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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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JPMorgan Net Rises 55% on Fixed Income, Provision Cut

April 14, 2010

By Dawn Kopecki April 14 (Bloomberg) — JPMorgan Chase & Co. , the second- biggest U.S. bank by assets, beat analysts’ estimates as first- quarter earnings rose 55 percent on record fixed-income trading revenue and a reduction in provisions for credit losses. Net income climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier, the New York-based bank said today in a statement. The per-share earnings compared with the 64-cent average estimate of 21 analysts surveyed by Bloomberg. “It’s an embarrassment of riches in this quarter,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York and owns JPMorgan shares. “These are results that you expect from maybe Goldman in a very good environment for trading,” Holland said in a Bloomberg Television interview. Chief Executive Officer Jamie Dimon , 54, has kept the bank profitable throughout the financial crisis, relying on fee income to counter loan losses in mortgage lending and credit cards. The bank, the No. 1 underwriter of stocks and bonds in the U.S. last year, generated three-quarters of its first- quarter profit from the investment bank. JPMorgan rose to $47.30 in New York trading at 7:43 a.m. from $45.87 at the close on the New York Stock Exchange yesterday. The shares are up 10 percent this year. Fixed Income First-quarter revenue climbed 11 percent to $27.7 billion, beating the highest estimate among analysts in the Bloomberg survey. Fixed-income revenue was $5.46 billion, compared with $4.89 billion a year earlier. The firm said improving fixed-income markets contributed to the revenue gains, as did a $462 million reversal of provisions for credit costs in investment banking, which compared with $1.2 billion in expenses a year earlier. JPMorgan cited lower loan balances, driven by repayments and loan sales. The bank reduced its total provisions for credit losses in all divisions to $7 billion, compared with $8.9 billion in the previous quarter and $10 billion the year before. The investment bank contributed $2.47 billion of JPMorgan’s $3.33 billion in net income, or 74 percent. That compares with 57 percent in the fourth quarter and 75 percent in the first quarter of 2009. “The good news is that the revenue picture was actually quite strong,” said Charles Peabody , an analyst at Portales Partners LLC, in an interview with Tom Keene on Bloomberg Radio. “And in particular, within investment banking, fixed-income trading. That had been an area of concern, so March must have been a blockbuster month.” Citigroup Results JPMorgan is the first of the largest U.S. banks to report earnings. Citigroup Inc. , the third-biggest lender behind JPMorgan and Bank of America Corp., may report earnings of $340 million when it releases results on April 19, the Bloomberg survey shows. Charlotte, North Carolina-based Bank of America may report a profit of $1.1 billion on April 16. “While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends,” Dimon said in the statement. “We believe these improvements will continue and are hopeful they will gather momentum, resulting in a strong recovery.” The company previously estimated mortgage losses could run as high as $2.5 billion in any quarter this year. “The key factor for this quarter for banks will be to say reserve builds are largely behind us and the outlook for lower problem loans and loan losses has improved for the second half of the year,” said Anthony Polini , an analyst at Raymond James & Associates. “It’s the outlook that matters.” Home Prices Financial companies have recorded losses and writedowns of $1.77 trillion stemming from the U.S. housing crisis and the worst job market in 26 years, according to data compiled by Bloomberg. The pace of losses has begun to ease in the past two quarters and home prices fell at a slower rate in January, even as the federal government withdraws support from financial markets. Dimon told shareholders in his annual letter last month that the bank, which cut its quarterly dividend to 5 cents from 38 cents in February 2009, would only boost the payout if the U.S. economy shows several months of improvement in the jobless rate and there is a “significant reduction” in charge-offs. Dimon, who took over as CEO in 2005, claimed credit in the letter for helping to stabilize markets during the crisis by purchasing Bear Stearns Cos. and Washington Mutual as they headed toward collapse. ‘No. 1 Priority’ With the worst of the crisis behind the company, Dimon said the board’s “No. 1 priority” this year is finding his replacement. He said many companies have been destroyed by poor succession planning. JPMorgan is rotating senior staff across divisions to ensure there are several internal candidates that could fill the job, he said. “He’s very talented. He’s led his company through a minefield without getting blown up; my hat’s off to him,” said Chris Kotowski , an equity analyst at Oppenheimer & Co. in New York. “But there are lots of other good executives around too, both inside JPMorgan and outside” that can run that company. To contact the reporter on this story: Dawn Kopecki in New York at dkopecki@bloomberg.com .

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JPMorgan Profit May Fall to $2.93 Billion on Home Loan, Credit Card Losses

April 12, 2010

By Dawn Kopecki April 13 (Bloomberg) — JPMorgan Chase & Co., the second- biggest U.S. bank by assets, may show a decline in net income on losses from credit cards and home lending when it reports first- quarter earnings tomorrow. Profit was probably about $2.93 billion, or 64 cents a share, according to the average estimate of 21 analysts surveyed by Bloomberg . That compares with net income of $3.28 billion, or 74 cents, in the fourth quarter and $2.14 billion, or 40 cents, a year earlier at the New York-based bank. Mortgage writedowns may be as high as $2.5 billion per quarter during 2010, compared with $8.3 billion in all of 2009, according to company data. Analysts including Anthony Polini at Raymond James & Associates said they will be watching to see if Chief Executive Officer Jamie Dimon was able to reduce provisions against future credit losses as a gauge of whether the worst of the U.S. housing crisis is behind the company. “The key factor for this quarter for banks will be to say reserve builds are largely behind us and the outlook for lower problem loans and loan losses have improved for the second half of the year,” Polini said. “It’s the outlook that matters.” U.S. lenders are collapsing at the fastest pace in 17 years, while survivors of the credit crisis such as JPMorgan are expected to post gains for the quarter. Citigroup Inc. , the third-biggest U.S. bank behind JPMorgan and Bank of America Corp., may report earnings of $455 million when it releases results on April 19, the Bloomberg survey shows. Charlotte, North Carolina-based Bank of America may report a gain of $1.42 billion on April 16. Credit Quality “For the banks, the thing that matters more than anything else is the trend in credit quality and the rate of inflow of new problem loans . That trumps all,” said Chris Kotowski , an equity analyst at Oppenheimer & Co. in New York. “That doesn’t mean that there aren’t any new problems coming in, but the rate of inflows are diminished.” Financial companies have recorded losses and writedowns of $1.77 trillion stemming from the U.S. housing crisis and the worst job market in 26 years, according to data compiled by Bloomberg. The pace of losses has begun to slow in the past two quarters and the housing market has shown signs of stabilization even as the federal government withdraws support from financial markets. Problem Loans Charge-offs from consumer credit-card and mortgage loans are expected to remain high for JPMorgan at around $8.6 billion in the first quarter, a 10 percent increase from the previous three months, according to Credit Suisse analysts led by Moshe Orenbuch . “Reserving remains the largest variable to reported earnings,” they wrote in an April 8 research note to clients. Dimon’s success in weathering the global credit contraction may allow JPMorgan to restore the dividend to pre-crisis levels before its major competitors. The bank cut its quarterly payout to shareholders to 5 cents from 38 cents in February 2009. The company is offsetting declines in mortgage banking and credit cards with trading revenue, which analysts from Credit Suisse estimated would increase to $4.9 billion from $3 billion in the fourth quarter. Credit Suisse said a credit-market recovery was fueling fixed-income results at JPMorgan. “The credit markets really, really did well in the first quarter,” said Paul Miller , a former examiner for the Federal Reserve Bank of Philadelphia and analyst at FBR Capital Markets in Arlington, Virginia. “It’s mainly because the Fed is printing money and there’s a lot of money sitting on the sidelines coming into the market right now, especially in the fixed-income side.” To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.com .

