Motor Co, analysts said. GM’s North American operations posted adjusted earnings in the quarter before interest and taxes of $1.3 billion, up $100 million from last year. It expects those results to improve on average for the rest of the year as better pricing and lower fixed costs more than offset higher commodity costs and more sales of less-profitable vehicles. GM’s European unit broke even on an adjusted earnings before interest and taxes basis and is targeting break-even before restructuring charges for the entire year. GM’s liquidity at the end of the quarter rose to $36.5 billion after the sales of the Delphi and Ally stakes. Cash and marketing securities grew to $30.6 billion from $27.6 billion at the end of the fourth quarter. (Reporting by Ben Klayman and Bernie Woodall in Detroit; Editing by Derek Caney) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Video: Jackson Says RIM `Pinning Its Hopes’ On New Platform

April 29, 2011

April 29 (Bloomberg) — Eric Jackson, founder and managing member of Ironfire Capital LLC, talks about the outlook for Research In Motion Ltd. The Waterloo, Ontario-based company lowered its outlook for this quarter, a month after providing figures. Profit will be $1.30 to $1.37 a share, RIM said yesterday, instead of $1.47 to $1.55, a forecast below analysts’ estimates at the time. Jackson speaks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Big Newspaper Chain Posts Bleak Quarterly Earnings

April 18, 2011

McLEAN, Va. — Gannett, the publisher of USA Today and more than 80 other daily newspapers, says its first-quarter net income fell, weighed by special charges and lower ad revenue. Gannett Co. said Monday that it earned $90.5 million, or 37 cents per share, down 23 percent from $117.2 million, or 49 cents per share, a year earlier. The company says revenue fell 4 percent to $1.25 billion from $1.3 billion. Excluding restructuring costs for facility closures and staff cuts, Gannett says it earned 41 cents per share in the latest quarter. Analysts surveyed by FactSet had expected earnings of 42 cents per share on revenue of $1.26 billion. Gannett says digital revenue grew 12 percent during the quarter. But print ads, which make up about half of Gannett’s revenue, fell 7 percent.

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ABM Resources NL (ASX:ABU) Release Quarterly Activities And Cashflow Report For The Quarter Ended 31 March 2011

April 17, 2011

ABM Resources NL (ASX:ABU) Release Quarterly Activities And Cashflow Report For The Quarter Ended 31 March 2011

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Google Earnings Miss Analyst Target

April 14, 2011

SAN FRANCISCO — Google’s first-quarter earnings came in below analyst projections as the Internet search leader sped up hiring and increased spending other areas to drive up its expenses. The results released Thursday may heighten investor fears that Google’s earnings might suffer because of the company’s commitment to hire at least 6,200 workers this year. That would be the most in Google’s 13-year history. Google co-founder Larry Page, who replaced Eric Schmidt as CEO after the quarter ended, has indicated he plans to keep investing in long-term opportunities that may take years to pay off, even if that crimps the company’s short-term results. Page, known for his aloofness, made a few tame remarks on Google’s earnings conference call Thursday before turning the presentation over to the company’s chief financial officer, Patrick Pichette, who has been steering the presentations for the past year. “I’m very excited about Google and our momentum, and I’m very, very optimistic about our future,” Page said. He also assured that the management transition that Google announced three month ago is unfolding as the company envisioned, with Page overseeing day-to-day operations while Schmidt handles government relations and stalks possible acquisition targets in his new role as executive chairman. Google shares shed $27.74, or nearly 5 percent, to $550.77 in extended trading. The stock closed the regular session at $578.51, up $2.23. The company earned $2.3 billion, or $7.04 per share, in the period ending in March. That was an 18 percent increase from nearly $2 billion, or $6.06 per share, last year. If not for the cost of employee stock rewards, Google said it would have earned $8.08 per share. That was below the average estimate of $8.11 per share among analysts surveyed by FactSet. Revenue was nearly $8.6 billion, a 27 percent increase from last year. After subtracting the commissions paid to ad partners, Google’s revenue stood at $6.54 billion. That figure topped the average analyst estimate of $6.33 billion, according to FactSet. Expenses grew faster than revenue. The company added 1,916 employees to end March with more than 26,300 workers. More than half of the new staff is working on products and services to supplement the search advertising network that makes most of Google’s money. The new growth opportunities include video ads on Google’s YouTube site, ads on smartphones, and more banner advertising. A 10 percent raise that Google gave all its employees at the beginning of the year contributed to rising costs. Google also spent $890 million on data centers and other capital projects in the quarter, more than triple the $239 million it spent in the same period last year.

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Real Money: SilverLeaf Looks To Double Note Buys This Year

March 24, 2011

SilverLeaf Financial in Salt Lake City has acquired more than $450 million of performing and non-performing loans since the company was founded in 2008, and has its sights on matching that milestone in 2011. “We have seen a number of active sellers this quarter,” said Shane Baldwin, SilverLeaf Financial’s CEO. “Currently there is over $2 billion of notes on the market expecting to be sold by quarter end. We expect to be very active this quarter…

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Economic Growth Hits Pre-Recession Speed

January 29, 2011

U.S. economic output finally regained the level reached before the recession, as growth sped up on stronger consumer spending and exports. Gross domestic product–a broad measure of all goods and services produced–grew at a 3.2% annual rate in the fourth quarter, the government said Friday. That’s up from the 2.6% pace notched the quarter before and confirms the view held by many economists and stock-market investors that the economy is gaining enough momentum to start bringing down unemployment in the months ahead. The expansion in large part was fueled by a jump in consumer spending–a crucial change from earlier in the recovery, when growth relied heavily on businesses investing and building up inventories.

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Video: Salesforce.com Climbs After Forecast Exceeds Estimates

November 19, 2010

Nov. 19 (Bloomberg) — Salesforce.com Inc.’s shares rose as much as 10 percent in extended trading after the company forecast fourth-quarter sales that exceeded analysts’ estimates. Revenue will be $447 million to $449 million in the quarter, which ends in January, Salesforce said yesterday in a statement. Bloomberg’s Emily Chang reports. (Source: Bloomberg)

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Video: Gro-Bels’s Freeze Recommends Japanese Real Estate: Video

November 15, 2010

Nov. 15 (Bloomberg) — Curtis Freeze, chief executive officer of Gro-Bels Co., a Tokyo-based property developer, and chairman of Honolulu-based Prospect Asset Management Inc., talks about Japan’s economy and his investment strategy. Japan’s economy grew more than forecast in the third quarter as consumer spending increased, shielding the expansion from a stronger yen and export slowdown likely to have a greater impact this quarter. Freeze speaks from Tokyo with Linzie Janis on Bloomberg Television’s “Global Connection.” (Source: Bloomberg)

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David Isenberg: October 2010 SIGIR Quarterly Report

November 5, 2010

The latest quarterly report from the Special Inspector General for Iraq Reconstruction (SIGIR), released October 30, has not received much attention. That is a pity because SIGIR does fine work and its reports always provide a wealth of detail on contractor activities in Iraq. Let’s consider a few examples of fraud noted in the report. As of early October 2010, SIGIR investigators were working 110 open cases. Recent investigative accomplishments included: • On July 23, Theresa Russell, a former staff sergeant in the U.S. Army, was sentenced in federal court in San Antonio, Texas, to five years probation and ordered to pay $31,000 in restitution and a $100 special assessment. The sentence was the result of a January 27, 2010, guilty plea to a one-count criminal information charging her with money laundering arising from a scheme involving the fraudulent awarding and administration of U.S. government contracts in Iraq. On August 11, Wajdi Birjas, a former DoD contract employee, pled guilty to conspiracy to bribe U.S. Army contracting officials stationed at Camp Arifjan, an, an Army base in Kuwait, and to money-laundering conspiracy involving former Majors Christopher Murray and James Momon, as well as a sergeant first class deployed to Camp Arifjan as a senior procurement non-commissioned officer. • On September 2, Dorothy Ellis, a former senior employee of a U.S. military contractor, pled guilty to conspiracy to pay $360,000 in bribes to U.S. Army contracting officials stationed at Camp Arifjan in Kuwait. According to court documents, Hall obtained the work by bribing certain U.S. Army contracting officers, including Momon and Murray. Ellis admitted that she participated in the bribery scheme by providing Momon and Murray access to secret bank accounts established on their behalf in the Philippines. Under the plea agreement, Ellis agreed to forfeit $360,000 to the government. Sentencing is scheduled for December. • In mid-September, papers were filed in federal court charging a U.S. Army major with one count of bribery. The major, who had served two tours in Iraq and one in Afghanistan, was charged with accepting money and other items of value from two foreign nationals affiliated with companies that sought and received Army contracts. If convicted, the major will have to forfeit all property derived from proceeds traceable to the commission of the offense, including two Rolex watches, real estate, a camper trailer, a Harley Davidson motorcycle, and a Dodge Ram truck. On October 1, Ismael Salinas pled guilty to receiving hundreds of thousands of dollars in illegal kickbacks from subcontractors in Iraq. Salinas overbilled DoD by $847,904, taking at least $424,000 in kickbacks from six companies. Salinas faces up to five years in prison when he is sentenced in December. Of course, not all contractors are crooks. Many make the ultimate sacrifice, albeit unheralded. The Department of Labor (DoL) received reports of 14 additional deaths of contractors working on U.S.-funded reconstruction programs in Iraq this quarter. DoL also received reports of 799 injuries this quarter that resulted in the contractor missing at least four days of work. Since DoL began compiling this data in March 2003, it has received reports of 1,507 contractor deaths in Iraq. Contractor mortality is now roughly equivalent to U.S. military fatalities, according to the report. The number of claims for contractor deaths has generally declined since early 2007, but military fatalities have declined even more. Consequently, the number of military fatalities and contractor deaths is now similar. According to GAO analysis of DoL data, approximately 26% of contractor deaths in FY 2009 and the first half of FY 2010 were due to hostile incidents, mostly resulting from improvised explosive devices. Contractor injuries increased sharply in late 2006 and began rising again in 2009. Note: See the graphic on page 55 for detail. For a month by month breakdown of contractor fatalities see graphic on p. 73.

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Video: Silvia Says GDP Report Shows Continued Underlying Demand

October 29, 2010

Oct. 29 (Bloomberg — John Silvia, chief economist at Wells Fargo, discusses today’s report on third-quarter U.S. gross domestic product. The U.S. economy grew at a 2 percent annual rate in the quarter, matching the median forecast of economists surveyed by Bloomberg News, as consumer spending climbed the most in almost four years. Silvia speaks with Scarlet Fu from Charlotte, North Carolina, on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Benitec Limited (ASX:BLT) Cash Flow Update For The Quarter Ended 30 September 2010

October 28, 2010

Benitec Limited (ASX:BLT) Cash Flow Update For The Quarter Ended 30 September 2010

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Video: STMicro’s Bozotti Expects Growth Up to 10% Next Year

October 27, 2010

Oct. 27 (Bloomberg) — Carlo Bozotti, chief executive officer of STMicroelectronics NV, talks about the company’s third-quarter profit and outlook. Europe’s largest semiconductor maker said sales will beat analysts’ estimates this quarter, citing an order backlog and demand for chips used in cars and consumer products. Bozotti speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

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Warehouse Market Sees Gains As Absorption Increases, Vacancies Improve

October 21, 2010

Add another commercial property type that is now on the path to recovery. The U.S. warehouse market joined the office market in clear recovery mode after logging another quarter of positive absorption and improving conditions as the national industrial…

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JPMorgan Chase Third Quarter Earnings…

October 13, 2010

JPMorgan Chase Third Quarter Earnings…

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Spain’s housing market still in trouble

September 23, 2010

House prices in Spain continue to trend downwards. In August prices were down 4.53% on the year, and down 1.63% on the quarter, according to TINSA, a real estate valuation company.