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Ford, Intel Spur Back-to-Back S&P 500 Profit Gains After Two-Year Drought

April 9, 2010

By Mary Schlangenstein and Armorel Kenna April 9 (Bloomberg) — Ford Motor Co. , Intel Corp. and JPMorgan Chase & Co. may drive the first back-to-back quarterly profit gains among U.S. companies since 2007 as demand climbs in the economic recovery. Earnings for Standard & Poor’s 500 Index members probably rose 30 percent in the three months through March after more than doubling in last year’s final quarter, according to analysts’ estimates compiled by Bloomberg. The results, while tempered by retiree-benefit costs under the new health-care law, start off a year in which S&P members may see profit rise 27 percent as automotive and financial-services companies rebound. Companies from Intel to Caterpillar Inc. are poised to increase sales as customers replace and upgrade equipment. The global economy may expand 3.9 percent this year after shrinking 0.8 percent in 2009, the International Monetary Fund estimates. “Last year it was all about cost-cutting, downsizing and conserving cash,” said Jane Coffey , who helps manage $50 billion of investments at Royal London Asset Management Ltd. “This year we are likely to see a recovery at the top line as demand emerges. Companies that had the biggest declines will probably bounce back most sharply.” Alcoa Inc. , the first Dow Jones Industrial Average company to report results, may say April 12 it benefited from rising metal prices after an adjusted loss of 54 cents a share a year earlier. The New York-based aluminum maker may report profit of 10 cents a share, based on average analysts’ estimates. Alcoa’s fourth-quarter profit was 1 cent a share. ‘A Huge Spike’ Earnings growth in Europe in 2010 may be led by automotive companies such as Daimler AG as sales recover and by financial and basic-materials companies, based on analysts’ estimates for members of the Dow Jones Stoxx 600 Index. The consecutive quarterly gains for the S&P 500 companies would be the first following nine straight declines that ended in the third quarter of 2009. The index rose 4.9 percent in the first three months of 2010. “You tend to see a huge spike in earnings after the trough,” said Geoffrey Pazzanese , a New York-based portfolio manager for the $682 million Federated InterContinental Fund. “That’s what we expect will be driving equity returns over the next couple of years, just basic earnings growth.” Some companies made adjustments in the quarter’s final week after President Barack Obama signed a nearly $1 trillion overhaul of the U.S. health-care system. At least 19 U.S. companies including AT&T Inc., Boeing Co. and Caterpillar said they will record combined one-time expenses of more than $2.9 billion for the loss of a tax benefit for retiree drug costs. Auto Sales Recover Dallas-based AT&T said March 26 it would record $1 billion in such costs during the first quarter, while New York-based Verizon Communications Inc. set its charge at $970 million. Automotive companies, retailers and media may report earnings growth of 78 percent as a group in the first quarter, eventually settling to a 17 percent increase for the full year. Ford , the second-largest U.S. automaker, may post a profit of 30 cents a share after a year-earlier loss of about 75 cents, analysts estimate. Market-share gains and better pricing for its cars will help the bottom line and should help produce a full- year profit, Ford said in January. Daimler, the world’s second-largest luxury carmaker, is aiming for 2.3 billion euros in full-year earnings before interest and taxes , after a 1.5 billion euro loss in 2009. The Stuttgart, Germany-based maker of Mercedes-Benz cars reported an 18 percent sales increase for this year’s first two months. Information Companies The premium car market is showing “signs of a clear recovery in demand” compared with a year ago, said Christian Aust , a Munich-based analyst with UniCredit SpA. Toyota Motor Corp. , Honda Motor Co. and Nissan Motor Co., Japan’s three largest automakers, are projected to post profits for the quarter through March 31 after year-earlier losses. Earnings at information-technology companies in the S&P 500 may have climbed 53 percent from the year-earlier quarter, the analysts’ estimates show. Growth may slow as the year progresses, with full-year gains expected to top 34 percent. Intel’s first-quarter profit may more than double to 38 cents a share on sales of $9.81 billion, based on analysts’ average estimates. Santa Clara, California-based Intel is the world’s largest semiconductor maker. Customers are replacing hardware such as personal computers after delaying purchases in the recession and are buying technology that will help them cut costs, said Richard Gordon , head of forecasting at research firm Gartner Inc. ‘Going to Break Down’ “You can delay buying hardware so long, but sooner or later the thing is going to break down,” Gordon said. Some other technology companies, from makers of televisions to telephone providers, are off to a slower start. Sony Corp. , the maker of Bravia TVs, will probably narrow its fiscal fourth-quarter loss to 33.4 billion yen ($357 million), from the 165 billion yen deficit reported a year earlier, according to the median of four analyst estimates compiled by Bloomberg. The Tokyo-based company has improved earnings at its television unit and reduced fixed costs. Telecommunications companies may see profit decline 15 percent in the first quarter and drop 1.3 percent for the full year, the estimates show. Sales and profit at AT&T and Verizon, the two largest U.S. phone companies, will be mostly unchanged in the first quarter as the recession hampers spending, said Chris King , an analyst at Stifel Nicolaus & Co. who recommends buying shares of both. Espoo, Finland-based Nokia Oyj, the world’s biggest mobile- phone maker, may report higher first-quarter profit and sales. “Demand is improving especially in mid-priced phones and emerging markets, and that helps Nokia a lot,” said Jason Willey , a London-based equity analyst with Standard & Poor’s. Financial Institutions Among banks in the S&P 500, JPMorgan started 2010 stronger than most peers with projected earnings of 63 cents a share, up 58 percent from the year-earlier quarter, according to analysts’ estimates for the company and financial-services industry. Banks are projected to post a sector-wide decline of 32 percent in the first quarter before doubling their profits for the full year. Homeowners and commercial real-estate investors are struggling to make loan payments while depressed prices leave them owing more than their properties are worth. “We will be looking for sustainability in the improvement of banks’ credit portfolios,” said Keith Wirtz , who oversees $18 billion as chief investment officer at Fifth Third Asset Management Inc. in Cincinnati. “Financials have shown strong performance and that’s setting the hurdle higher this earnings season.” Industrial Companies Industrial companies are poised to benefit from rising demand in the U.S. and Asia and companies’ need to restock inventories. U.S. manufacturing expanded in March at the fastest pace since July 2004, according to the Institute for Supply Management’s factory index. “These companies are going to both beat top-line and bottom-line estimates,” said Tom Wirth , senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “We are hearing sales are stronger than what was anticipated earlier in the quarter.” Peoria, Illinois-based Caterpillar, the world’s largest maker of construction equipment, has said 2010 sales will increase as much as 25 percent from 2009. Airlines, Transportation General Electric Co. , the world’s biggest maker of jet engines, power-plant turbines and medical-imaging equipment, will be hurt as its financial units add to reserves and real- estate losses continue. First-quarter profit may fall to 16 cents a share from 26 cents a year earlier, based on analysts’ average estimate. Profit for S&P 500 transportation companies including airlines may climb 25 percent in the first quarter, leading to 2010 growth of 20 percent as more businesses resume travel, the estimates show. “I don’t see anything that makes me think this won’t continue for the rest of the year,” said Hunter Keay , a Stifel Nicolaus analyst in Baltimore. “People are back out there traveling.” Delta Air Lines Inc. , the world’s biggest carrier by passenger traffic, is projected by analysts to report a loss for the first quarter and return to a full-year profit after two straight annual losses. Deutsche Lufthansa AG sees a 2010 operating profit on reduced spending and a recovery in demand in the second half. Retailers Retailers in the S&P 500 may see full-year earnings growth of 8.8 percent, building on first-quarter gains of 20 percent, according to the analysts’ estimates. The economic recovery will test Wal-Mart Stores Inc.’s ability to keep customers gained during the recession. Sales by U.S. stores open at least a year fell 1.6 percent last quarter, trailing the Bentonville, Arkansas-based retailer’s estimate and rival Target Corp.’s gain of 0.6 percent. Luxury-goods companies such as LVMH Moet Hennessy Louis Vuitton SA and Hermes International SCA are projected to see revenue growth of at least 5 percent in 2010, after a rebound starting in the last quarter of 2009. “We continue to believe consumers are re-engaging with retailers across the value chain, and would continue to look for signs of consumers trading back up, as luxury retailers have begun to note certain customers returning to stores after a sustained period of absence,” Robert Drbul , a Barclays Plc analyst in New York, said in an April 5 note. To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net ; Armorel Kenna in Milan at akenna@bloomberg.net

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China Central Bank to Sell Three-Year Bills Today at 2.75%, Survey Shows