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Video: Garcha Says RIM’s Earnings Forecast Is Credible: Video

September 17, 2010

Sept. 17 (Bloomberg) — Kulbinder Garcha, an analyst at Credit Suisse Group AG, discusses Research In Motion Ltd.’s profit forecast. The maker of the BlackBerry smartphone said revenue this quarter will be as much as $5.55 billion and earnings per share will be as much as $1.70, beating analyst estimates. Garcha, speaking from London, talks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Video: Mellman Says Slowdown in U.S. Growth Is `Intensifying’: Video

August 20, 2010

Aug. 20 (Bloomberg) — Robert Mellman, an economist at JPMorgan Chase & Co., talks with Bloomberg’s Julie Hyman about the state of the U.S. economy and the prospects for quantitative easing by the Federal Reserve. Economists at JPMorgan lowered U.S. growth estimates, predicting that the economy will grow at a 1.5 percent annual rate this quarter and at a 2 percent pace in the last three months of the year, a percentage point less than they previously projected. (Source: Bloomberg)

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Video: Mellman Says Slowdown in U.S. Growth Is `Intensifying’: Video

August 20, 2010

Aug. 20 (Bloomberg) — Robert Mellman, an economist at JPMorgan Chase & Co., talks with Bloomberg’s Julie Hyman about the state of the U.S. economy and the prospects for quantitative easing by the Federal Reserve. Economists at JPMorgan lowered U.S. growth estimates, predicting that the economy will grow at a 1.5 percent annual rate this quarter and at a 2 percent pace in the last three months of the year, a percentage point less than they previously projected. (Source: Bloomberg)

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Video: Deutsche Bank’s Modoff Says Cisco Shares `Attractive’: Video

August 11, 2010

Aug. 11 (Bloomberg) — Brian Modoff, an analyst at Deutsche Bank AG, talks about Cisco Systems Inc.’s financial results and growth prospects. Cisco, the largest maker of networking equipment, forecast sales this quarter that missed analysts’ estimates as companies rein in spending because of the sluggish economy. Modoff speaks with Bloomberg’s Susan Li from Austin, Texas. (Source: Bloomberg)

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David Isenberg: The Latest on Contractors From SIGIR

July 31, 2010

The latest Quarterly Report to Congress from the Office of the Special Inspector General for Iraq Reconstruction has been released. The following are excerpts relevant to private military contractors. Number of contractors: Current, 119,700. Peak, 171,000 (Q4 2007) p. 2 On July 22, 2010, several rockets impacted inside the International Zone, killing three foreign-national contractors working for Triple Canopy, a U.S.-based security company.Figure1.10 [ see p. 16] lists the 15 contracting companies that have reported the largest number of deaths in Iraq since March 2003. This quarter, the Department of Labor (DoL) received reports of 12 additional deaths of contractors working on U.S.-funded programs in Iraq. DoL also received reports of 882 injuries this quarter that caused the injured contractors to miss four or more days of work. Since 2003, at least 1,487 death claims have been filed with the DoL. p. 15 DoS has also requested that it be allowed to use the Logistics Civil Augmentation Program (LOGCAP) III to support its operations in Iraq beyond December 2011. As of June 30, 2010, however, Kellogg, Brown and Root, Inc. (KBR)–the sole LOGCAP III contractor–is scheduled to remain in Iraq only until the end of 2011. According to U.S. Embassy-Baghdad, it does not have a plan to meet its support requirements if KBR pulls out. p. 43 JCC-I/A: Transitioning to CENTCOM Contracting Command On June 11, 2010, CENTCOM transitioned the Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) to the CENTCOM Contracting Command (C³). The change was made to facilitate expansion of the organization’s oversight to all contingency operations in CENTCOM’s area of operations–including Kuwait and Pakistan–in accordance with joint doctrine, “which has evolved to consider complex long-term contingencies.” To that end, C³will relocate to Qatar and reassess its staffing requirements. In addition to contract oversight, C³’s responsibilities in Iraq will include liaising with the armed services’ contracting organizations, providing monthly contractor census and SPOT data, and establishing and chairing a joint contracting support board to coordinate the enforcement of contracting and payment procedures. p. 44 Contractor and Grantee Support As of June 30, 2010, there were 113,649 contractor and grantee personnel supporting U.S. efforts in Iraq. For a breakdown of contractors and grantees–by agency, purpose, and national origin–see Table2.11. Contractors provide a variety of services. According to the most recent DoD census of its contractors in Iraq, roughly 65% performed base support functions, such as maintaining the grounds, running dining facilities, and providing laundry services. Comparable data was not available from DoS or USAID. The profile of DoD contractors in Iraq has changed over time. The number of contractors providing base support has generally paralleled the number of U.S. troops in Iraq. Meanwhile, as the focus of the U.S. assistance programs shifted away from large-scale infrastructure projects, the number of construction contractors has declined and the percentage of contractors providing security has increased. Third-country nationals currently make up a larger percentage of total DoD contractors than they have at any previous time, and the percentage of Iraqi nationals has declined to its lowest point yet. For details on the types of service provided by DoD contractors, and their national origin, see Figure2.13. pp. 46-47 Tracking Contractors and Grantees in Iraq On March 23, 2010, the House Armed Services Committee’s Subcommittee on Oversight and Investigations held hearings on grants and contracts in Iraq and Afghanistan. Among the topics discussed was the ongoing development of the Synchronized Predeployment and Operational Tracker (SPOT) database, which is intended to serve as a coordination tool for U.S. government agencies, contractors, and grantees. Representatives of DoD, DoS, USAID, and GAO stated the following: •According to DoD, approximately 75% of its contractor personnel were entered into SPOT. Registering Iraqi contractors who are not operating at U.S. military bases or DoD installations is the largest remaining challenge. DoD is using SPOT to track its contractor draw down. •According to DoS, it has expanded its use of SPOT to include grantees as well as contractor personnel. Additionally, DoS uses SPOT-generated Letters of Authorization (LOAs) to grant privileges to contractors–such as meals and common access cards (CACs)–and can track contractor movements in-country using LOA reader machines. •According to USAID, the administrative and financial burden of entering individual data for all its partners (which it defines as contractors and grantees) outweighs the benefits, because many do not require LOAs. Additionally, there are concerns that registration of USAID partners working in certain communities could endanger their safety. USAID has arranged with DoD to enter personal data for partners that require LOAs and aggregate data for partners that do not. •According to GAO, its audits have revealed that inadequate information about contractors and grantees may inhibit planning, increase costs, and introduce unnecessary risk. Agencies have made some progress in implementing SPOT, but their efforts still fall short in terms of having complete and reliable data to fulfill statutory requirements and improve management and oversight. Alternatives to SPOT, including periodic surveys, are generally incomplete and unreliable, particularly for identifying trends and drawing conclusions. According to further testimony by DoD and USAID, those agencies have reached an agreement whereby USAID will provide aggregate data for grantees–broken down by the broad categories of U.S., local-national, and third-country nationals–which should be sufficient to allow them to use SPOT as a management tool. The GAO representative acknowledged that different types of data may be required for different classes of contractors and grantees, and that it was up to the agencies to determine what worked best and to coordinate among themselves. pp. 47-48 FAPIIS Launched To Help Evaluate Contractors On April 22, 2010, the General Services Administration (GSA) launched the Federal Awardee Performance and Integrity Information System (FAPIIS), which is “designed to significantly enhance the government’s ability to evaluate the business ethics and quality of prospective contractors competing for federal contracts and to protect taxpayers from doing business with contractors that are not responsible sources.” The system was designed to meet the requirements of Section 872 of the Duncan Hunter National Defense Authorization Act of 2009 (P.L.110-417), which directed GSA to establish a database to track contractor integrity and performance. Before mid-2009, the only government-wide information available to contracting officers were lists of debarment and suspension actions, which are maintained in the Excluded Parties List System (ELPS). The FAPIIS expands the scope of information available to contracting officers, including: •records of contractor performance •contracting officers’ non-responsibility determinations •contract terminations for default or cause •agency defective pricing determinations •administrative agreements used to resolve a suspension or debarment •contractor self-reporting of criminal convictions, civil liability, and adverse administrative actions p. 48 Private Security Contractor Support A June 2010 RAND study offers new details on the unprecedented use of PSC support in Iraq over the past seven years. According to the report, between 2003and 2007, the main employers of PSCs–DoD, DoS, and USAID–paid more than $5 billion directly to security contractors. During that same period, prime contractors in Iraq paid an additional $3 billion-$6 billion for PSC services. The U.S. military has called on PSCs for a wide range of services, including static security for bases, convoy security, force protection for USACE, personal security details, and coordination of military activities through the Reconstruction Operations Center. DoS employs several types of armed contractors to staff security programs in Iraq, including diplomatic security special agents, marine security guards, third-country nationals, and personal security specialists. According to DoD regulations, “PSC personnel are not authorized to participate in offensive operations and must comply with specific USCENTCOM Rules for the Use of Force,” which allow the use of deadly force only in self-defense and defense of facilities or property (as specified in their contracts) or for “prevention of life-threatening acts directed against civilians.” USF-I provides guidance on the rules of use of force and issues weapons cards to approved PSC personnel, allowing them to carry weapons. The contractor’s signature on the weapons card acknowledges an understanding of these rules. For the totals of armed PSCs serving DoD, DoS, and USAID, see Table 2.16. For more details on contractors in Iraq, see the Reconstruction Funding Management and Uses subsection of this Report. As SIGIR reported last quarter, some GOI agencies and personnel have harassed PSCs this year. The U.S. Embassy’s Regional Security Office provided additional examples of undue bureaucratic restrictions and operational challenges reported this quarter: • In mid-June, a non-Chief of Mission PSC, on an administrative move without a client, reached an entry control point and prepared to present documents. IA personnel reportedly removed PSC personnel from their vehicles and assaulted them under the threat of deadly force. PSC personnel were arrested, equipment and vehicles confiscated, and the PSC members taken to another location where, reportedly, they were once again assaulted. The reasons for the IA’s actions are unknown. • The MOI Private Security Companies Licensing and Registration Office has reportedly been issuing arbitrary orders and imposing deadlines that are difficult to meet, which strains the MOI’s capacity to manage its own workload. •Some PSCs report waiting months for the MOI to approve annual license renewal applications, requiring companies to file a renewal even before the original application has been adjudicated. The Regional Security Office (RSO) is uncertain whether this is intentional or simply the result of inaction. pp. 58-59

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Ford Profit 2Q 2010: Automaker Posts Huge Quarter On Brisk Sales

July 23, 2010

DEARBORN, Mich. — Ford Motor Co. posted a strong second-quarter profit Friday but trimmed its U.S. sales forecast and predicted weaker results in the second half as the economy slowly recovers. The automaker surprised Wall Street, making $2.6 billion in the quarter as it continued to grab sales from rivals. Ford’s U.S. sales rose 28 percent in the first six months of this year. That’s almost double the pace of industrywide sales. It was Ford’s fifth straight quarterly profit, and the No. 2 U.S. automaker predicted a strong 2010 and even better 2011. But it said it will make less money in the second half of this year because of seasonal plant shutdowns, costs for new product launches and rising prices for raw materials like aluminum. The automaker said U.S. sales, which hit a 30-year low in 2009, remain weak, with many shoppers not yet confident enough about the economy to buy new cars. Ford cut its forecast for total U.S. auto sales to a range of 11.5 million to 12 million. The company had predicted sales of 11.5 million to 12.5 million cars and trucks. Ford held its third-quarter production forecast steady at 1.27 million cars and trucks worldwide. Ford President and CEO Alan Mulally said the company is making money in the challenging environment because of strong new products and a leaner, global structure in which more vehicles around the world share parts. Shares of the Dearborn, Mich.-based company rose 62 cents, or 5 percent, to $12.71. Helped by brisk sales of products like the Ford Fusion sedan and F-150 pickup, Ford has gained market share in the U.S. from Toyota Motor Corp., which was hurt by a series of safety recalls, and General Motors Co. and Chrysler Group LLC, who were tainted in some buyers’ eyes for accepting federal bailout money last year. Ford ended the quarter with 17.2 percent of the U.S. market, up from 16.9 percent at the end of the first quarter, according to auto information site Edmunds.com. For the second quarter, Ford earned $2.6 billion, or 61 cents per share. That compared with net income of $2.3 billion, or 69 cents per share, in the same quarter a year ago. Ford beat Wall Street’s expectations. Without special items, Ford earned 68 cents per share in the latest quarter, exceeding analysts’ forecasts of 40 cents. Analysts don’t factor in one-time items, including $229 million in charges related to the discontinuation of the Mercury brand. Ford’s revenue rose to $31.3 billion, beatings expectations of $29.8 billion. Ford paid off $7 billion in debt in the second quarter, most of it a cash payment to a United Auto Workers trust fund that pays retiree health care bills. The automaker ended the quarter with $27.3 billion in debt, which will cut its interest payments by $470 million per year. Ford’s debt has helped finance a series of highly regarded new products, which has helped the Detroit automaker grab buyers’ attention. Ford said it expects to end 2011 with more cash than debt. It now has $21.9 billion in cash, down from $25.3 billion in the first quarter due to debt repayments.

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Video: BlackRock’s Fink Interview

July 21, 2010

July 21 (Bloomberg) — Laurence Fink, chief executive officer of BlackRock Inc., talks about the company’s second-quarter earnings reported today and outlook for European sovereign debt and U.S. Treasuries. BlackRock’s net income rose 98 percent to $432 million, or $2.21 a share. Clients withdrew a net $30.4 billion in the quarter as they reassessed investments following the firm’s acquisition of Barclays Global Investors. Fink speaks with Erik Schatzker on Bloomberg Television’s “InBusiness With Margaret Brennan.” (Source: Bloomberg)

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BP, Big Oil Slightly Increase Lobbying Spending In Wake Of Spill

July 20, 2010

In the wake of the biggest oil spill in the nation’s history and facing a government intent on tightening regulation of the oil and gas industry, BP and some of its competitors slightly increased their spending on lobbying in the second quarter of 2010. In its effort to shape the upcoming regulatory changes and a host of other issues, from financial reform to climate change legislation, BP spent $1,720,000 on lobbying from April through June, compared to the $1.6 million it spent in the first quarter of the year. In addition to a team of in-house lobbyists led by Elizabeth Reicherts, the company’s senior director of U.S. government and international affairs, BP also paid high-powered lobbyists at the Podesta Group; the Duberstein Group; Arnold & Porter; the Alpine Group; Stuntz, Davis & Staffier; Thomas Advisors and Eris Group. And the industry’s main trade group, the American Petroleum Institute, almost doubled its spending to $2.3 million in the quarter, likely out of concern about the Obama administration’s current moratorium on offshore drilling. Chevron increased its spending by almost 27% to $3.92 million and Shell increased its spending by almost 75% to $4.05 million. The owner of the Deepwater Horizon, which exploded at the start of the quarter, on April 20, causing the massive oil spill, also increased its visibility on Capitol Hill. Transocean spent $110,000 on lobbying by the Capitol Hill Consulting Group. Halliburton, the massive oil services company which has been potentially implicated in the incident due to its cementing work, decreased its spending by almost half, shelling out $70,000 for lobbying in the second quarter. Other oil giants actually decreased their spending in the quarter — ExxonMobil spent $2.52 million compared to $3.39 million in the first quarter, ConocoPhillips spent $5.52 million compared to $6.41 million in the first quarter. API spent much of the quarter lobbying on oil spill legislation currently before Congress, “including amending the 1990 Oil Pollution Act and a measure to strengthen federal oversight of the blowout preventers that apparently failed on the BP rig,” reports Roll Call . Overall, the oil industry’s biggest players only slightly increased their spending in the quarter to $25.6 million, from $24.3 million in the first quarter, according to an analysis by Reuters . The amount is still $2 million less than what the sector spent in the second quarter of 2009. The up and down numbers reflect the challenge facing the industry, according to several lobbyists who declined to be named. Though they are willing to spend millions to influence pending legislation that could hurt their bottom line, most oil companies are acutely aware that a heavy lobbying presence could appear unseemly in the wake of the Gulf disaster.

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Apple Q3 2010 Earnings: Net Income Jumps 78 Percent

July 20, 2010

SEATTLE — Apple Inc. blew past expectations with its latest quarterly report on Tuesday, selling almost as many of its new iPad tablets as it sold Mac computers. Apple also gave higher revenue guidance than Wall Street was expecting, something the company rarely does. Investors sent shares up in after-hours trading. Apple said net income rose 78 percent to $3.25 billion, or $3.51 per share, from $1.8 billion, or $2.01 per share a year ago. Revenue for the April-to-June period rose 61 percent from last year to $15.7 billion, making it the company’s highest quarterly revenue ever, even beating the latest holiday season. That’s better than Wall Street predicted. Analysts surveyed by Thomson Reuters had forecast net income of $3.11 per share on $14.7 billion in revenue. Apple sold 8.4 million iPhones, up 61 percent from last year, even though the company stopped shipping more of the previous-generation iPhones after the updated model, the iPhone 4, was announced in early June. Apple sold 1.7 million of the newest iPhone 4 during the last three days of the quarter. Apple also said it sold about 3.3 million iPads in the gadget’s first three months on the market. Both the iPad and iPhone 4 have been out of stock in most stores and take a few weeks to ship to new buyers. During the conference call, an analyst asked whether Apple intentionally makes too few of the gadgets. “We do not purposefully create a shortage for buzz,” said Apple Chief Operating Officer Tim Cook. “We are currently still selling both of those products as fast as we can make them.” Cook said he doesn’t know when Apple will have enough of the gadgets on hand to meet demand. Some analysts had worried that the release of the iPad, which can be used to surf the Web, check e-mail, watch movies and read books among other tasks, would lure people who might otherwise buy a Macintosh computer. The fear seems to have been unfounded: Mac unit sales jumped 33 percent to 3.5 million, helped by what CFO Peter Oppenheimer called record sales to educational institutions in the quarter. Cook said it was too early to tell whether the iPad may steal revenue from other product categories in the future. Apple’s guidance consistently comes in lower than Wall Street estimates, so it’s notable that Apple said it expects $18 billion in revenue for the current quarter, compared with the Street forecast for $17 million. Rajesh Ghai of ThinkEquity LLC said the unexpectedly high outlook appears to be an attempt to redirect investors’ attention away from “antennagate” – a problem with the iPhone 4′s antenna design that prompted Apple to promise free cases through September – and back to consumers’ seemingly insatiable demand for iPhones and iPads. Apple shares rose $7.36, or 2.9 percent, to $259.25 in extended trading after the release of the results. The company said it will wait until the October-through-December quarter to recognize about $175 million in revenue to account for the free cases it plans to ship to buyers after the end of the current quarter. The company did not say how much the case giveaway will cost. Apple expects to earn $3.44 per share for the current quarter, less than the $3.83 analysts are predicting. While several technology companies, including Intel Corp. and IBM Corp., saw revenue hurt in the quarter by the effects of a stronger U.S. dollar, Apple didn’t seem to flinch. “I’m sure they’re seeing a negative impact, but it just doesn’t matter because they’re selling so much stuff,” said Andy Hargreaves, an analyst for Pacific Crest Securities. Apple, based in Cupertino, Calif., sold 9.4 million iPods in the quarter, 8 percent fewer than a year ago.

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Citigroup Profit Falls 10 Percent In 2Q, But Bank Sees Fewer Loan Losses

July 16, 2010

NEW YORK — Citigroup said Friday its second-quarter net income dropped 10 percent to $2.7 billion even as its losses from failed loans fell. The drop in income reflects the bank’s sale a year ago of the Smith Barney brokerage, which inflated its earnings at the time. Citigroup Inc. joins JPMorgan Chase & Co. and Bank of America Corp. in reporting earnings that rose in the April-June period as loan losses fell. That’s a positive sign for the economy, because it indicates that consumers are having an easier time paying their debts. But Citigroup, like the other banks, also had a decline in trading revenue because of the stock market’s plunge this spring. Citigroup was among the hardest hit banks by the financial crisis of 2008, and it was further hurt as many customers fell behind in loan payments during the recession. The bank’s losses from failed loans fell 31 percent to $7.96 billion during the April-June period from $11.47 billion a year ago. Despite the improving trend, CEO Vikram Pandit remained cautious about future growth, saying in a statement that “economic conditions remain challenging.” Like JPMorgan, Citigroup also removed some money from its reserves for future loan losses, which helps boost earnings. It’s also an indication that the bank is becoming more confident that the worst of the defaults is over and that delinquency and default levels are likely to shrink in the coming quarters. Citigroup removed $1.51 billion from its loss reserves during the quarter. A year earlier, the bank added $4 billion to those reserves. John Gerspach, Citi’s chief financial officer, said during a conference call with reporters that reserves could be released in future quarters as well if credit trends continue to improve. Loan losses have dropped four straight quarter, and Gerspach said he was particularly encouraged by a slowdown in new delinquencies in the credit card business. “It’s a business I’d expect to get back on its feet through 2011,” Gerspach said of Citi’s big credit card lending division. The stock market’s slump sent Citigroup’s revenue from its securities and banking division down 11 percent from a year earlier to $6 billion. That was down 26 percent from the first quarter. Citigroup said it earned $2.7 billion, or 9 cents per share, during the April-June period. That compares with $3 billion, or 49 cents per share, during the same quarter last year. The year-ago period’s profit was inflated because Citigroup recorded an after-tax gain of $6.7 billion during the quarter from the sale of a majority stake in Smith Barney to Morgan Stanley. Analysts forecast the bank would earn 5 cents per share. Total revenue fell 33 percent to $22.07 billion from $33.1 billion during the year-ago period. Citigroup’s revenue fell just short of the $22.16 billion analysts had forecast. Citigroup received $45 billion in government bailout money during the 2008 financial crisis. The company repaid $20 billion of the money late last year and the rest was converted into common stock. At the time Citi repaid the $20 billion, the government said it would sell the $25 billion in stock by the end of 2010. Earlier this month, the government said it has now sold a total of 2.6 billion shares at a profit. It still owns 5.1 billion shares. Shares of Citi fell 10 cents to $4.06 in pre-opening trading. Citi Holdings, which holds assets the company decided to sell including its worst-performing loans, lost $1.21 billion during the most recent quarter, compared with a profit of $1.22 billion last year. The year-ago figures includes the gain from the sale of Smith Barney.

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Intel Profit: Chipmaker Posts Biggest Quarterly Profit In A Decade

July 13, 2010

SAN FRANCISCO — Intel Corp. has booked its largest quarterly net income in a decade as the chipmaker benefits from a stronger computer market and more sophisticated factories. Large corporations bought more computers that use Intel’s most expensive chips, an encouraging sign for the economy that emerged from Intel’s second-quarter numbers, reported Tuesday after the stock market closed. Corporations have been stingy on upgrading their workers’ personal computers, a trend Intel is now seeing reverse. Intel gets most of its profit from the sale of chips that go into PCs. Intel CEO Paul Otellini said companies are starting to replace 4- and 5-year-old PCs now that they have some “breathing room in the economy and their budgets.” Intel has unique insight because it owns 80 percent of the worldwide market for microprocessors, the “brains” of PCs and servers. The numbers offer further evidence that companies are freeing their technology budgets, which should have helped other big technology companies. Intel’s main rival, Advanced Micro Devices Inc., reports its quarterly results on Thursday, while IBM Corp. and Microsoft Corp. issue their numbers next week. Intel’s results topped Wall Street’s forecasts, and the company raised its guidance. Its shares rose more than 7 percent in extended trading. Intel’s net income was $2.89 billion, or 51 cents per share, in the quarter ended June 26. Analysts expected 43 cents per share. The last time Intel’s quarterly net income topped $2.5 billion was in 2000 during the dot-com heyday, when Internet fever fueled spectacular computer sales. In the year-ago period, Intel lost $398 million, or 7 cents per share, when it paid a $1.45 billion fine in Europe over antitrust violations. Revenue was $10.77 billion in the latest period, above the $10.25 billion expected by analysts surveyed by Thomson Reuters. Intel’s third-quarter forecast was stronger than expected. It said it expects revenue of $11.20 billion to $12 billion. Analysts were projecting $10.92 billion. Intel’s profit forecast also got a lift. Intel now expects gross profit margin – a key measure of a company’s ability to control costs – of 64 percent to 68 percent of revenue for the full year. Its previous forecast was for 62 percent to 66 percent. Technological upgrades to its factories have made Intel’s chips more powerful and cheaper to make. That’s a major factor in Intel’s ability to increase its profit margins. Its business has improved over the past year and a half largely on robust consumer spending on discounted PCs. Corporate spending on PCs has been a troubled corner of the market. Many companies have resisted upgrading their workers’ PCs amid lingering fears about the health of their businesses. It has been more than a year since Intel CEO Paul Otellini declared that PC sales had “bottomed out” and were starting to recover after their worst stretch in six years. His analysis was accurate, but the semiconductor business is highly cyclical and now many analysts worry that another slowdown could be around the corner. The fears are being stoked by economic wobbliness in Europe and signs of slowing demand in China. More than half of Intel’s revenue comes from Europe and the Asia-Pacific region. On a conference call with analysts, Otellini said business in China and Europe was slow when the quarter started but “settled down” by the end of the quarter and were “nicely up” in both regions. Market research firms IDC and Gartner Inc. predict that PC shipments will grow a robust 20 percent this year. Shares of Intel, which is based in Santa Clara, rose $1.54, or 7.3 percent, to $22.55 in extended trading. In regular trading earlier, it jumped 44 cents, or 2.1 percent, to close at $21.01.

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Intel Profit: Chipmaker Posts Biggest Quarterly Profit In A Decade

July 13, 2010

SAN FRANCISCO — Intel Corp. has booked its largest quarterly net income in a decade as the chipmaker benefits from a stronger computer market and more sophisticated factories. Large corporations bought more computers that use Intel’s most expensive chips, an encouraging sign for the economy that emerged from Intel’s second-quarter numbers, reported Tuesday after the stock market closed. Corporations have been stingy on upgrading their workers’ personal computers, a trend Intel is now seeing reverse. Intel gets most of its profit from the sale of chips that go into PCs. Intel CEO Paul Otellini said companies are starting to replace 4- and 5-year-old PCs now that they have some “breathing room in the economy and their budgets.” Intel has unique insight because it owns 80 percent of the worldwide market for microprocessors, the “brains” of PCs and servers. The numbers offer further evidence that companies are freeing their technology budgets, which should have helped other big technology companies. Intel’s main rival, Advanced Micro Devices Inc., reports its quarterly results on Thursday, while IBM Corp. and Microsoft Corp. issue their numbers next week. Intel’s results topped Wall Street’s forecasts, and the company raised its guidance. Its shares rose more than 7 percent in extended trading. Intel’s net income was $2.89 billion, or 51 cents per share, in the quarter ended June 26. Analysts expected 43 cents per share. The last time Intel’s quarterly net income topped $2.5 billion was in 2000 during the dot-com heyday, when Internet fever fueled spectacular computer sales. In the year-ago period, Intel lost $398 million, or 7 cents per share, when it paid a $1.45 billion fine in Europe over antitrust violations. Revenue was $10.77 billion in the latest period, above the $10.25 billion expected by analysts surveyed by Thomson Reuters. Intel’s third-quarter forecast was stronger than expected. It said it expects revenue of $11.20 billion to $12 billion. Analysts were projecting $10.92 billion. Intel’s profit forecast also got a lift. Intel now expects gross profit margin – a key measure of a company’s ability to control costs – of 64 percent to 68 percent of revenue for the full year. Its previous forecast was for 62 percent to 66 percent. Technological upgrades to its factories have made Intel’s chips more powerful and cheaper to make. That’s a major factor in Intel’s ability to increase its profit margins. Its business has improved over the past year and a half largely on robust consumer spending on discounted PCs. Corporate spending on PCs has been a troubled corner of the market. Many companies have resisted upgrading their workers’ PCs amid lingering fears about the health of their businesses. It has been more than a year since Intel CEO Paul Otellini declared that PC sales had “bottomed out” and were starting to recover after their worst stretch in six years. His analysis was accurate, but the semiconductor business is highly cyclical and now many analysts worry that another slowdown could be around the corner. The fears are being stoked by economic wobbliness in Europe and signs of slowing demand in China. More than half of Intel’s revenue comes from Europe and the Asia-Pacific region. On a conference call with analysts, Otellini said business in China and Europe was slow when the quarter started but “settled down” by the end of the quarter and were “nicely up” in both regions. Market research firms IDC and Gartner Inc. predict that PC shipments will grow a robust 20 percent this year. Shares of Intel, which is based in Santa Clara, rose $1.54, or 7.3 percent, to $22.55 in extended trading. In regular trading earlier, it jumped 44 cents, or 2.1 percent, to close at $21.01.