April 7, 2010

By Bloomberg News April 8 (Bloomberg) — China’s central bank will sell three-year bills for the first time since June 2008 at a yield of 2.75 percent, according to a survey of traders. The sale of 15 billion yuan ($2.2 billion) in the securities at 10 a.m. will be followed by issuance every two weeks, the People’s Bank of China said in a statement yesterday. The yield will be 82 basis points higher than the 1.93 percent on one-year bills sold on April 6, according to the median estimate in a Bloomberg News survey of nine finance companies. Selling higher-yielding bills may be a precursor to the first increase in benchmark lending rates in more than two years and allowing yuan gains, said Jiang Chao , an analyst at Guotai Junan Securities Co., the nation’s largest brokerage by revenue. Policy makers from China to India have begun withdrawing economic stimulus this year, seeking to prevent asset-price bubbles as Asia leads the recovery from a global recession. “This is meant to pave the way for the central bank to raise interest rates or resume yuan appreciation,” said Jiang. “The PBOC can drain liquidity by issuing bills.” The one-year swap contract, in which the floating seven-day repurchase rate is exchanged for a fixed payment, rose for a second day, reaching 2.27 percent as of 8:11 a.m. in Shanghai. The seven-day repurchase rate, a measure of interbank funding availability, gained eight basis points yesterday to 1.7 percent, the highest in three weeks. The People’s Bank is targeting a drop of 22 percent in new lending this year from 2009’s record 9.59 trillion yuan and has told banks twice this year to set aside more cash as reserves. India increased interest rates last month for the first time in almost two years. Australia’s central bank has raised borrowing costs in five out of the past six meetings. Inflation Target China’s central bank last cut its one-year lending rate by 0.27 percentage point to 5.31 percent in December 2008 to revive the economy amid the financial crisis. The monetary authority raised the rate in March 2007, two months after selling three- year bills following a 20-month interval. Its most-recent increase was in December 2007. Central bank adviser Li Daokui said the nation may raise rates this quarter should the inflation rate breach 3 percent, the China Securities Journal reported yesterday. Consumer prices rose 2.7 percent in February from a year earlier. The bills will drain cash from the economy by providing an alternative to lending, according to Xu Xiaoqing , a bond analyst at China International Capital Corp., the nation’s first Sino- foreign investment bank in Beijing. “The central bank needs to use higher-yielding bills to attract banks so that they won’t make too many loans,” said Xu, who sees a rate increase this quarter. “Three-year bills can lock up banks’ cash for longer periods, which will push up money-market rates and bond yields.” — Belinda Cao . Editors: Sandy Hendry , Ven Ram To contact the reporter on this story: Belinda Cao in Beijing at lcao4@bloomberg.net

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China Said to Sell Three-Year Bills in Signal Interest Rates May Soon Rise

April 6, 2010

By Bloomberg News April 7 (Bloomberg) — China’s central bank will sell three-year bills tomorrow for the first time since June 2008, seeking to drain cash from the world’s fastest-growing economy, traders at three of the nation’s largest banks said. The People’s Bank of China asked the lenders to give indications of their demand for the securities, said the traders, who asked not to be identified before an official announcement. The companies are primary dealers required to bid at bill auctions. A central bank press officer declined to comment. Selling higher-yielding bills may be a precursor to the first increase in benchmark lending rates in more than two years and allowing yuan gains, said Jiang Chao , an analyst at Guotai Junan Securities Co., the nation’s largest brokerage by revenue. Policy makers from China to India have begun withdrawing economic stimulus this year, seeking to prevent asset-price bubbles as Asia leads the recovery from a global recession. “This is meant to pave the way for the central bank to raise interest rates or resume yuan appreciation,” said Jiang. “The PBOC can drain liquidity by issuing bills if the interest- rate hike or appreciation attracts more hot money.” The seven-day repurchase rate , which measures interbank funding availability, rose eight basis points to 1.7 percent. The central bank last sold one-year bills at a yield of 1.9264 percent yesterday, unchanged for the 10th sale in a row. It guided the rate higher twice in January. Loan Growth Yuan forwards strengthened for a ninth day, the longest winning streak in more than a year, on speculation China will end a 21-month-old peg to the U.S. dollar to help curb inflationary pressures. U.S. Treasury Secretary Timothy F. Geithner yesterday said China needs to make its own decision on when to revalue the yuan. Twelve-month non-deliverable forwards climbed 0.1 percent to 6.6295 per dollar, reflecting bets the currency will strengthen 3 percent from the spot rate of 6.8255. The People’s Bank is targeting a drop of 22 percent in new lending this year from 2009’s record 9.59 trillion yuan ($1.4 billion) and has told banks twice this year to set aside more cash as reserves. India increased interest rates last month for the first time in almost two years. Australia’s central bank has raised borrowing costs in five out of the past six meetings. China’s central bank last cut its one-year lending rate by 0.27 percentage point to 5.31 percent in December 2008 to revive the economy amid the financial crisis. The monetary authority raised the rate in March 2007, two months after selling three- year bills following an 18-month interval. It’s most-recent increase was in December 2007. Inflation Target Central bank adviser Li Daokui said the nation may raise rates this quarter should the inflation rate breach 3 percent, the China Securities Journal reported today. Consumer prices rose 2.7 percent in February from a year earlier. The bills will drain cash from the economy by providing an alternative to lending, according to Xu Xiaoqing , a bond analyst at China International Capital Corp., the nation’s first Sino- foreign investment bank in Beijing. “The central bank needs to use higher-yielding bills to attract banks so that they won’t make too many loans,” said Xu, who sees a rate increase this quarter. “Three-year bills can lock up banks’ cash for longer periods, which will push up money-market rates and bond yields.” China’s finance ministry sold 28 billion yuan in five-year bonds at an average yield of 2.70 percent, two basis points higher than the 2.68 percent median estimate in a Bloomberg News survey. A basis point is 0.01 percentage point. Asset Bubbles China’s central bank said in its 2009 report on international financial markets on April 2 that asset bubbles are emerging in parts of the world and in certain industries that may burst unless supported by real economic recovery.     “They’re trying to tighten policy to some extent,” said Ben Simpfendorfer , Hong Kong-based chief China economist at Royal Bank of Scotland Group Plc. “There’s talk about a rate hike coming in the next few months, so this would be an initial step.” — Belinda Cao , Bob Chen , Judy Chen . Editors: Sandy Hendry , James Regan To contact the reporter on this story: Belinda Cao in Beijing at lcao4@bloomberg.net

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Tanker Rates Sinking 35% in Estimates of Refinery Cutbacks From Idle Ships

April 6, 2010

By Alaric Nightingale and Alistair Holloway April 6 (Bloomberg) — The most profitable supertanker market in more than a year is heading for a 35 percent slump as oil refineries from Japan to the U.K. shut for maintenance and leave a surplus of vessels. Shipping costs will fall to an average of $28,758 a day this quarter from $44,576 on April 1, according to the median estimate in a Bloomberg survey of 13 analysts, traders and shipbrokers. Rates to hire the ships, each bigger than the Chrysler Building, averaged $49,908 a day in the first quarter, the most since the last three months of 2008. The most extensive shipbuilding program in three decades is adding supplies and fewer tankers are being used to store crude, swelling the number of available vessels just as global oil demand drops for the first time in a year. Frontline Ltd., the world’s biggest operator of supertankers, would lose money on any ship it hired out at the survey’s median forecast. “Refineries are slowing and shutting down and they’ve already imported crude,” said Andreas Vergottis , the Hong Kong- based research director at Tufton Oceanic Ltd., which manages the world’s largest shipping hedge fund. “Crude inventories are high and getting higher. The entire second quarter tends to be soft for tankers.” Global oil demand will slip about 0.5 percent to 85.9 million barrels a day this quarter, down from 86.3 million barrels in the previous three months, according to the Paris- based International Energy Agency. Japanese refiners including Japan Energy Corp. plan to cut oil processing by as much as 17 percent this quarter, according to company announcements. Tanker Demand The slowdown will weigh on shipping because the Far East and Southeast Asia represents 62 percent of demand for supertankers, according to McQuilling Services LLC. Rates along the Saudi Arabia-to-Japan route set a global benchmark for supertankers and form the basis of the forecasts in the Bloomberg survey. “Asia would be one of the markets where we would expect some kind of flagging demand,” said Mark Jenkins , a London- based analyst at Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. “Asia’s role as a generator of tanker employment has grown substantially.” ConocoPhillips and Ineos Group Holdings Plc plan to shut or partially close refineries in the U.K. this quarter, data compiled by Bloomberg show. U.S. plants are running at 82.6 percent capacity compared with a 10-year average of 89.3 percent, data from the Department of Energy show. Refined Products Shipping rates may also drop as traders use fewer vessels to store crude and refined products. The number of tankers tied up in storage reached a record 168 in November and fell to 104 by February, according to Simpson, Spence & Young. As an oil glut formed during the recession, traders could profit by purchasing crude, storing it on tankers and selling the barrels for delivery in the months ahead. Those trades unwound after the premium for later delivery evaporated, especially for products such as gasoil. The number of available ships may also expand as the northern hemisphere’s winter ends, said Jonathan Chappell , an analyst at JPMorgan Chase & Co. in New York. “Refinery maintenance in Asia will have an impact but an equally big issue is that the fleet runs far more efficiently in summer than in winter,” he said. Oil Demand The drop in charter rates may not last long. The IEA forecasts a rebound in oil demand in the third quarter and the Organization of Petroleum Exporting Countries, accounting for about 40 percent of oil supply, increased output for six consecutive months through February. Non-OPEC supply will expand about 0.6 percent this year, the IEA says. The additional supply spurs demand for tankers. “Normal seasonal trends argue for decreasing rates but not as much as normal,” said Ole-Rikard Hammer , a senior analyst at Oslo-based Pareto Securities ASA, who has tracked tanker markets for more than two decades. “The risk really is on the upside.” Ship owners may also get help from the scrapping of single- hulled tankers after a global ban began to take hold this year. Single-hulled tankers account for about 12 percent of the fleet, according to Lloyd’s Register-Fairplay. Their scrapping will contribute to an overall 4.2 percent decline in the fleet this year, according to Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. Shipping Stocks The six-member Bloomberg Tanker Index of shipping stocks advanced 7.5 percent this year, more than the 4.2 percent gain in the MSCI World Index of stocks. Frontline added 19 percent in Oslo trading and the Hamilton, Bermuda-based firm is expected to earn $2.33 a share this year, compared with $1.32 last year, analysts’ estimates compiled by Bloomberg show. Frontline said in February it needs $30,800 a day to break even on its supertankers. Ship owners hire their vessels out in the spot market and on longer rentals at fixed prices. The median of $28,758 in the Bloomberg survey of rates would still be 24 percent more than the full-year average of $23,130 in 2009. Rates fell so low at some points last year that ship owners were effectively subsidizing their clients by having to pay toward fuel costs. Global oil demand will rebound in the third quarter to 86.8 million barrels a day, its highest level since the first three months of 2008, the IEA estimates. The world economy will expand 2.7 percent this year, the fastest pace since 2007, according to the World Bank. Higher Consumption Ship owners are counting on higher consumption to fill new vessels joining the fleet. Shipping lines ordered the largest number of supertankers since the 1970s after rates rose as high as $177,000 a day in 2008. Fifty-four carriers were delivered from yards last year, the largest number since 1976, according to Clarkson. A further 71 will be added this year. Refineries ran below capacity during the global recession, potentially allowing them to carry out early maintenance, said Jens Martin Jensen , Singapore-based chief executive officer of Frontline’s management unit. “Short term, the rates have dropped but I think they will bounce back,” he said. To contact the reporters on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net ; Alistair Holloway in London at aholloway1@bloomberg.net .