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U.S. Economy Expands Less Than First Estimated, Highlighting Europe Risks

May 27, 2010

By Timothy R. Homan May 27 (Bloomberg) — The U.S. economy grew in the first quarter at a slower pace than previously calculated, reflecting smaller gains in consumer and business spending and highlighting the risks to the recovery posed by the European debt crisis. The 3 percent increase at an annual rate in gross domestic product was less than the median estimate of economists surveyed by Bloomberg News and compares with an advance estimate of 3.2 percent issued last month, figures from the Commerce Department showed today in Washington. Corporate profits grew and incomes were revised down. Households are gaining confidence this quarter as employment improves, and manufacturing is powering ahead as business investment and exports keep growing. The setback in stocks and rebound in the dollar caused by Europe’s financial troubles may cool spending here and abroad, giving the Federal Reserve additional scope to keep interest rates low. “We are at a fairly fragile turning point,” said Julia Coronado, a senior U.S. economist at BNP Paribas in New York. “There’s a lot of headwinds that the economy is struggling with.” More Americans than forecast filed applications for unemployment benefits last week, indicating firings persist even as the economy rebounds and employment picks up, figures from the Labor Department also showed today. Initial jobless claims fell by 14,000 to 460,000 in the week ended May 22. Economists forecast claims would drop to 455,000, according to the median estimate in a Bloomberg News survey. Shares Rebound Stock-index futures trimmed earlier gains following the reports. The contract on the Standard & Poor’s 500 Index rose 2 percent to 1,082.5 at 8:56 a.m. in New York. Treasury securities dropped, pushing the yield on the 10-year note up to 3.27 percent from 3.19 percent late yesterday. GDP was forecast to grow at a 3.4 percent annual pace, according to the median estimate of 79 economists surveyed. Projections ranged from gains of 3 percent to 4.1 percent. Consumer spending, which accounts for about 70 percent of the economy, rose at a 3.5 percent pace last quarter, compared with the 3.6 percent the government estimated last month and a 1.6 percent gain in the prior three months. The first-quarter increase was the biggest since 2007. Corporate Profits Company earnings increased 5.5 percent in the first quarter after climbing 8 percent in the previous three months. Earnings were up 31 percent from the same time last year, the biggest year-over-year gain since 1984, one reason why hiring and spending on capital equipment is improving. Chrysler Group LLC, the automaker controlled by Fiat SpA, posted a $143 million operating profit in its first quarter and said last week that it will add a second shift to a Detroit factory that makes Jeep Grand Cherokees. The company will add 1,100 workers at the assembly plant to increase production of the redesigned sport-utility vehicle, Chief Executive Officer Sergio Marchionne said at a May 21 news conference. He said he expects to add jobs at other Chrysler plants, without specifying which factories. Today’s report also revised household earnings data covering the past two quarters. Wages and salaries decreased by $13.2 billion in the last three months of 2009, a downward revision of $30.3 billion. The figures, which incorporate new data on bonuses and stock options, indicate employment may have been weaker at the end of last year than current data show. Less Income Today’s report also showed that gross domestic income, or the money earned by the people, businesses and government agencies whose purchases go into calculating growth, grew at a slower pace than GDP before adjusting for inflation during the past two quarters. According to Fed research, GDI is a better gauge of the economy, signaling growth may be overestimated. Since then, mounting concern over the sovereign-debt crisis in Europe has rattled global financial markets. The Standard & Poor’s 500 Index is down 8.7 percent from March 31 through yesterday, and the dollar index, which tracks the currency’s performance against six major currencies including the euro and yen, is up 7.6 percent. The drop in stocks will damp household wealth, leading to smaller gains in consumer spending over the next year than would otherwise be the case, according to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. The advance in the dollar will also hurt American exports, he said. ‘Negative’ Influence “The measurable effects of the recent move in financial conditions have been, on net, negative, but not enough to derail the recovery,” Feroli said in a May 24 note to clients. There are also “less quantifiable effects,” he said, that will bear watching in coming months, including banks’ willingness to lend and an increase in uncertainty that may prove a barrier to further gains in hiring and business investment. Business spending on new equipment and software advanced at a 12.7 percent pace last quarter after advancing at a 19 percent rate the previous three months, the biggest gain since 1998, today’s report showed. Spending on structures, including office buildings and factories, dropped at a 15.3 percent pace in the first quarter. Today’s GDP report is the second for the quarter and will be revised in June as more information becomes available to the government. The Fed’s preferred price gauge, which is tied to consumer spending and strips out food and energy costs, rose at a 0.6 percent annual pace, the lowest level since records began in 1959. The reading underscores the Fed’s pledge to keep interest rates near zero in coming months. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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U.S. Thrifts Post Highest Profit Since 2007 as Bad Loans Decline, OTS Says

May 24, 2010

By Phil Mattingly May 24 (Bloomberg) — U.S. savings and loans reported their highest profit since 2007 as lenders recover from the worst economic crisis since the Great Depression, the Office of Thrift Supervision said. Thrifts had total profits of $1.82 billion in the first quarter, improving on a $442 million profit in the preceding three-month period, the OTS said today in its quarterly report on industry performance. The agency included 50 thrifts on its confidential list of so-called problem lenders required to boost capital and liquidity, up from 43 in the fourth quarter of 2009. “The health of the thrift industry is improving, but we cannot say the industry has fully recovered from the financial crisis,” OTS Acting Director John Bowman said today at a news conference in Washington. Savings and loans returned to profitability last year after reporting total losses of $15.9 billion in 2008 as the collapse of the U.S. mortgage market led to the failures of Washington Mutual Inc. and Indymac Bancorp Inc. Today’s OTS report follows a May 20 Federal Deposit Insurance Corp. release showing U.S. banks posted profit of $18 billion in the first quarter. Regulators are closing banks and thrifts at the fastest pace since the end of the savings-and-loan crisis in the 1990s in what FDIC Chairman Sheila Bair has called the clean-up phase after the housing market collapse. Five thrifts have been shuttered this year among the 73 lenders seized. Thrifts set aside $2.7 billion to cover bad loans, representing 1.15 percent of average assets in the quarter, down from 1.65 percent in the fourth quarter. Elimination President Barack Obama has proposed eliminating the OTS, which was faulted for lax oversight before the housing crisis, as part of a broad overhaul of U.S. financial-industry rules. The U.S. House and Senate, in separate bills, have voted to eliminate the agency. The two chambers may meet as soon as this week to reconcile the two versions. “As one door seems destined to close, another will be opening with exciting opportunities and a larger agency that will examine and supervise all federally chartered institutions,” Bowman said. “I’m right now very comfortable that the Hill has it right in terms of protections for employees, and to the extent there are gaps, we will continue to work with them to try and close those gaps.” The OTS, an arm of the Treasury, supervised 757 thrifts with a combined $949.8 billion in assets at the end of the quarter. The largest U.S. thrift is ING Bank FSB, the $91.3 billion-asset institution based in Wilmington, Delaware. To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net .

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MF Global’s Quarterly Loss `Unacceptable’ as Corzine Plans Staff, Pay Cuts

May 20, 2010

By Matthew Leising May 20 (Bloomberg) — MF Global Holdings Ltd. , the futures and options broker headed by former New Jersey Governor Jon Corzine , posted an unexpected quarterly loss and plans to eliminate as much as 15 percent of its workforce. “Let me state the obvious: our fiscal 2010 performance is completely unacceptable, as was our fourth-quarter result,” Corzine, who took over as chief executive officer in March, said today on a conference call with analysts. Investors “should not tolerate such earnings.” The loss attributable to common shareholders in the quarter ended March 31 narrowed to $96.5 million, or 78 cents a share, from $119.3 million, or 98 cents, a year earlier, the New York- based company said in a statement. Excluding certain costs, the company lost 17 cents. On that basis, MF Global was estimated to earn 1 cent, according to a Bloomberg survey of 11 analysts. The company will freeze hiring, eliminate 10 percent to 15 percent of its 3,200 workers this quarter and is restructuring, postponing or terminating “non-core initiatives” and associated “non-compensation expenses,” according to the release. Those steps should produce savings of more than $60 million in the next year, said Corzine, the former chairman of Goldman Sachs Group Inc. The quarterly performance “was abysmal” even as “we see the aggressive cost actions as carrying the day,” Ed Ditmire , an analyst with Macquarie Group Ltd. in New York, said today in a note to clients. Ditmire estimated that MF Global would have break-even adjusted earnings per share and expenses of $241.2 million, compared with $268.2 million the company reported. Capital Structure Shares of MF Global, formerly the brokerage unit of Man Group Plc, the world’s largest publicly traded hedge-fund manager, rose 7 cents to $8.19 as of 11:03 a.m. in New York Stock Exchange composite trading. The shares had gained 17 percent this year before today. Corzine, 63, said his goal is to boost the company’s profile in “principal risk taking” that is focused on “customer-facilitated books” of trades where MF Global puts its own money up in transactions with its clients. The company isn’t starting a proprietary trading operation, he said. “If we change that view, we’ll speak to it directly,” Corzine said. A change in the company’s capital structure also is under way. “We will seek extended terms” on debt and credit facilities as well as the hybrid securities MF Global has sold to investors to fund its borrowing, Corzine said. Interest Income “Hopefully this is the trough,” Niamh Alexander , an analyst with Keefe Bruyette & Woods, said on the conference call, regarding the net loss. Benchmark interest rates near zero percent have cut into the broker’s interest income, the revenue it receives from client money it holds as collateral for trades on exchanges. While that amount rose 57 percent to $156.5 million, the firm earned $1.77 billion in the same quarter in 2007 when rates were 5.25 percent. MF also earns fees for brokering trades at futures and options exchanges. Revenue rose 20 percent to $565 million from $471 million in the same period last year, the company said. Compensation and benefit expenses climbed 20 percent to $184 million while interest outlays almost quadrupled to $109 million from $28 million. ‘Cultural Shift’ With profits at Wall Street firms at record levels and bonuses being paid, Corzine was asked how he intended to keep his brokers from going to the competition amid the pay cuts he repeatedly referred to as a needed “cultural shift” within the company. Corzine said he wants to lower compensation as a ratio of net revenue to less than 50 percent from 64.5 percent in the fourth quarter. Corzine answered that he must convince his brokers that his growth strategy will succeed. “It’s my responsibility to create a vision of what that can turn into for an individual,” he said. The firm said it can’t estimate the charge it will incur to reduce its payroll by as much as 15 percent, according to a regulatory filing today. An example of possible cuts would be in the company’s foreign exchange operation, Corzine said. MF Global has offices in New York and Chicago, with some Chicago brokers calling customers in New York, he said. “I don’t think that makes a lot of sense,” he said. “We don’t need that duplication.” Bonus Cuts Last quarter’s results included one-time pretax items such as impairment of goodwill of $51.7 million, costs associated with cutting future sign-on bonus and retention payments to employees that resulted in an upfront compensation charge of $27.5 million and costs related to its initial public offering of $6.7 million, the company said. The amount of client money MF Global had during the quarter for investments rose to $12 billion compared with $11.8 billion a year ago, the company said. The number of trades MF Global executed on exchanges for clients fell 23 percent in the quarter to 87.8 million while the transactions it sent to clearinghouses rose 24 percent to 338.2 million. MF Global has had an application pending since last year to become a primary dealer that trades directly with the Federal Reserve Bank of New York and is required to bid at Treasury auctions. “We’re working hard” toward the designation, Corzine said, declining to be more specific. The firm also will look to generate revenue by charging fees to its customers for advisory business, Corzine said. “We will look for advisory activity that we will inlay into our businesses,” he said. Corzine was appointed chief executive March 23, giving him control of the company for six business days in the quarter. “After 57 days on the job, I’m more excited about MF Global than the day I joined,” he said. To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net .