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Tanker Rates Seen Sinking 35% as Refinery Closures Leave Surplus of Ships

April 6, 2010

By Alaric Nightingale and Alistair Holloway April 6 (Bloomberg) — The most profitable supertanker market in more than a year is heading for a 35 percent slump as oil refineries from Japan to the U.K. shut for maintenance and leave a surplus of vessels. Shipping costs will fall to an average of $28,758 a day this quarter from $44,576 on April 1, according to the median estimate in a Bloomberg survey of 13 analysts, traders and shipbrokers. Rates to hire the ships, each bigger than the Chrysler Building, averaged $49,908 a day in the first quarter, the most since the last three months of 2008. The most extensive shipbuilding program in three decades is adding supplies and fewer tankers are being used to store crude, swelling the number of available vessels just as global oil demand drops for the first time in a year. Frontline Ltd., the world’s biggest operator of supertankers, would lose money on any ship it hired out at the survey’s median forecast. “Refineries are slowing and shutting down and they’ve already imported crude,” said Andreas Vergottis , the Hong Kong- based research director at Tufton Oceanic Ltd., which manages the world’s largest shipping hedge fund. “Crude inventories are high and getting higher. The entire second quarter tends to be soft for tankers.” Global oil demand will slip about 0.5 percent to 85.9 million barrels a day this quarter, down from 86.3 million barrels in the previous three months, according to the Paris- based International Energy Agency. Japanese refiners including Japan Energy Corp. plan to cut oil processing by as much as 17 percent this quarter, according to company announcements. Tanker Demand The slowdown will weigh on shipping because the Far East and Southeast Asia represents 62 percent of demand for supertankers, according to McQuilling Services LLC. Rates along the Saudi Arabia-to-Japan route set a global benchmark for supertankers and form the basis of the forecasts in the Bloomberg survey. “Asia would be one of the markets where we would expect some kind of flagging demand,” said Mark Jenkins , a London- based analyst at Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. “Asia’s role as a generator of tanker employment has grown substantially.” ConocoPhillips and Ineos Group Holdings Plc plan to shut or partially close refineries in the U.K. this quarter, data compiled by Bloomberg show. U.S. plants are running at 82.6 percent capacity compared with a 10-year average of 89.3 percent, data from the Department of Energy show. Refined Products Shipping rates may also drop as traders use fewer vessels to store crude and refined products. The number of tankers tied up in storage reached a record 168 in November and fell to 104 by February, according to Simpson, Spence & Young. As an oil glut formed during the recession, traders could profit by purchasing crude, storing it on tankers and selling the barrels for delivery in the months ahead. Those trades unwound after the premium for later delivery evaporated, especially for products such as gasoil. The number of available ships may also expand as the northern hemisphere’s winter ends, said Jonathan Chappell , an analyst at JPMorgan Chase & Co. in New York. “Refinery maintenance in Asia will have an impact but an equally big issue is that the fleet runs far more efficiently in summer than in winter,” he said. Oil Demand The drop in charter rates may not last long. The IEA forecasts a rebound in oil demand in the third quarter and the Organization of Petroleum Exporting Countries, accounting for about 40 percent of oil supply, increased output for six consecutive months through February. Non-OPEC supply will expand about 0.6 percent this year, the IEA says. The additional supply spurs demand for tankers. “Normal seasonal trends argue for decreasing rates but not as much as normal,” said Ole-Rikard Hammer , a senior analyst at Oslo-based Pareto Securities ASA, who has tracked tanker markets for more than two decades. “The risk really is on the upside.” Ship owners may also get help from the scrapping of single- hulled tankers after a global ban began to take hold this year. Single-hulled tankers account for about 12 percent of the fleet, according to Lloyd’s Register-Fairplay. Their scrapping will contribute to an overall 4.2 percent decline in the fleet this year, according to Clarkson Research Services Ltd., a unit of the world’s biggest shipbroker. Shipping Stocks The six-member Bloomberg Tanker Index of shipping stocks advanced 4.2 percent through April 1, ahead of the 3.7 percent gain in the MSCI World Index of stocks in 23 developed nations. Frontline added 13 percent in Oslo trading through March 31, and the Hamilton, Bermuda-based firm is expected to earn $2.33 a share this year, compared with $1.32 last year, analysts’ estimates compiled by Bloomberg show. Frontline said in February it needs $30,800 a day to break even on its supertankers. Ship owners hire their vessels out in the spot market and on longer rentals at fixed prices. The median of $28,758 in the Bloomberg survey of rates would still be 24 percent more than the full-year average of $23,130 in 2009. Rates fell so low at some points last year that ship owners were effectively subsidizing their clients by having to pay toward fuel costs. Global oil demand will rebound in the third quarter to 86.8 million barrels a day, its highest level since the first three months of 2008, the IEA estimates. The world economy will expand 2.7 percent this year, the fastest pace since 2007, according to the World Bank. Higher Consumption Ship owners are counting on higher consumption to fill new vessels joining the fleet. Shipping lines ordered the largest number of supertankers since the 1970s after rates rose as high as $177,000 a day in 2008. Fifty-four carriers were delivered from yards last year, the largest number since 1976, according to Clarkson. A further 71 will be added this year. Refineries ran below capacity during the global recession, potentially allowing them to carry out early maintenance, said Jens Martin Jensen , Singapore-based chief executive officer of Frontline’s management unit. “Short term, the rates have dropped but I think they will bounce back,” he said. To contact the reporters on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net ; Alistair Holloway in London at aholloway1@bloomberg.net .

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Zero Fees From India Has Investment Bankers Relying on Private Share Sales

April 6, 2010

By Ruth David April 6 (Bloomberg) — India’s best quarter for stock sales in at least six years was accompanied by a slump in fees as investment banks competed to take state-owned companies public in deals that netted them almost no revenue. Companies led by NMDC Ltd. raised 441 billion rupees ($9.8 billion) through March 31, the most for a single quarter since Bloomberg began compiling data in 2004. While the value of sales doubled from the previous three months, fees slumped by half to 2 billion rupees, according to Bloomberg data. More than half of sales were by state-owned companies that paid near-zero fees and crowded out private firms, putting pressure on banking revenues. JPMorgan Chase & Co. and ICICI Securities Ltd. are among underwriters predicting a rebound in charges this year as more private companies tap stock markets for capital and the government overhauls the way it pays banks. “The private-sector IPO pipeline is very strong and those deals will result in lucrative fees for the banks,” said Jagannadham Thunuguntla , head of equity at SMC Capitals Ltd., the investment banking arm of New Delhi-based SMC Group. At least 55 private companies are awaiting approval from the securities regulator to sell shares, according to the Securities and Exchange Board of India ’s Web site. Indian state-owned companies that sold shares last quarter paid an average 0.05 percent of what they raised as fees, according to a study by SMC Capitals released March 30. That compared with 2.88 percent for private enterprises. Wrong Approach State-run United Bank of India , a lender in the country’s northern and eastern parts, paid 0.56 percent fees for its 3.25 billion rupee initial public offering in February, managed by Edelweiss Capital Ltd., Enam Securities Pvt. and SBI Capital Markets Ltd., according to data compiled by Bloomberg. A similar-sized IPO by Jubilant Foodworks Ltd. , which is controlled by brothers Shyam and Hari Bhartia and runs the Domino’s Pizza chain in India, netted 2.72 percent fees for the sole bookrunner Kotak Mahindra Capital Co. A price war between investment banks seeking league-table credit isn’t necessarily in the government’s interest, the official in charge of selling state assets said last month. “We had some cases where the banks bid at zero fees and the department was more than unhappy with that kind of approach,” Sumit Bose , secretary of the department for disinvestment, said in a March 6 interview in New Delhi. “We are looking at tweaking the rules to ensure that we continue to make a good selection” without putting too much emphasis on fees, he said. Dominant Force As part of the new regulations, “the weight will be given to technical, including their experience, what sort of experience they have had internationally, nationally,” along with how competitive fees are, Bose said. The government will remain a dominant force in India’s equity capital market. It plans to raise $8.9 billion selling shares in state-owned companies in the fiscal year through March 2011 — more than half the total value of last year’s offerings in India. Investment banks are willing to sacrifice fees for the cachet of having been picked to manage large sales, said Indraneil Borkakoty , head of equity capital markets at Kotak Investment Banking, a unit of Kotak Mahindra. “The state transactions are global in terms of scale and size. There’s a huge visibility factor,” Mumbai-based Borkakoty said in an interview. “Doing these deals helps us get league table credit and build relationships with investors across geographies” that the bank can tap into for future deals. Raft of Sales Kotak ranked second after Citigroup Inc. in arranging stock sales in the first quarter, after helping state companies NMDC, India’s biggest iron-ore producer, and Rural Electrification Corp. issue shares, according to Bloomberg data. Vedika Bhandarkar , head of India investment banking at JPMorgan in Mumbai, said several private companies that had planned to sell stock in the first quarter delayed offerings on concerns state firms would soak up investors’ money. As those companies revive offerings, fees will improve, she said. Since March 22, nine private companies — including Avantha Power & Infrastructure Ltd., Electrosteel Integrated Ltd. and SKS Microfinance Ltd. filed documents with the regulator for IPOs. Fees for IPOs of private firms average 2 percent to 3 percent in India, about 0.5 percentage point more than secondary offerings, Bhandarkar said. JPMorgan ranked eighth in local equity sales in the quarter, advising on a share sale by National Thermal Power Corp. “Most of the issuance this quarter has been from government companies,” Bhandarkar said in a March 30 interview. “If you take state companies out of the list, the fee numbers will be different.” To contact the reporter on this story: Ruth David in Mumbai at rdavid9@bloomberg.net

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Recession Over? Economic Activity Fell In Half Of The U.S. In Last 3 Months (CHART)

April 1, 2010

Despite widespread hints that the recession has ended and a generally rosy outlook for tomorrow’s job numbers, economic activity fell in half of U.S. states over the past three months, according to this great map that Calculated Risk pulled from the Federal Reserve Bank of Philadelphia . In its monthly report, the Philadelphia Fed reported that while the coincident index rose nationally and in 18 states over the quarter, it also dropped off in 25 states. ( A coincident index is a single value, derived from a series of economic indicators, that the Fed uses to monitor the health of the economy. If the index rises, it suggests an increase in economic activity, while a decrease indicates a contraction.) As Vincent Fernando at The Business Insider points out, these uneven outcomes may help explain why so many Americans are dubious that the country is emerging from the downturn. Check out the CHART below:

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Takeovers Creep Higher as More Cross-Border, Hostile Deals Herald Recovery

March 31, 2010

By Serena Saitto April 1 (Bloomberg) — Mergers and acquisitions gained momentum in the first quarter with more than 2,034 cross-border transactions and 10 hostile takeovers signaling a recovery from the worst deal market in six years. Global takeovers rose 5 percent to $498.24 billion from a year ago, according to data compiled by Bloomberg. Purchases by companies outside their home markets more than doubled to $249 billion, while $17.46 billion of hostile acquisitions were announced compared with $4.29 billion a year earlier. Chief executive officers are gaining confidence as stock markets rally and a thaw in credit markets makes it easier to fund deals. The Standard & Poor’s 500 Index rose 4.9 percent in the quarter, extending last year’s 23 percent climb. Interest rates slashed during the global economic crisis are at historic lows in the U.S., the U.K. and the 16-nation euro region. “Assuming the economy doesn’t double dip, we are cautiously optimistic for the rest of the year,” said Mark Shafir , global head of M&A at Citigroup Inc. , which advised American International Group Inc. on the $35.5 billion sale of its Asian life insurance unit to Prudential Plc, the quarter’s largest deal. Mergers and acquisitions may increase 15 percent to 20 percent from 2009, said Shafir, returning to “more familiar conditions” than last year, when takeovers slumped 27 percent to $1.8 trillion, the lowest level since 2003 Hostile Takeovers A pickup in hostile takeovers that began in the fourth quarter “reflects increased confidence on the part of some corporate clients,” said Shafir, whose firm advised Kraft Foods Inc. on its $21.4 billion hostile takeover of Cadbury Plc. The companies reached a deal in February after a four-month battle. Citigroup, based in New York, ranked fifth among takeover advisers in the quarter after Goldman Sachs Group Inc., Zurich- based Credit Suisse Group AG, Frankfurt-based Deutsche Bank AG and JPMorgan Chase & Co., Bloomberg data show. This year’s hostile deals include Astellas Pharma Inc. ’s $3.5 billion bid for OSI Pharmaceuticals Inc. in March and Air Products & Chemicals Inc.’s $5.1 billion unsolicited offer for Airgas Inc. in February. Citibank is advising Astellas. “We’re likely to see more hostile M&A activity because companies have access to capital that allows them to pay in cash,” said Jeffrey Kaplan , global head of M&A and corporate finance at Bank of America Merrill Lynch, which is advising Airgas in its defense against Air Products. “Equity values have increased such that buyers are willing to use their stock as well.” Debt Markets Company debt rallied for the fourth-straight quarter as U.S. consumer confidence gained in March and corporate defaults declined from record levels, according to a Bank of America Merrill Lynch index. Borrowing costs declined in the first quarter to the lowest since 2005. Kraft sold $9.5 billion of debt to finance the cash portion of its takeover of Cadbury in the biggest bond offering by a non-financial company in almost a year. The market recovery also created buying opportunities for companies looking to expand abroad. More than half of the 20 biggest deals of the quarter were cross border, including the $10.7 billion acquisition of Zain Africa BV by Billionaire Sunil Mittal’s Bharti Airtel Ltd. ‘Opportunistic’ Buying Deals in Latin America got off to the best start in at least a decade, driven by consolidation in the commodities, food and telecommunications industries in Brazil and Mexico. America Movil SAB’s $25.7 billion all-stock purchase of Carso Global Telecom SAB in Mexico was the No. 2 takeover of the quarter. ”This is an opportunistic moment in which buyers can pay a full price at fair multiples,” said Andrew Bednar , head of M&A at Perella Weinberg Partners LP, the New York-based boutique investment bank. ”As M&A heats up the equity markets follow and it becomes more challenging to pay an acceptable premium without correspondingly higher multiples.” Perella advised Merck KGaA on its $6 billion acquisition of Millipore Corp. in March. Inc., people close to the situation said. Merck’s offer was 15.3 times Millipore’s earnings before interest, taxes, depreciation and amortization, according to Bloomberg data. Merck offered 42 percent more than the shares were worth before the deal was announced. The average premium paid for companies in the first quarter was 20 percent, down from 31.44 percent in the same period a year ago, according to Bloomberg data. The decline signals a return to a more normal conditions, said Citigroup’s Shafir. While the market for takeovers is improving, the recovery has been less robust than after the downturn in 2003. In the first quarter of 2004, takeovers more than doubled compared with the year-ago quarter. European Firms ”I expected M&A activity in the U.S. to be more vibrant at this point of the year,” said Jeff Raich , head of M&A at Moelis & Co., a New York-based investment bank that advises on deals. U.S. takeovers rose 33 percent to $250.5 billion in the quarter, while acquisitions involving Asian companies more than doubled to $185.5 billion, according to Bloomberg data. Europe also curbed the recovery. Takeovers by European companies were flat at $185.7 billion in the quarter, as Greece’s fiscal crisis and a slower economic recovery made executives more cautious about pursuing deals. Completing deals remains a challenge. Siemens AG shelved a possible sale of its hearing-aid unit in March after bids fell short of the 2 billion euros ($2.7 billion) sought, two people familiar with the plan said. In February, Sichuan Tengzhong Heavy Industrial Machinery Co. couldn’t win Chinese approval to buy General Motors Co.’s Hummer, the maker of military-inspired sport-utility vehicles. ”In spite of a high level of dialogue going on, these discussions have not resulted in many announced transactions,” said Moelis’s Raich. Private Equity LyondellBasell Industries AF rejected a purchase offer by India’s Reliance Industries Ltd. in March, saying it had a superior recovery plan for the chemical maker. Lyondell filed for bankruptcy in January 2009 after a leveraged buyout in 2007 saddled it with more than $22 billion of debt. Takeovers by private equity-firms are starting to return after the market froze during the credit crunch. Since Jan. 1, companies have raised more than $5 billion in the high-yield, high-risk leveraged-loan market to finance buyouts, Bloomberg data show. No similar transactions were arranged in the comparable period last year. ”The environment for M&A is healthy with deals that make good strategic sense,” said Bruce Evans , head of M&A for the Americas at Deutsche Bank. “While leveraged buyout activity has returned, we will not see the volume back to the level we saw in 2007 anytime soon.” To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net .