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Berkshire Hathaway Has Smaller Holding of Procter & Gamble, Filing Shows

May 7, 2010

By Andrew Frye May 7 (Bloomberg) — Warren Buffett ’s Berkshire Hathaway Inc. had a smaller shareholding of Procter & Gamble Co. at the end of March than three months earlier, a company filing showed. The market value of Berkshire’s investment in the world’s largest consumer-products company fell to $4.73 billion on March 31 from $5.04 billion at the end of December, Buffett’s firm said today in its quarterly report. Cincinnati-based P&G rose 4.4 percent on the New York Stock Exchange in the first quarter. The investment’s cost basis, a measure of how much was paid to accumulate a stake, declined to $4.46 billion from $4.96 billion, Omaha, Nebraska-based Berkshire said. The cost basis for American Express Co., Coca-Cola Co. and Wells Fargo & Co., the other three top holdings listed in Berkshire’s filing, were unchanged in the quarter. To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net .

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Atlas Iron Limited (ASX:AGO) Updates On Planned Work For June Quarter And Activities Through The March Quarter 2010

May 2, 2010

Atlas Iron Limited (ASX:AGO) Updates On Planned Work For June Quarter And Activities Through The March Quarter 2010

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Samsung Electronics Profit Rises Seven-Fold to $3.6 Billion on Chip Prices

April 29, 2010

By Kevin Cho April 30 (Bloomberg) — Samsung Electronics Co. , Asia’s biggest maker of semiconductors, flat screens and mobile phones, reported record profit after rebounding demand for personal computers drove up chip prices. First-quarter net income rose almost seven-fold to 3.99 trillion won ($3.6 billion) in the three months ended March 31, from 582.2 billion won a year earlier, the Suwon, South Korea- based company said in a statement today. Sales, including those of overseas affiliates, increased 21 percent to 34.64 trillion won. Samsung said it expects to boost spending and earnings growth to extend into this quarter, joining technology companies including Intel Corp. and Apple Inc. in signaling a revival in demand for electronics ranging from televisions to PCs. Analysts predict Samsung’s earnings growth will probably extend until the third quarter, while higher memory-chip and flat-panel prices will help the company post record profit this year. The likelihood of increased spending “reflects a confidence in demand,” said Chang In Whan , president of Seoul- based KTB Asset Management Co., which manages the equivalent to $10 billion in assets. “I think overall the company will post stronger earnings than we previously anticipated.” Samsung , which climbed 77 percent last year, rose 1.6 percent to 838,000 won at 10:58 a.m. in Seoul trading, while the benchmark Kospi index gained 0.8 percent. The shares have climbed 4.9 percent this year, compared with the 3.6 percent advance by the Kospi. Cautiously Optimistic The company said it’s “cautiously optimistic” second- quarter earnings will rise, citing demand for products across all of Samsung’s major product categories. Samsung also expects capital spending this year to be substantially higher than it projected, though the electronics maker can’t currently disclose specific figures, said Robert Yi , head of investor relations. “We will continue to widen the gap with competitors in the memory business, improve profitability in the LCD business, and strengthen our competiveness and market dominance in the handset and TV businesses,” Yi said. Operating profit, or sales minus the cost of goods sold and administrative expenses, jumped to a record 4.41 trillion won from 593 billion won, Samsung said. The year-earlier results were revised following Samsung’s adoption of International Financial Reporting Standards from this year, the company said. Chip Division First-quarter profit at Samsung’s semiconductor division was 1.96 trillion won, compared with a loss a year earlier, as prices rose. Micron Technology Inc. and Hynix Semiconductor Inc. , which compete against Samsung in computer memory, both reported quarterly profit that beat analysts’ estimates. Intel , the biggest chipmaker, this month forecast record profit margins for 2010 and said sales will rise this quarter. Samsung, the world’s largest maker of computer-memory chips, said last month it expects prices to remain “stable” in the second half of the year, buoyed by strong demand. The company said in January it plans to spend 5.5 trillion won in capital investment on semiconductors this year, compared with 4.5 trillion won in 2009. Kwon Oh-Hyun , head of Samsung’s chip division, said March 16 a decision on raising capital spending for chips will be taken in the second quarter. Flat-Screen TV Demand At the flat-screen business, Samsung reported a profit of about 490 billion won, compared with a year-earlier loss, driven by higher TV demand. LG Display Co. , the second-largest liquid- crystal display maker after Samsung, last week reported its fourth straight quarterly profit after prices increased. Prices of most panels used in computer monitors, notebooks and TVs rose in the second half of March from a year earlier, according to Taipei-based researcher WitsView Technology Corp. Panel prices will probably remain flat in the current period and rebound in the third quarter, James Kim , an analyst at Nomura Holdings Inc., wrote in a report this month. A shortage of components for LCDs will continue throughout this year, which will help limit supply growth, he wrote. Samsung’s digital media division, which makes TVs, posted a profit of about 520 billion won from 470 billion won, as the company increased sales of more expensive models using light- emitting diodes as screen backlights. Global shipments of LCD TVs may rise 24 percent to more than 180 million units in 2010, Austin, Texas-based DisplaySearch said last month. Samsung, the world’s largest TV maker, said in January it expects to sell 35 million LCD sets this year. Mobile Phones LG Electronics Inc. , the second-ranked TV maker, this week posted a quarterly profit compared with a year-earlier loss, helped by sales of TVs and appliances. LG said its first-quarter LCD TV shipments increased 62 percent to 5.2 million sets. Samsung, also the world’s second-largest mobile-phone maker, said profit from the telecommunications division fell to 1.1 trillion won from 1.12 trillion won. First-quarter handset shipments climbed 40 percent to 64.3 million, Samsung said. The company said in February its handset shipments may grow 19 percent to more than 270 million units, helped by demand for smartphones. Samsung has said it plans to triple shipments of the devices this year from 6 million in 2009. Nokia, Apple Nokia Oyj , the world’s biggest maker of mobile phones, last week cut its margin forecast and posted profit that missed analysts’ estimates because of competition from Apple’s iPhone. Apple said last week its second-quarter iPhone sales more than doubled and profit increased 90 percent. LG Electronics, the world’s third-largest handset maker, this week said earnings from its mobile phones fell 89 percent as the company fell behind in introducing new models in the smartphone market, the fastest growing segment. Worldwide sales of smartphones will increase 36 percent to 247 million in 2010 and expand 30 percent next year, ISuppli said last month. The total mobile-phone industry shipments will probably rise 11 percent to 1.28 billion units this year, according to ISuppli. To contact the reporters on this story: Kevin Cho in Seoul at kcho2@bloomberg.net

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BASF First-Quarter Profit Beats Estimates as Demand for Plastics Recovers

April 28, 2010

By Cornelius Rahn and Richard Weiss April 29 (Bloomberg) — BASF SE, the world’s biggest chemical company, said profit more than doubled in the first quarter, boosted by recovering demand for plastics and products used in the automotive and electronics industries. Net profit increased to 1.03 billion euros ($1.4 billion) from 726 million euros, the Ludwigshafen, Germany-based company said in a statement today. Analysts surveyed by Bloomberg predicted 899 million euros. Sales also topped estimates. Carmakers and other chemical users are rebuilding inventories depleted during the financial crisis and BASF is forecasting higher sales in 2010 and a significant increase in earnings for 2010. BASF has advanced 6.7 percent this year, for a market value of more than 42 billion euros. Dow Chemical Co. shares have climbed 15 percent. Sales totaled 15.5 billion euros, beating the 14.37 billion euros predicted by analysts. Earnings before interest and tax was 1.8 billion euros. The German chemical maker matched rivals who also surprised analysts. Dow reported profit that topped estimates yesterday, driven by higher sales of commodity plastics such as polyethylene. DuPont Co., the third-biggest U.S. chemical maker, more than doubled first-quarter profit and raised its 2010 earnings forecast. BASF also benefited from a rising oil price. Crude Oil futures averaged $79.26 in the quarter ended March 31, compared to $44.35 in the quarter last year, according to Bloomberg data. Chief Executive Officer Juergen Hambrecht plans to cut at least 1 billion euros in costs by 2012. The worst chemical industry slump for 35 years prompted the 63-year-old to place more than 4,000 employees in Germany on shorter hours to trim expenses by shuttering plants. In addition, the merger of Ciba Specialty Chemicals into BASF should generate annual savings of 450 million euros by 2012 through the elimination of as many as 3,800 jobs. Possible Purchase The CEO may now be preparing his next major purchase. BASF is preparing a bid for Germany’s Cognis GmbH that may value the closely held chemical maker at about 3 billion euros, two people with knowledge of the situation said in early April. Cognis, owned by Goldman Sachs Group Inc. and Permira Advisers Ltd., is drawing bidders with its ingredients for body lotions, cleaning products and shampoos, products that are more resistant to economic cycles than those directly derived from oil and gas. A purchase by BASF would further Hambrecht’s drive to steer BASF away from commoditized chemicals. To contact the reporters on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net Richard Weiss in Frankfurt at rweiss5@bloomberg.net .

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Dividend Slump Ending as Record Cash Lifts Payouts for S&P 500 Companies

April 28, 2010

By Whitney Kisling April 28 (Bloomberg) — The fastest profit growth in 16 years means no companies in the Standard & Poor’s 500 Index are likely to lower their dividends this quarter, the first time that’s happened since 2004. Of 245 companies in the index yet to announce payouts, 218 will probably keep their level and 27 may increase, according to forecasts based on data compiled by Bloomberg. The projections come from criteria such as options prices, comparisons with competitors and statements from management. S&P 500 dividends were slashed by a record $52 billion in 2009, S&P data show. “Dividends show what companies are really saying, how they feel about the economy and their prospects,” said Tom Wirth , senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “When no companies are cutting, that is a signal that the economy is doing well, and it certainly helps the stock market .” Earnings in the S&P 500 rose 176 percent in the fourth quarter and probably climbed 44 percent in the first three months of 2010, giving companies a record stockpile of cash, estimates compiled by Bloomberg show. That helped spur Starbucks Corp. , the world’s largest chain of coffee shops, to offer its first-ever dividend, while Safeway Inc., Exxon Mobil Corp. and Chevron Corp. may boost theirs, the data show. International Business Machines Corp., the world’s biggest computer-services provider, increased its payout by 18 percent yesterday, more than forecast by Bloomberg. IBM is based in Armonk, New York. Not Since 2004 The last time all dividend-paying companies in the S&P 500 maintained or increased their rates was the second quarter of 2004, S&P data show. That was during the first half of the rally between 2002 and 2007 that drove the index up 101 percent. In the energy industry, 23 percent of companies are forecast to increase payouts through the end of the quarter, the most among 10 groups in the S&P 500. Consumer companies such as carmakers and entertainment companies are next, with 14 percent expected to raise their rates, according to the data. Safeway , the Pleasanton, California-based grocery-store chain, may push its dividend up 20 percent to 12 cents this month. Pharmaceutical distributor McKesson Corp. in San Francisco may increase its payout 25 percent to 15 cents. Irving, Texas-based Exxon and Chevron in San Ramon, California, could boost theirs by 4.8 percent and 5.9 percent, respectively, the data indicate. 85% Success Rate Bloomberg’s analysis had an 85 percent success rate identifying companies that started dividends or raised them in 2009. Starbucks announced on March 24 its first quarterly dividend since going public in 1992. Nine hours earlier, Bloomberg News said expanding cash levels would prompt the Seattle-based company to boost its rate. Higher payouts may help increase the S&P 500’s dividend yield from 1.80 percent, which is near the five-year low of 1.75 reached on April 23. The measure has slipped from 4.67 percent in November 2008, the highest level in at least 15 years, as a 75 percent rally in the index pushed up prices relative to the cash companies paid shareholders. “Balance-sheet management has been stellar over the past two years,” Jonathan Golub , the U.S. equities strategist for Zurich-based UBS AG, wrote in a note to clients on March 29. “We continue to like high dividend yielding stocks as alternatives to money-market and short-duration bond funds.” More than 800 dividend decreases were announced in 2009, a year after the S&P 500 plunged 38 percent for its worst annual performance since the 1930s. The January-to-March period in 2009 was the worst quarter ever for S&P 500 dividends with $38.7 billion in reductions, according to S&P. The stock index sank to a 12-year low on March 9, 2009. Billions in Cash As the economy rebounded, cash balances rose to a record $831.2 billion at the end of the fourth quarter, according to S&P data. One company cut its dividend and another suspended it during the first three months of 2010, the fewest since 2006, according to S&P. “Dividends are emblematic of corporate strength,” Jack Ablin , chief investment officer at Chicago-based Harris Private Bank, who oversees $55 million, said in a Bloomberg Television interview. “It is remarkable to me the level of cash on corporate balance sheets. It’s certainly a strong vote of confidence for corporate America right now.” To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net .