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RIM Fourth-Quarter Sales, Shipments Miss Analysts’ Estimates; Shares Drop

March 31, 2010

By Hugo Miller March 31 (Bloomberg) — Research In Motion Ltd. , maker of the BlackBerry, reported fourth-quarter sales and shipments that missed analysts’ estimates and said its profit margin will shrink this period. The shares slid 11 percent in late trading. Sales in the period ended Feb. 27 rose 18 percent to $4.08 billion, Waterloo, Ontario-based RIM said today in a statement. Analysts in a Bloomberg survey projected $4.31 billion on average. RIM said it shipped 10.5 million devices, less than estimates from Citigroup Inc. and Goldman Sachs Group Inc. RIM spent 46 percent more on research last quarter as it develops devices that can replicate the success of Apple Inc.’s iPhone or Motorola Inc. ’s Droid. RIM unveiled a revamped version of its touch-screen Storm in October, after the first version was criticized for awkward typing technology. Gross margin, a profitability measure, will be 44.5 percent in the quarter ending in May, down from 45.7 percent last quarter. “Investors have concerns about North American sales and that’s why you’re seeing a selloff,” said Nick Agostino , an analyst at Mackie Research Capital Corp. in Toronto. He advises clients to buy the shares and doesn’t own any. “Average selling prices were lower in the quarter which suggests they sold more devices internationally and fewer in North America.” RIM slid as much as $7.97 to $66 in late trading after falling 95 cents to $73.97 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have gained 9.5 percent this year. Average Selling Price Agostino, as well as Simona Jankowski , an analyst at Goldman Sachs, estimated RIM’s average selling price last quarter was $311, below their projections of about $319 and $317, respectively. Net income rose to $710.1 million, or $1.27 a share, compared with $518.3 million, or 90 cents, a year earlier. Motorola’s Droid, which was released in November, sold 1 million units in its first 74 days, similar to the original iPhone’s success in 2007, according to Flurry Inc., a company that tracks smartphone use. Growth of smartphones, which have advanced data and video features, has outpaced basic voice devices. Smartphone shipments jumped 30 percent in the fourth quarter, compared with 11.3 percent for the total mobile-phone market, according to Framingham, Massachusetts-based IDC. To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

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U.S. Stocks Rise as Economic Data, Earnings Offset Sovereign-Debt Concern

March 30, 2010

By Rita Nazareth March 30 (Bloomberg) — U.S. stocks rose as an improved outlook for industrial companies and better-than-estimated data on consumer confidence and home prices overshadowed concern government deficits will derail the economy recovery. 3M Co. rallied 3.5 percent as Morgan Stanley said profit may top estimates after Danaher Corp. boosted its earnings forecast, sending the maker of Craftsman tools shares up 4.6 percent. Home Depot Inc. and Lowe’s Cos. climbed as the S&P/Case-Shiller index of home prices in 20 U.S. cities and the Conference Board’s confidence gauge topped economists’ estimates. The Standard & Poor’s 500 Index increased less than 0.1 percent to 1,173.73 at 3:12 p.m. in New York after falling as much as 0.4 percent. The Dow Jones Industrial Average increased 13.3 points, or 0.1 percent, to 10,909.16. About 11 stocks rose for every 10 that fell on U.S. stock exchanges. “We’re definitely off the bottom,” said Michael Mullaney , who helps manage $9 billion at Fiduciary Trust Co. in Boston. “There’s improvement in confidence and sentiment. People seem to be more comfortable about spending again. We’ll continue to see strength in stocks.” Benchmark indexes fluctuated earlier after Standard & Poor’s cut Iceland’s credit rating and Greece failed to sell half the 12-year bonds it offered, reigniting concern governments around the world struggle to finance growing budget deficits. The 20-city home-price index unexpectedly climbed 0.3 percent and the Conference Board’s sentiment gauge climbed to 52.5 in March from 46.4 in February. The Dow average rose to an 18-month high yesterday after reports showed Americans spent more for a fifth month and European confidence in the economic outlook improved. First-Quarter Rally The S&P 500 has rallied for the last four weeks, heading for a fourth straight quarterly advance, on speculation the economy is recovering from the worst contraction since the Great Depression. The benchmark index for U.S. stocks has climbed 5.3 percent since Dec. 31, its best first-quarter rally since 1998. Traders attributed part of the market’s gains today and yesterday to “window dressing,” in which investors buy shares of the best-performing companies at the end of the quarter to shore up their portfolios. “It’s just the end of the quarter,” said Mark Bronzo , an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “We’ve had a decent quarter so it’s probably a little bit of window dressing. The economic numbers continue to be a little better and today’s numbers were not an exception.” U.S. Treasury Secretary Timothy F. Geithner said U.S. employers soon may start hiring again after weathering the worst recession since the Great Depression. “The economy is getting stronger,” Geithner said yesterday in an interview on CNBC. “We’re probably just on the verge now of what we think will be a sustained period of job creation finally.” To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net .

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UBS’s Gruebel Rebuilds Fixed-Income Unit, Boosting First-Quarter Revenue

March 30, 2010

By Jacqueline Simmons March 30 (Bloomberg) — Oswald Gruebel , who parlayed bond expertise into the top jobs at Switzerland’s biggest banks, is rebuilding UBS AG ’s fixed-income business, which reaped about $2.3 billion of revenue this quarter, people familiar with the matter said. UBS may have revenue of almost $1 billion from credit alone, said the people, who declined to be identified because the figures haven’t been publicly released. Gruebel, 66, a former Eurobond trader who also ran Credit Suisse Group AG, hired about 350 people at the fixed-income unit, which includes emerging markets and foreign exchange, in the past year. “The new hires and position-taking in the first quarter delivered fixed-income revenue ahead of targets,” said Simon Maughan , an analyst at MF Global Securities who rates UBS “buy.” “That’s two ticks in the box for Gruebel.” The performance marks a reversal of fortune for the bank’s debt unit, which was responsible for most of the more than $57 billion in writedowns and losses during the credit crisis. Gruebel, who became chief executive officer at UBS in February 2009, named Rajeev Misra , 48, and Dimitri Psyllidis , 43, co- heads of the fixed-income division in January. UBS said in a statement today that $2.3 billion is “slightly higher” than its current estimate for the period. The bank rose 49 centimes, or 3 percent, to 17.09 Swiss francs, the most since March 5. The stock has advanced 6.5 percent in 2010. Possible ‘Adjustments’ In its statement, UBS said that “because the quarter has not ended and results to date are subject to possible fair value adjustments, including those relating to own credit,” the estimate of about $2.3 billion “may not be reliable.” UBS will publish first-quarter results on May 4. Banks are profiting from trading and selling debt as credit markets recover to levels not seen since 2007. Goldman Sachs Group Inc. ’s fixed-income, currencies and commodities unit will probably report revenue of $6.8 billion for the first quarter, up from $4 billion in the fourth quarter and $6.6 billion in the first quarter of 2009, according to a note from Richard Staite , an analyst at Atlantic Equities. He rates New York-based Goldman Sachs “overweight.” Gruebel’s Rise Gruebel, a war orphan raised by his grandparents in East Germany, worked at Zurich-based Credit Suisse for 37 years. He moved to West Germany when he was 10 to live with relatives and got into banking after school as a trainee at Deutsche Bank AG . At Credit Suisse, Gruebel, who has no university education, rose through the ranks from the bank’s Eurobond trading desk. In the three years after he took over as sole CEO in 2004, Gruebel doubled Credit Suisse’s profit and share price . It was under his watch in 2006 that the bank started cutting its holdings of U.S. subprime mortgage bonds, while UBS was still buying them. At UBS, Gruebel picked new management for the investment bank and starting weekly calls with top risk officers. He sold UBS’s Brazil unit and raised 3.8 billion francs ($3.6 billion) from investors to boost capital. A recovery at the investment bank, which includes equities and investment banking as well as fixed income, helped the bank report its first profit in more than a year last month. Asia Hires UBS’s hires so far this year include Thomas Siegmund , formerly of Nomura Holdings Inc. , and Shahryar Mahbub , previously at New York-based Citigroup Inc., to co-head fixed- income Asia, people close to the bank said. UBS also hired Edward Hubner and two other credit traders from Deutsche Bank AG in New York, according to the people. The fixed-income unit is composed of three businesses: credit, emerging markets and “macro,” including foreign exchange, money market and interest-rate sales and trading. A turnaround at the debt unit will be “central” to the bank’s goal of reaching an annual pretax profit of 15 billion francs in three to five years, UBS said in November. Carsten Kengeter , 42, gave up his role as co-head of fixed income in January to focus on his position as co-chief of UBS’s investment bank. Alexander Wilmot-Sitwell , 49, leads the investment bank with Kengeter. Misra, who left Deutsche Bank in June 2008, joined UBS last year as global head of credit at its investment bank. Psyllidis, formerly of Merrill Lynch, joined the Swiss bank last year to head foreign exchange and rates trading globally. UBS aims to generate about 40 percent of the investment bank’s total revenue from fixed income in three-to-five years, or at least 8 billion francs annually. That would return fixed- income revenue to the levels achieved before the credit crisis led to record losses at the bank. UBS aims to reach an annual pretax profit of 6 billion francs at the investment bank over the next three to five years, after losses since 2007. To contact the reporters responsible for this story: Jacqueline Simmons in Paris at jackiem@bloomberg.net .

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Gruebel Rebuilds Fixed-Income Unit, Boosting Revenue

March 30, 2010

By Jacqueline Simmons March 30 (Bloomberg) — Oswald Gruebel , who parlayed bond expertise into the top jobs at Switzerland’s biggest banks, is rebuilding UBS AG ’s fixed-income business, which reaped about $2.3 billion of revenue this quarter, people familiar with the matter said. UBS may have revenue of almost $1 billion from credit alone, said the people, who declined to be identified because the figures haven’t been publicly released. Gruebel, 66, a former Eurobond trader who also ran Credit Suisse Group AG, hired about 350 people at the fixed-income unit, which includes emerging markets and foreign exchange, in the past year. “The new hires and position-taking in the first quarter delivered fixed-income revenue ahead of targets,” said Simon Maughan , an analyst at MF Global Securities who rates UBS “buy.” “That’s two ticks in the box for Gruebel.” The performance marks a reversal of fortune for the bank’s debt unit, which was responsible for most of the more than $57 billion in writedowns and losses during the credit crisis. Gruebel, who became chief executive officer at UBS in February 2009, named Rajeev Misra , 48, and Dimitri Psyllidis , 43, co- heads of the fixed-income division in January. UBS said in a statement today that $2.3 billion is “slightly higher” than its current estimate for the period. The bank rose 49 centimes, or 3 percent, to 17.09 Swiss francs, the most since March 5. The stock has advanced 6.5 percent in 2010. Possible ‘Adjustments’ In its statement, UBS said that “because the quarter has not ended and results to date are subject to possible fair value adjustments, including those relating to own credit,” the estimate of about $2.3 billion “may not be reliable.” UBS will publish first-quarter results on May 4. Banks are profiting from trading and selling debt as credit markets recover to levels not seen since 2007. Goldman Sachs Group Inc. ’s fixed-income, currencies and commodities unit will probably report revenue of $6.8 billion for the first quarter, up from $4 billion in the fourth quarter and $6.6 billion in the first quarter of 2009, according to a note from Richard Staite , an analyst at Atlantic Equities. He rates New York-based Goldman Sachs “overweight.” Gruebel’s Rise Gruebel, a war orphan raised by his grandparents in East Germany, worked at Zurich-based Credit Suisse for 37 years. He moved to West Germany when he was 10 to live with relatives and got into banking after school as a trainee at Deutsche Bank AG . At Credit Suisse, Gruebel, who has no university education, rose through the ranks from the bank’s Eurobond trading desk. In the three years after he took over as sole CEO in 2004, Gruebel doubled Credit Suisse’s profit and share price . It was under his watch in 2006 that the bank started cutting its holdings of U.S. subprime mortgage bonds, while UBS was still buying them. At UBS, Gruebel picked new management for the investment bank and starting weekly calls with top risk officers. He sold UBS’s Brazil unit and raised 3.8 billion francs ($3.6 billion) from investors to boost capital. A recovery at the investment bank, which includes equities and investment banking as well as fixed income, helped the bank report its first profit in more than a year last month. Asia Hires UBS’s hires so far this year include Thomas Siegmund , formerly of Nomura Holdings Inc. , and Shahryar Mahbub , previously at New York-based Citigroup Inc., to co-head fixed- income Asia, people close to the bank said. UBS also hired Edward Hubner and two other credit traders from Deutsche Bank AG in New York, according to the people. The fixed-income unit is composed of three businesses: credit, emerging markets and “macro,” including foreign exchange, money market and interest-rate sales and trading. A turnaround at the debt unit will be “central” to the bank’s goal of reaching an annual pretax profit of 15 billion francs in three to five years, UBS said in November. Carsten Kengeter , 42, gave up his role as co-head of fixed income in January to focus on his position as co-chief of UBS’s investment bank. Alexander Wilmot-Sitwell , 49, leads the investment bank with Kengeter. Misra, who left Deutsche Bank in June 2008, joined UBS last year as global head of credit at its investment bank. Psyllidis, formerly of Merrill Lynch, joined the Swiss bank last year to head foreign exchange and rates trading globally. UBS aims to generate about 40 percent of the investment bank’s total revenue from fixed income in three-to-five years, or at least 8 billion francs annually. That would return fixed- income revenue to the levels achieved before the credit crisis led to record losses at the bank. UBS aims to reach an annual pretax profit of 6 billion francs at the investment bank over the next three to five years, after losses since 2007. To contact the reporters responsible for this story: Jacqueline Simmons in Paris at jackiem@bloomberg.net .

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Euro Strengthens as Greece Concerns Recede; Copper, Mining Stocks Advance