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Lazard Reports Second Straight Loss on Compensation, Restructuring Costs

April 27, 2010

By Michael J. Moore April 27 (Bloomberg) — Lazard Ltd. , the biggest non-bank merger adviser, reported its second straight loss on higher compensation costs and a restructuring charge for staff cuts. The loss for the first three months of 2010 was $33.5 million, or 38 cents a share, compared with a loss of $53.5 million, or 77 cents, in the same period a year earlier, the Hamilton, Bermuda-based company said today in a statement. Adjusted earnings were 46 cents a share, beating the 18-cent average estimate of 12 analysts in a Bloomberg survey. Compensation expenses drove the loss for a second quarter as Lazard recognized costs related to deferred stock awards and severance payments. Lazard’s revenue from advising on mergers and acquisitions climbed from a year earlier even as companies completed a lower value of deals in the quarter. “Over the last two years, in addition to aggressively hiring senior bankers, we’ve also right-sized the firm in both asset management and the financial-advisory business, to make sure we have the right skill sets for the new world,” Chief Financial Officer Michael Castellano said in an interview. “I think we’ve now got the right manpower complement to be able to drive growth in both of the businesses.” Lazard fell 41 cents, or 1.1 percent, to $38.21 yesterday in New York Stock Exchange composite trading. The shares gained 28 percent last year after falling 27 percent in 2008. Revenue Increase Operating revenue rose 67 percent from a year earlier to a first-quarter record of $456.9 million. Operating revenue from financial-advisory services climbed to $269.1 million as fees from advising on both mergers and restructuring jumped more than 50 percent. Revenue from merger and acquisition and strategic advisory climbed 53 percent from a year earlier to $147.6 million. That’s down 13 percent from the fourth quarter of 2009. Asset management revenue climbed 78 percent from a year earlier to $183.7 million. Assets under management increased 4 percent to $135 billion from Dec. 31, with net inflows of $3 billion in the quarter. “Both financial advisory and asset management had their best first quarters ever,” Castellano said. “We’re continuing to gain global market share in the M&A business.” Compensation costs climbed 35 percent from a year earlier to $275.5 million. The firm’s compensation ratio fell to 60 percent of revenue, excluding one-time charges, compared with 75 percent in the first quarter of 2009. The firm also recorded a one-time $87.1 million expense tied to staff reductions. Kenneth Jacobs Kenneth Jacobs was named chief executive officer in November after the death of Bruce Wasserstein, the preeminent Wall Street dealmaker who took Lazard public in 2005. Jacobs, who has worked at the firm for 22 years, had served as deputy chairman and CEO of North American businesses since 2002, shortly after Wasserstein arrived. Lazard said last month that Castellano will retire on March 31, 2011. He will be replaced by Matthieu Bucaille , who served as deputy chief executive officer of Lazard Freres Banque in Paris. Lazard has been using its restructuring-advisory business to counter weakness in mergers and acquisitions. It was the second-ranked adviser in 2009 bankruptcy liquidations, according to Bloomberg data, and advised debtors or creditors in the top 10 Chapter 11 bankruptcies in 2009. Companies worldwide completed $358.9 billion of deals in the first quarter, down 25 percent from the same period in 2009 and 52 percent from the first quarter of 2008, data compiled by Bloomberg show. Financial Advice Lazard was the seventh-ranked financial adviser on announced deals and 12th-ranked on completed takeovers in the first quarter. The firm advised on completed deals totaling more than $33.9 billion, including Kraft Foods Inc.’s acquisition of Cadbury PLC. Lazard employees own more than a quarter of the firm, excluding the estate of Wasserstein. Because the stakes owned by employees can be converted into common stock, the company reports earnings as though the stakes were fully exchanged instead of treating them as minority interest. Evercore Partners Inc. , the investment bank founded by former U.S. Deputy Treasury Secretary Roger Altman , reported earnings last week that beat analysts’ estimates as advisory revenue climbed from a year earlier. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net .

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Morgan Stanley Climbs Most Since July After Beating Estimates

April 21, 2010

By Michael J. Moore April 21 (Bloomberg) — Morgan Stanley climbed the most in nine months on the New York Stock Exchange after posting earnings that beat analysts’ estimates on higher fixed-income trading revenue. The shares rose as much as 6 percent after the New York- based bank said first-quarter net income was $1.78 billion, or 99 cents a share. Earnings from continuing operations were $1.03 a share, including a 21-cent tax benefit, compared with the 57- cent average estimate of 24 analysts surveyed by Bloomberg. Morgan Stanley’s fixed-income results, the best since the third quarter of 2008, follow record revenue from debt trading reported earlier this month by Bank of America Corp. , JPMorgan Chase & Co. and Goldman Sachs Group Inc. Chief Executive Officer James Gorman , who succeeded John Mack in January, said in a letter to shareholders last week he wasn’t satisfied with the company’s performance in 2009 and the firm had hired 350 employees as part of a “revitalization” of sales and trading. “This was really surprising,” Thomas Brown , CEO of hedge fund Second Curve Capital LLC in New York, said in a Bloomberg Television interview. “Given the previous four quarters, where they really looked like the weak sister, this quarter they really stepped out. These were great numbers.” Morgan Stanley climbed $1.70 to $32.15 at 12:08 p.m. in composite trading on the New York Stock Exchange, after reaching $32.29 earlier today. The shares have gained 8.8 percent this year, compared with a 4.7 percent drop for Goldman Sachs and a 16 percent increase in the Standard & Poor’s 500 Financials Index. SEC’s Case Morgan Stanley’s shares fell 5.6 percent on April 16, as the SEC accused Goldman Sachs of failing to tell investors in a 2007 collateralized debt obligation that hedge fund Paulson & Co., which planned to bet against the CDO, played a part in selecting the underlying assets. Goldman Sachs has said the SEC’s case is “completely unfounded in law and fact” and that it plans to “vigorously contest” the case. Morgan Stanley Chief Financial Officer Ruth Porat said on a conference call with analysts today that the firm has not received a Wells notice, a signal of the Securities and Exchange Commission’s intention to pursue a lawsuit, regarding its collateralized debt obligations business. Revenue from fixed-income sales and trading jumped to $2.7 billion in the quarter from $1.29 billion a year earlier. That beat estimates for $1.95 billion from Howard Chen at Credit Suisse Group AG and $2.04 billion from Keith Horowitz at Citigroup Inc. ‘Coming Back’ “The fixed-income franchise is coming back for Morgan Stanley,” Jason Tyler , senior vice president at Ariel Investment LLC, said in a Bloomberg Television interview. “The history of this organization is that it’s very strong on the fixed-income side.” Goldman Sachs reported fixed-income revenue of $7.39 billion yesterday. Bank of America and JPMorgan, the two biggest U.S. banks by assets, both beat analysts’ earnings estimates last week as they posted fixed-income revenue of $5.52 billion and $5.46 billion, respectively. Morgan Stanley’s profit compared with a loss of $177 million, or 57 cents, in the first quarter of 2009, the bank said today in a statement. Revenue more than tripled to $9.08 billion. Morgan Stanley generated $887 million in revenue from investment banking, up from $811 million a year earlier. In equities trading, Morgan Stanley’s $1.42 billion of first- quarter revenue was up from $954 million a year earlier. The unit’s revenue compares with $2.35 billion at Goldman Sachs and $1.5 billion at JPMorgan. Smith Barney Global wealth management posted pretax income of $278 million, compared with $119 million in the first quarter of 2009, as the unit benefited from its joint venture with Citigroup Inc.’s Smith Barney. Asset management reported a pretax profit of $173 million, compared with a pretax loss of $283 million in the previous year’s first quarter. Morgan Stanley recorded a $932 million loss on its $1.2 billion investment in Revel Entertainment Group LLC, the developer of an unfinished casino resort in Atlantic City, New Jersey. Porat said the company plans to dispose of the investment in the next 12 months. The Revel loss was partly offset by a $775 million payment Morgan Stanley received from Discover Financial Services to resolve a legal dispute. Both were included in discontinued operations. Wealth Management The wealth-management unit had $3.11 billion in revenue, down from $3.14 billion in the fourth quarter. The brokerage’s pretax profit margin was 9 percent, up from 7 percent in the fourth quarter. Gorman has said the firm expects to increase that margin to 15 percent by the end of this year and more than 20 percent by the end of 2011. “That progression is what we’re looking at as an indication that the integration is continuing on track,” Porat said in an interview. “The revenues are pretty flat from the fourth quarter, and that reflects a more muted retail environment. Retail investors just weren’t as active.” Net new client assets in the unit were $5.8 billion, the highest since the third quarter of 2008. The unit had 18,140 advisers as of March 31 as turnover was at “historic lows,” Porat said. Compensation and benefits expenses were $4.4 billion in the quarter, or 49 percent of the firm’s overall revenue. The cost compared with $2.08 billion in the first quarter of 2009, when the firm set aside 68 percent of revenue. The compensation ratio was 41 percent in the institutional securities business, which includes the trading and investment banking units, and 64 percent in the wealth-management division. Porat said the firm aims to reduce the ratio in the brokerage as revenue increases. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net .

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AMR Declines Most Since October as Fuel Costs Lead to Wider Quarterly Loss

April 21, 2010

By Mary Schlangenstein April 21 (Bloomberg) — American Airlines parent AMR Corp. slid as much as 7.7 percent in New York trading, the most since October, as higher fuel prices and stagnant passenger traffic led to a wider quarterly loss than analysts expected. The first-quarter deficit was $452 million, or $1.36 a share, excluding costs linked to currency devaluation, Fort Worth, Texas-based AMR said today. That was wider than the $1.31 average in 9 analysts’ estimates compiled by Bloomberg. American, the second-biggest U.S. carrier, paid 16 percent more per gallon for jet fuel, tempering the benefit from the return of some high-fare overseas travel as the recession eased. AMR spent $1.48 billion for fuel , its second-largest cost after labor, as total traffic for the quarter was little changed. “We were expecting a little more pricing traction” in the quarter, said Hunter Keay , a Stifel Nicolaus & Co. analyst in Baltimore who recommends buying AMR shares. The carrier missed Keay’s revenue estimate by about $20 million. AMR tumbled 55 cents, or 6.4 percent, to $8.01 at 2:29 p.m. in New York Stock Exchange composite trading. The shares slid as low as $7.90 for their biggest intraday percentage drop since Oct. 30. The company’s net loss widened to $505 million, or $1.52 a share, from $375 million, or $1.35, a year earlier, according to its statement. Sales rose 4.7 percent to $5.07 billion. “That disappointing result, which was driven by lingering weakness in the economy combined with rising fuel prices, underscores the reality that despite a lot of hard work and progress, we remain regrettably far from our goal of sustained profitability,” Chief Executive Officer Gerard Arpey told employees in a letter today. AirTran Shares Fall AirTran Holdings Inc., a low-fare carrier based in Orlando, Florida, that flies mostly in the eastern U.S., today said its quarterly net loss was $12 million, or 9 cents a share, compared with net income of $28.7 million, or 21 cents, a year earlier. AirTran slid 53 cents, or 9.1 percent, to $5.27 in NYSE trading, the shares’ biggest intraday decline since October. Delta Air Lines Inc., the world’s biggest carrier, said yesterday that its first-quarter loss narrowed to $256 million and forecast a profit this quarter. Continental Airlines Inc. and Southwest Airlines Co. report results tomorrow. American’s passenger traffic on international flights rose 1.7 percent in the quarter, after a 12 percent plunge a year earlier. The increase for all traffic was 0.4 percent, the carrier said. ‘Modest Success’ Winter storms in the U.S. and earthquakes in Haiti and Chile reduced revenue in the quarter by as much as $25 million, American said. Unit revenue, which reflects fares and traffic, rose 6.8 percent in the airline’s main jet operations on the resumption of business travel. Corporate revenue increased more than 17 percent from a year earlier. “While average fares are still not where we need them to be, we are seeing fewer sales and, in fact, the industry has had some modest success in raising fares,” Arpey told workers. “It’s fair to say there is cause for some cautious optimism on the revenue side of the equation as we head into summer.” American’s cost to fly each seat a mile, a measure of efficiency, jumped 9.2 percent. Excluding fuel, expense on that basis increased 5.7 percent. Yield, or average fare per mile, rose 3.7 percent. AMR ended the quarter with $5 billion in cash and short- term investments , including $460 million for specific uses. Labor Talks The company and unions for its flight attendants and for ramp workers and mechanics were ordered April 14 to return to contract negotiations by the National Mediation Board. The Association of Professional Flight Attendants and the Transport Workers Union asked the board to declare talks deadlocked and trigger a 30-day countdown to a possible strike. American is trying to hold down spending on labor , its largest expense, while boosting productivity. The workers want to recoup pay and benefits given up in 2003 to save the airline from bankruptcy. AMR ’s first-quarter spending for wages, salaries and benefits rose less than 1 percent to $1.7 billion. AirTran said its quarterly loss excluding a $4.7 million gain related to fuel hedges was 12 cents a share. That was narrower than the 13-cent average of 10 analysts’ estimates compiled by Bloomberg. Sales rose 12 percent to $605.1 million, less than the average of $606.3 million from 7 estimates. Storms in February that forced Washington-area airports to close for several days reduced AirTran’s revenue by at least $10 million, and storms in Atlanta forced more cancellations, CEO Bob Fornaro said today in an interview. AirTran canceled 1,400 flights in this year’s first two months, more than in 2009’s first 10 months of 2009, he said. To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

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Morgan Stanley Gains Most Since July as Fixed-Income Trading Drives Profit

April 21, 2010

By Michael J. Moore April 21 (Bloomberg) — Morgan Stanley climbed the most in nine months on the New York Stock Exchange after posting earnings that beat analysts’ estimates on higher fixed-income trading revenue. The shares rose as much as 6 percent after the New York- based bank said first-quarter net income was $1.78 billion, or 99 cents a share. Earnings from continuing operations were $1.03 a share, including a 21-cent tax benefit, compared with the 57- cent average estimate of 24 analysts surveyed by Bloomberg. Morgan Stanley’s fixed-income results, the best since the third quarter of 2008, follow record revenue from debt trading reported earlier this month by Bank of America Corp. , JPMorgan Chase & Co. and Goldman Sachs Group Inc. Chief Executive Officer James Gorman , who succeeded John Mack in January, said in a letter to shareholders last week he wasn’t satisfied with the company’s performance in 2009 and the firm had hired 350 employees as part of a “revitalization” of sales and trading. “This was really surprising,” Thomas Brown , CEO of hedge fund Second Curve Capital LLC in New York, said in a Bloomberg Television interview. “Given the previous four quarters, where they really looked like the weak sister, this quarter they really stepped out. These were great numbers.” Morgan Stanley climbed $1.70 to $32.15 at 12:08 p.m. in composite trading on the New York Stock Exchange, after reaching $32.29 earlier today. The shares have gained 8.8 percent this year, compared with a 4.7 percent drop for Goldman Sachs and a 16 percent increase in the Standard & Poor’s 500 Financials Index. SEC’s Case Morgan Stanley’s shares fell 5.6 percent on April 16, as the SEC accused Goldman Sachs of failing to tell investors in a 2007 collateralized debt obligation that hedge fund Paulson & Co., which planned to bet against the CDO, played a part in selecting the underlying assets. Goldman Sachs has said the SEC’s case is “completely unfounded in law and fact” and that it plans to “vigorously contest” the case. Morgan Stanley Chief Financial Officer Ruth Porat said on a conference call with analysts today that the firm has not received a Wells notice, a signal of the Securities and Exchange Commission’s intention to pursue a lawsuit, regarding its collateralized debt obligations business. Revenue from fixed-income sales and trading jumped to $2.7 billion in the quarter from $1.29 billion a year earlier. That beat estimates for $1.95 billion from Howard Chen at Credit Suisse Group AG and $2.04 billion from Keith Horowitz at Citigroup Inc. ‘Coming Back’ “The fixed-income franchise is coming back for Morgan Stanley,” Jason Tyler , senior vice president at Ariel Investment LLC, said in a Bloomberg Television interview. “The history of this organization is that it’s very strong on the fixed-income side.” Goldman Sachs reported fixed-income revenue of $7.39 billion yesterday. Bank of America and JPMorgan, the two biggest U.S. banks by assets, both beat analysts’ earnings estimates last week as they posted fixed-income revenue of $5.52 billion and $5.46 billion, respectively. Morgan Stanley’s profit compared with a loss of $177 million, or 57 cents, in the first quarter of 2009, the bank said today in a statement. Revenue more than tripled to $9.08 billion. Morgan Stanley generated $887 million in revenue from investment banking, up from $811 million a year earlier. In equities trading, Morgan Stanley’s $1.42 billion of first- quarter revenue was up from $954 million a year earlier. The unit’s revenue compares with $2.35 billion at Goldman Sachs and $1.5 billion at JPMorgan. Smith Barney Global wealth management posted pretax income of $278 million, compared with $119 million in the first quarter of 2009, as the unit benefited from its joint venture with Citigroup Inc.’s Smith Barney. Asset management reported a pretax profit of $173 million, compared with a pretax loss of $283 million in the previous year’s first quarter. Morgan Stanley recorded a $932 million loss on its $1.2 billion investment in Revel Entertainment Group LLC, the developer of an unfinished casino resort in Atlantic City, New Jersey. Porat said the company plans to dispose of the investment in the next 12 months. The Revel loss was partly offset by a $775 million payment Morgan Stanley received from Discover Financial Services to resolve a legal dispute. Both were included in discontinued operations. Wealth Management The wealth-management unit had $3.11 billion in revenue, down from $3.14 billion in the fourth quarter. The brokerage’s pretax profit margin was 9 percent, up from 7 percent in the fourth quarter. Gorman has said the firm expects to increase that margin to 15 percent by the end of this year and more than 20 percent by the end of 2011. “That progression is what we’re looking at as an indication that the integration is continuing on track,” Porat said in an interview. “The revenues are pretty flat from the fourth quarter, and that reflects a more muted retail environment. Retail investors just weren’t as active.” Net new client assets in the unit were $5.8 billion, the highest since the third quarter of 2008. The unit had 18,140 advisers as of March 31 as turnover was at “historic lows,” Porat said. Compensation and benefits expenses were $4.4 billion in the quarter, or 49 percent of the firm’s overall revenue. The cost compared with $2.08 billion in the first quarter of 2009, when the firm set aside 68 percent of revenue. The compensation ratio was 41 percent in the institutional securities business, which includes the trading and investment banking units, and 64 percent in the wealth-management division. Porat said the firm aims to reduce the ratio in the brokerage as revenue increases. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net .

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Apple Profit Rises 90% on Demand for Macintosh PCs, IPhones; Shares Climb

April 20, 2010

By Connie Guglielmo April 20 (Bloomberg) — Apple Inc. reported net income and sales that soared past analysts’ estimates as Chief Executive Officer Steve Jobs promised to release “several more extraordinary products” this year. The shares surged. Second-quarter profit rose 90 percent to $3.07 billion, or $3.33 a share, from $1.62 billion, or $1.79, a year earlier, Cupertino, California-based Apple said today in a statement. Sales gained 49 percent to $13.5 billion, topping the $12 billion average of analysts’ estimates compiled by Bloomberg. Jobs, 55, won consumers over to the iPhone while persuading more PC users to embrace the Mac. Results for the period ended March 27 don’t include the iPad, which went on sale April 3. Investors and analysts anticipate the tablet computer will spur sales after Apple said last week it couldn’t make enough of the gadgets to satisfy demand. “Incredible numbers,” said Michael Obuchowski , managing director at First Empire Asset Management Inc. in Hauppauge, New York, which oversees $3.8 billion in assets including Apple shares. “With the improving global economy lifting all the boats, Apple will benefit more than most.” Apple jumped as much as 8.3 percent to $265 in after-hours trading after falling $2.48 to $244.59 at 4 p.m. New York time on the Nasdaq Stock Market . The shares have doubled in the past year. Buoyed by optimism for the iPad, the stock closed at a record high of $248.92 on April 15. Analysts on average estimated profit of $2.46 a share. Product Performance The company said it shipped 8.75 million iPhones, 2.94 million Macs and 10.9 million iPods last quarter. Toni Sacconaghi , an analyst at Sanford C. Bernstein & Co. in New York, estimated shipments of 7.3 million iPhones, 3.1 million Macs and 9.9 million iPods. Sacconaghi, who rates the stock “outperform,” is the top-ranked computer analyst by Institutional Investor magazine. “It’s another monster quarter,” said Gene Munster , an analyst at Piper Jaffray & Co. in Minneapolis. “The iPhone is on fire right now.” Sales this quarter will be $13 billion to $13.4 billion and profit will be $2.28 to $2.39 a share, Chief Financial Officer Peter Oppenheimer said today. Analysts on average anticipated third-quarter sales of $13 billion and profit of $2.70 a share. “We have several more extraordinary products in the pipeline for this year,” Jobs said in the statement. He said the second period was the company’s best outside a holiday quarter. Apple said in January that revenue typically drops after the holiday season, one of its biggest quarters for sales. IPad Boost Sales this quarter will be boosted by the iPad, a mobile gadget for surfing the Web, playing music, watching video and reading electronics books. Apple said it sold more than 500,000 iPads in the first week after its U.S. debut. Because demand has been “far higher” than the company predicted, Apple said it delayed the device’s international release by a month to the end of May. The iPad’s initial release only included models that start at $499 and run on Wi-Fi networks. The iPad 3G, which can tap into Wi-Fi and 3G systems, starts at $629 and will be released April 30. Apple said yesterday that U.S. customers who ordered 3G models starting April 19 won’t receive them until May 7. The company may sell as many as 900,000 iPads this quarter, said Shaw Wu , an analyst with Kaufman Bros. in San Francisco. Updates to the MacBook notebooks, announced April 13, should also lift Mac sales this quarter, said Wu, who recommends buying the shares and doesn’t own any. Gross margin , the percentage of sales after deducting product costs, was 41.7 percent, compared with 40.9 percent in the first quarter. Sacconaghi predicted second-quarter gross margin of 40 percent. To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net .

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New Zealand Consumer Prices Rose Less-Than-Expected 0.4% in First Quarter

April 19, 2010

By Tracy Withers April 20 (Bloomberg) — New Zealand consumer prices rose less than economists expected in the three months through March, giving central bank Governor Alan Bollard more room to delay an interest-rate increase until the third quarter. Consumer prices increased 0.4 percent from the fourth quarter, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 14 economists was for a 0.6 percent gain. Annual inflation was 2 percent, unchanged from the year through December. Bollard said March 11 he expected to increase the benchmark interest rate from a record-low 2.5 percent around the middle of this year as the economy rebounds. Indicators in the past month suggest a first-quarter decline in housing and consumer spending will slow the recovery, boosting the case for the central bank to hold off raising borrowing costs. “ There’s nothing to really push the Reserve Bank into going in June,” said Nick Tuffley , chief economist at ASB Bank ltd. in Auckland, who previously expected an increase that month. “The odds are marginally in favor of July over June at the moment.” New Zealand’s dollar declined to 70.88 U.S. cents at 11:25 a.m. in Wellington from 71.25 cents immediately before the report. Ten of 15 economists surveyed by Bloomberg News last week say Bollard will raise the official cash rate at the meeting on June 10. Two tip an increase on April 29 and three expect a move in the third quarter. Traders Bet Traders are betting the rate will be 4.01 percent in a year’s time, down from 4.13 percent immediately before the report, according to a Credit Suisse index based on swaps trading. New Zealand’s economy expanded 0.8 percent in the fourth quarter, the fastest pace in two years, as it emerged from a recession that began in early 2008. The central bank forecast on March 11 that growth will accelerate to 0.9 percent in the first quarter. Cameron Bagrie , chief economist at ANZ National Bank Ltd. in Wellington, said that pace of recovery may not occur until the second half of the year. Retail sales declined for the second time in three months in February, according to government figures on April 14. First-quarter house sales slumped 12 percent from the fourth quarter, according to Real Estate Institute figures on April 16. Spare Capacity Inflation pressures are subdued, the New Zealand Institute of Economic Research Inc . said April 6, citing a quarterly survey. Its gauge of capacity utilization, or spare capacity in the economy, fell in the first quarter and companies expect profits will decline in the second quarter because they are unable to pass on cost increases, it said. Bollard is required by the government to keep annual inflation between 1 percent and 3 percent on average over the medium term. He expects inflation will accelerate to 2.8 percent by the end of 2011. Food and fuel stoked inflation in the quarter, the statistics agency said. Food prices increased 1 percent led by fruit, meat, fresh milk, cheese and butter. Gasoline prices surged 6.9 percent. Excluding fuel, consumer prices would have been unchanged in the quarter, the agency said. Bollard’s primary focus is on non-tradable inflation, a core measure of prices that aren’t influenced by currency fluctuations and fuel. University Fees Non-tradable prices rose 0.5 percent from the fourth quarter, today’s report showed. The measure gained 2.1 percent from a year earlier, the smallest gain in more than eight years. Non-tradable inflation was stoked by a 4.8 percent jump in education prices reflecting higher university course fees and the removal of government subsidies for adult and community education courses. Rents increased 0.5 percent and the cost of purchasing a new home rose 0.2 percent, today’s report showed. Land taxes and charges for water and waste disposal were unchanged. Electricity prices gained 0.2 percent. Tradable prices gained 0.1 percent from the fourth quarter, as the price of imported computers, cameras, appliances and new car declined. International air travel costs dropped 8.3 percent. Excluding the increase in gasoline, tradable prices fell 0.6 percent, the agency said. From a year earlier, tradable prices increased 2 percent. To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

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Bank of America Returns to Profit as Merrill Lynch Purchase Boosts Revenue

April 16, 2010

By David Mildenberg and Nikolaj Gammeltoft April 16 (Bloomberg) — Bank of America Corp. , the largest U.S. lender, posted its first profit in three quarters as the company reaped gains from Merrill Lynch & Co.’s investment banking and provisions for loan losses declined. First-quarter net income was $3.18 billion, or 28 cents a share, compared with $4.25 billion, or 44 cents, in the same period a year earlier, according to a statement today from the Charlotte, North Carolina-based bank. That beat the average estimate of 23 analysts surveyed by Bloomberg of 10 cents, adjusted for one-time items. Revenue from Merrill Lynch’s corporate customers and retail investors is helping Chief Executive Officer Brian T. Moynihan keep the bank profitable while he tries to stem losses from home loans. Bank of America bought Merrill Lynch last year in a deal criticized by lawmakers, regulators and investors over its cost, the U.S. bailout that followed and concern that the bank would be saddled with write-offs. “It would be a surprise if Merrill didn’t add to the earnings ,” said Bruce Bittles , chief investment strategist at Milwaukee-based Robert W. Baird & Co., before results were released. “The institutional business is way up and there’s a lot more deal-making going on this year than last year, so the numbers look pretty good.” His firm manages more than $75 billion and owns Bank of America stock. Repair Jobs Moynihan, 50, has said he’s focused on curtailing bad loans and simplifying consumer accounts and fees. The provision for credit losses dropped by $3.6 billion, according to the bank. He’s also trying to repair relations with Congress and regulators, which frayed during the months before the December retirement of his predecessor, Kenneth D. Lewis .     New consumer banking regulations will trim Bank of America’s annual revenue from service charges to about $2 billion per quarter starting in the fourth quarter this year, the bank said. That revenue has averaged more than $2.6 billion per quarter over the past year, the bank said. “We’ve seen the view of commercial companies in America get more confident,” Moynihan said in a CNBC interview. “I expect we’ll see better loan demand, but right now it’s not very strong.” Bank of America ranks first in the U.S. by deposits and assets, and second among credit-card lenders. Overdue card loans fell in March to the lowest in more than a year, signaling that write-offs may decline from 2009’s record. Card Services     The bank’s card services business swung to a $952 million profit from a $1.75 billion loss. The provision for credit costs on unpaid card debts dropped by more than half to $3.54 billion.     Home loans and insurance reported a $2.07 billion loss as fewer borrowers refinanced their homes and defaults increased. It was the only one of Bank of America’s six operating units to report a loss during the quarter. At Merrill Lynch, the company has sought to head off defections of top producers and rehired executives who left. The bank has said it’s spurring growth outside the U.S. by adding more than a dozen corporate bankers in Hong Kong, London and Singapore this year and more staff in emerging-market nations. Revenue from fixed-income, currency and commodity trading climbed 16 percent to $5.52 billion, the most since the bank acquired Merrill Lynch last year. The segment’s revenue exceeded JPMorgan Chase & Co.’s $5.46 billion in fixed-income revenue for the quarter, which was a record for that bank. Bank of America stock is trading at its highest price since the Merrill purchase, closing yesterday at $19.48 on the New York Stock Exchange and rising to $19.75 today in early trading. The shares soared sixfold from March 2009 when analysts were speculating about nationalization. Banks Report JPMorgan, the lender’s biggest rival, reported earlier this week that first-quarter profit topped analysts’ estimates on record fixed-income trading and declining provisions for credit losses. Citigroup Inc. and Wells Fargo & Co. report results next week. “The mega-cap banks will continue to offer very positive results,” said Jack Ablin , chief investment officer at Chicago- based Harris Private Bank, who oversees $55 billion. “Most of Bank of America’s business is skewed to the consumer and because consumer balance sheets are improving they should deliver good results.” To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net ;

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Bank of America Returns to Profit as Merrill Lynch Purchase Boosts Revenue

April 16, 2010

By David Mildenberg and Nikolaj Gammeltoft April 16 (Bloomberg) — Bank of America Corp. , the largest U.S. lender, posted its first profit in three quarters as the company reaped gains from Merrill Lynch & Co.’s investment banking and provisions for loan losses declined. First-quarter net income was $3.18 billion, or 28 cents a share, compared with $4.25 billion, or 44 cents, in the same period a year earlier, according to a statement today from the Charlotte, North Carolina-based bank. That beat the average estimate of 23 analysts surveyed by Bloomberg of 10 cents, adjusted for one-time items. Revenue from Merrill Lynch’s corporate customers and retail investors is helping Chief Executive Officer Brian T. Moynihan keep the bank profitable while he tries to stem losses from home loans. Bank of America bought Merrill Lynch last year in a deal criticized by lawmakers, regulators and investors over its cost, the U.S. bailout that followed and concern that the bank would be saddled with write-offs. “It would be a surprise if Merrill didn’t add to the earnings ,” said Bruce Bittles , chief investment strategist at Milwaukee-based Robert W. Baird & Co., before results were released. “The institutional business is way up and there’s a lot more deal-making going on this year than last year, so the numbers look pretty good.” His firm manages more than $75 billion and owns Bank of America stock. Repair Jobs Moynihan, 50, has said he’s focused on curtailing bad loans and simplifying consumer accounts and fees. The provision for credit losses dropped by $3.6 billion, according to the bank. He’s also trying to repair relations with Congress and regulators, which frayed during the months before the December retirement of his predecessor, Kenneth D. Lewis .     New consumer banking regulations will trim Bank of America’s annual revenue from service charges to about $2 billion per quarter starting in the fourth quarter this year, the bank said. That revenue has averaged more than $2.6 billion per quarter over the past year, the bank said. “We’ve seen the view of commercial companies in America get more confident,” Moynihan said in a CNBC interview. “I expect we’ll see better loan demand, but right now it’s not very strong.” Bank of America ranks first in the U.S. by deposits and assets, and second among credit-card lenders. Overdue card loans fell in March to the lowest in more than a year, signaling that write-offs may decline from 2009’s record. Card Services     The bank’s card services business swung to a $952 million profit from a $1.75 billion loss. The provision for credit costs on unpaid card debts dropped by more than half to $3.54 billion.     Home loans and insurance reported a $2.07 billion loss as fewer borrowers refinanced their homes and defaults increased. It was the only one of Bank of America’s six operating units to report a loss during the quarter. At Merrill Lynch, the company has sought to head off defections of top producers and rehired executives who left. The bank has said it’s spurring growth outside the U.S. by adding more than a dozen corporate bankers in Hong Kong, London and Singapore this year and more staff in emerging-market nations. Revenue from fixed-income, currency and commodity trading climbed 16 percent to $5.52 billion, the most since the bank acquired Merrill Lynch last year. The segment’s revenue exceeded JPMorgan Chase & Co.’s $5.46 billion in fixed-income revenue for the quarter, which was a record for that bank. Bank of America stock is trading at its highest price since the Merrill purchase, closing yesterday at $19.48 on the New York Stock Exchange and rising to $19.75 today in early trading. The shares soared sixfold from March 2009 when analysts were speculating about nationalization. Banks Report JPMorgan, the lender’s biggest rival, reported earlier this week that first-quarter profit topped analysts’ estimates on record fixed-income trading and declining provisions for credit losses. Citigroup Inc. and Wells Fargo & Co. report results next week. “The mega-cap banks will continue to offer very positive results,” said Jack Ablin , chief investment officer at Chicago- based Harris Private Bank, who oversees $55 billion. “Most of Bank of America’s business is skewed to the consumer and because consumer balance sheets are improving they should deliver good results.” To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net ;

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Bank Of America Q1 Profit 2010: Bank Pulls In $2.8 Billion On Strong Trading

April 16, 2010

CHARLOTTE, N.C. — Bank of America said Friday its first-quarter earnings rose 0.7 percent to $2.83 billion as strong trading revenue helped the bank offset continuing losses on consumer loans. The bank reported a $2.1 billion loss in its home mortgage business, but said its other consumer loan businesses were showing signs of healing. Bank of America’s results after payment of preferred stock dividends are up slightly from $2.81 billion a year ago. They surpassed expectations and provided further evidence that the banking industry and the economy are recovering. JPMorgan Chase & Co. on Wednesday also reported improvements in its consumer loan business, and said continuing credit losses were offset by income from trading. Bank of America set aside $9.8 billion to covered soured loans during the quarter, down 3 percent from $10.1 billion the previous quarter. A year earlier, it had set aside $13.4 billion. Many analysts predict loan losses should peak some time in the first half of 2010. CEO Brian Moynihan said in a statement, “the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy.” JPMorgan Chase also reported that it saw signs of improvement in the economy. Still, home mortgages remain a trouble spot for Bank of America, the nation’s largest mortgage servicer. Although its set aside less money for overall loan losses, it increased the amount set aside for home mortgage losses, to $3.6 billion, as its mortgage losses widened. Home loans were the only one of Bank of America’s six major business units to show a loss for the quarter. The bank said losses in other consumer loans portfolios, including credit cards, fell during the quarter. Bank of America reported that income from its global banking and markets business, which includes the Merrill Lynch investment banking operations, rose $709 million to $3.2 billion. Charlotte, N.C.-based Bank of America earned 28 cents per share after paying preferred dividends. A year ago, it earned $2.81 billion, or 44 cents per share. Analysts expected profit of 9 cents per share in the most recent quarter, according to Thomson Reuters. Revenue totaled nearly $32 billion in the quarter. Bank of America’s stock rose 1.5 percent to $19.78 in pre-opening trading, a level it hasn’t reached since November 2008. The bank was among the hardest hit during the credit crisis, and received $45 billion in bailout funds from the federal government. Bank of America said in December it had repaid the money. Like nearly all banks in the country, the company faced waves of loan defaults as more customers fell behind and investments soured. Earlier in the week, JPMorgan Chase said it earned $3.3 billion in the first quarter even as consumers continued to struggle to repay loans. The bank said it set aside $7 billion to cover bad loans during the most recent quarter. Its investment banking division and other businesses enabled it to more than overcome the ongoing weakness in lending. Citigroup Inc. reports earnings Monday. While the bank is still facing big losses from failed consumer loans, but CEO Brian Moynihan said there have been clear improvements in the economy. Bank of America’s business relationships extend to about 59 million customers, including individual consumers and businesses. That breadth makes BofA particularly vulnerable to high unemployment, which currently sits at 9.7 percent

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Google’s Profit Up 37 Percent In 1Q As Revenue Hits $5 Billion

April 15, 2010

SAN FRANCISCO — Google Inc. is thriving again, and feeling so good about the economy that it’s spooking investors. The company’s first-quarter earnings exceeded analyst estimates and its revenue growth accelerated for the third consecutive quarter. More people clicked on Internet ads powered by its dominant search engine. But the results released Thursday didn’t impress investors, who appeared worried that the strengthening economy may cause Google to abandon some of the financial discipline that it exerted during the recession. The company’s shares tumbled almost 5 percent in extended trading. Investors also might have been unnerved to see a decline from the previous quarter in the prices paid for Google’s ads. The average first-quarter price fell 4 percent from the fourth quarter. But it was 7 percent above the average rate at the same time last year. The architect of Google’s cost cutting, Chief Financial Officer Patrick Pichette, left little doubt the company is loosening its pursestrings again. “We are continuing to invest heavily in people, products and acquisitions,” Pichette told analysts in a Thursday conference call. Pichette, who joined Google in 2008, steered the conference call, filling Google CEO Eric Schmidt’s usual role. It marked the first time that Schmidt hasn’t been on Google’s earnings conference call since the company went public in August 2004. The decision to have Schmidt sit out the call was disclosed to The Associated Press several weeks ago. Pichette advised analysts not to read anything into the switch, which he said was aimed at focusing the discussion on Google’s finances. Google shares shed $29.30 in extended trading after closing at $595.30, up 1.1 percent in the regular session. The company earned nearly $2 billion, or $6.06 per share in the quarter. That was up 37 percent from $1.42 billion, or $4.49 per share, at the same time last year. Revenue climbed 23 percent to $6.78 billion. That marked Google’s greatest revenue growth since the third quarter of 2008. If not for expenses covering employee stock compensation, Google said it would have earned $6.76 per share. That figure exceeded the average estimate of $6.60 per share among analysts surveyed by Thomson Reuters. After subtracting commissions paid to advertising partners, Google’s revenue stood at $5.06 billion. That was about $90 million above analyst estimates. The most noticeable change in Google’s spending patterns cropped up in the company’s payroll. Google added nearly 800 workers during the quarter, part of an effort to hire about 2,000 employees this year. That’s the most hiring Google has done since the first quarter of 2008. At the end of March, Google employed 20,621 people – the most in its 11 1/2-year history. Management had trimmed nearly 400 jobs from the payroll last year to boost its profit as revenue growth slowed. In a Thursday interview, Pichette dismissed the notion that the hiring spree signals Google has become a spendthrift. “Hiring more people does not mean we are wasteful,” he said. “It just means we have a great agenda.” He declined to guess whether Google would end up hiring more or fewer than 2,000 people this year. “When I find the candidate that fits into our agenda, we will hire them,” Pichette said. Besides bringing in more people, Google is promoting more heavily. Excluding stock compensation, the company’s sales and marketing costs climbed 47 percent to $553 million. Some of those expenses may have been driven by Google’s decision to sell its own mobile phone, the Nexus One, in January to compete against Apple Inc.’s iPhone. Google declined to specify how many Nexus Ones have been shipped so far, but said about 60,000 devices using its Android operating system are sold daily. The rising demand for gadgets and online ads are just a few of the reasons why the technology sector appears to be bouncing back more quickly than the rest of the economy. “The digital economy is running flat out with so much innovation,” Pichette said in Thursday’s interview. “(It’s) going gangbusters.”

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