March 28, 2010

By Darren Boey March 29 (Bloomberg) — The euro strengthened against the dollar for a second day on receding concern Greece’s financial crisis will derail the 16-nation region’s economic recovery. Gains in copper drove stocks of Asian mining companies higher. The euro strengthened to $1.344 at 12:24 p.m. in Tokyo from $1.3410 in New York on March 26. Copper for delivery in three months in London gained 1.6 percent to $7,635 a metric ton as inventories slid. Nickel rose 3 percent to $24,300 a ton. A gauge of material producers on the MSCI Asia Pacific Index rose 0.3 percent. Standard & Poor’s 500 futures advanced 0.2 percent. The euro advanced before a report today forecast to show European economic confidence rose to the highest since June 2008 and builds on gains last week after the European Union and International Monetary Fund pledged to help Greece finance its budget deficit. The MSCI World Index has risen 2.2 percent this quarter, erasing declines of as much as 6.5 percent, as confidence in the global recovery grew. “People are becoming more bullish on riskier assets. Sovereign risk in Greece and Euroland will abate this year,” said Hideo Shimomura , who helps oversee $54.1 billion in Tokyo as chief fund investor at Mitsubishi UFJ Asset Management Co. Europe’s currency rose to 124.41 yen from 124.06 yen. The dollar traded at 92.65 yen from 92.52 yen. It touched 92.96 yen on March 25, the highest since Jan. 8. The euro has declined 6.2 percent against the dollar in the quarter ending March 31, the most since the three months ended Sept. 30, 2008. European Confidence An index of executive and consumer sentiment in the 16 nations using the euro rose to 97.1 this month from 95.9 in February, according to the median estimate of economists in a Bloomberg News survey. The European Commission in Brussels is scheduled to release the data today. ‘‘The euro has been benefiting from an agreement on Friday among European leaders that a rescue package for Greece is required,’’ said Mike Jones , a currency strategist at Bank of New Zealand Ltd. in Wellington. Australia’s currency strengthened 0.3 percent to 90.71 U.S. cents, and 0.5 percent to 84.05 yen. Australian retail sales rose 0.3 percent in February, after gaining 1.2 percent the previous month, according to the median forecast of 19 economists in a Bloomberg News survey. Interest rates may need to be increased further to contain inflation, Reserve Bank of Australia Governor Glenn Stevens said in an interview with Australia’s Channel Seven broadcast today. The bank has raised rates at four of its past five meetings. Retail Data ‘‘Retail trade is really the indicator of the degree to which interest-rate hikes are starting to affect the consumer,” said Amy Auster , head of foreign-exchange and international economics research at Australia & New Zealand Banking Group Ltd. in Melbourne. “If the retail-trade data on Wednesday cause the market to re-price the RBA’s April move, that would obviously be supportive for the Aussie.” Copper futures gained as stockpiles monitored by the London Metal Exchange dropped on March 26 to the lowest level since Jan. 11. Aluminum advanced 1.1 percent. Oil futures rose as much 0.7 percent to $81.25 a barrel in after-hours electronic trading on the New York Mercantile Exchange. BHP Billiton Ltd., the world’s largest mining company, gained 0.5 percent to A$43.51 in Sydney. Jiangxi Copper Co. climbed 1.7 percent to HK$16.84 in Hong Kong. China Petroleum & Chemical Corp., Asia’s biggest oil refiner that’s also known as Sinopec, gained 2.5 percent in Shanghai trading after 2009 earnings doubled. China Construction Bank Corp. , the country’s second-largest bank, advanced 2.2 percent in Shanghai after it said fourth-quarter profit more than doubled. China’s Shanghai Composite Index rose 1.8 percent to the highest in more than two months. Hong Kong’s Hang Seng Index increased 0.7 percent. Japanese Stocks Japan’s Nikkei 225 Stock Average lost 0.5 percent, led by companies trading without the rights to their latest dividends. Tokyo Gas Co., a gas utility, and Eisai Co., a drugmaker, dropped more than 1.6 percent. “Japanese shares are falling temporarily because they are ex-rights, although the market has been on an upward trend supported by strong demand from Asia,” said Akio Yoshino , chief economist at Societe Generale Asset Management (Japan) Inc., which manages the equivalent of $17 billion. Seven stocks advanced for every six that declined on the MSCI Asia Pacific Index , which gained 0.1 percent to 124.60. To contact the reporter for this story: Darren Boey at in Hong Kong or dboey@bloomberg.net ; Jonathan Burgos in Singapore at jburgos4@bloomberg.net .

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New Zealand Economy Grows at Fastest Pace in Two Years on Higher Spending

March 24, 2010

By Tracy Withers March 25 (Bloomberg) — New Zealand’s economy grew at the fastest pace in two years in the fourth quarter as consumer spending, manufacturing and house construction increased. Gross domestic product rose 0.8 percent from the previous three months, Statistics New Zealand said in Wellington today. Growth matched the median estimate in a Bloomberg News survey of 13 economists and followed a revised 0.3 percent gain in the third quarter. Accelerating growth adds to signs the central bank will raise borrowing costs in the second quarter to curb inflation pressures. Reserve Bank Governor Alan Bollard, who forecast fourth-quarter growth of 0.6 percent, said on March 11 he expected to raise the benchmark interest rate from a record-low 2.5 percent around the middle of the year. “The Reserve Bank cannot wait forever if growth continues to improve,” Doug Steel , an economist at Bank of New Zealand Ltd. in Wellington, said ahead of the report. “We think the first increase will be in June. There are still question marks over the sustainability of the pickup in demand.” New Zealand’s dollar bought 70.25 U.S. cents at 10.51 a.m. in Wellington from 70.20 cents before the report was released. Nine of 14 economists surveyed by Bloomberg expect an interest-rate increase in June. Two predict an April move and three forecast a change in the third quarter. Annual Growth The economy grew 0.4 percent in the fourth quarter from a year earlier, also matching economists’ expectations. That’s the first annual growth since the second quarter of 2008. Bollard said this month the economy is recovering from a recession that ended in the second quarter last year, buoyed by rising consumer confidence and increased spending. Confidence surged to a three-year high in January, according to an index compiled by Roy Morgan Research and ANZ National Bank Ltd. Still, New Zealand’s expansion may be subdued when compared with previous recoveries, Bollard said. New Zealand has fallen behind other Asia-Pacific countries in rebounding from the global recession as it relies less on exports to China, the world’s fastest-growing major economy. The central bank forecasts quarterly growth will average 1 percent this year as a global recovery buoys exports and businesses hire more workers in response to rising demand. Household Spending Household spending , which makes up 60 percent of the economy, rose 0.9 percent. Sales of used cars, home appliances and other so-called durable goods gained 1.4 percent. Sales of food and non-durable items also increased. Spending on services fell, led by health and life insurance. Briscoe Group Ltd. , which owns sporting goods and home-ware stores, increased sales by 14 percent in the three months ended Jan. 31 from a year earlier, it said last month. The Auckland- based retailer lowered prices to encourage customers to start spending as the recovery got under way. Manufacturing rose 4.5 percent, the first increase in eight quarters, led by output from food, metal and chemical processing. Inventories increased for the first time in a year as manufacturers rebuilt stocks, anticipating increased demand, the agency said. Investment in residential building rose 4.8 percent. Total construction fell after declines in work on commercial offices and government buildings. Increased activity in wholesale trade, accommodation, real estate services and communications also contributed to GDP, the agency said. Output from primary industries fell in the quarter, led by mining. Farm output increased 1.1 percent. Milk Production Fonterra Cooperative Group Ltd. , the world’s largest dairy exporter, said yesterday milk production increased 1 percent in the six months ended Jan. 31. Business investment fell 2.5 percent, today’s report showed. There was a 26 percent drop in investment on exploration software. Commercial construction also declined while companies spent more on plant, machinery and transport equipment. Exports of goods and services fell 0.9 percent led by a decline in dairy products, logs and reduced spending by tourists. Imports rose 6 percent, buoyed by machinery and transport equipment purchases, and spending by citizens traveling overseas. Net exports subtracted from growth. Excluding exports and imports, gross national expenditure surged 3 percent in the quarter, the agency said. The GDP deflator, a measure of prices, rose 1.6 percent in the year ended Dec. 31. To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

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Opinions Vary on Cap Markets Comeback

March 21, 2010

NEW YORK-Expectations for when the real estate capital markets will regain equilibrium have been all over the map, with predictions ranging from this quarter to a few years. A survey at a recent multifamily/commercial-focused RE cap

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Paulson Buys, Buffett Sells as Billionaires Duel Over SunTrust Banks Stock

February 17, 2010

By David Mildenberg Feb. 17 (Bloomberg) — John Paulson , who amassed a fortune by betting against U.S. mortgage markets, became the biggest stakeholder in SunTrust Banks Inc. while fellow billionaire Warren Buffett was cutting his stake in the Atlanta lender. Paulson & Co., the New York-based hedge fund, boosted its ownership to 6.1 percent of SunTrust’s shares, federal filings yesterday showed. That gives his firm about 30.4 million SunTrust shares as of Dec. 31, an increase from 1.5 million on Sept. 30. Buffett’s Berkshire Hathaway Inc. reduced its SunTrust holdings by 22 percent to 2.4 million shares, leaving his Omaha, Nebraska based firm with less than a 1 percent stake. After making billions by foreseeing the collapse of the U.S. mortgage market in 2007 and 2008, Paulson placed new bets last year on some of the banks hit hardest by slumping home prices, including Bank of America Corp. and Wells Fargo & Co. SunTrust posted a $1.56 billion loss for 2009 as loans soured in the Southeast. Paulson also slashed holdings of Regions Financial Corp., a SunTrust rival. “When you look at the list of Buffett’s banks, almost everybody has a sterling shine,” said Jaime Peters , an analyst at Morningstar Inc., which doesn’t have a buy rating on SunTrust or Regions. In contrast, “Paulson sold one troubled bank to buy another.” Both are well-capitalized by U.S. standards, he said. SunTrust represents about 3.1 percent of the $19.8 billion of holdings disclosed by Paulson in yesterday’s federal filings. The bank has been reduced to less than half a percent of Berkshire’s portfolio , based on yesterday’s filings. Bank of America Bank of America was the second-largest U.S. housing lender last year, edged out of first place by Wells Fargo. It remains the biggest by assets and deposits. Paulson told investors in his newsletter last November that Bank of America’s shares may rise to $29.81 by the end of 2011 as loan write-offs ease. Paulson owned 151 million shares of Bank of America at the end of the year, or 1.7 percent, after selling 8.7 million shares during the fourth quarter, his filing showed. Berkshire reported holdings of about 5 million shares last year. As for Wells Fargo, Paulson bought 17.5 million shares of the San Francisco-based bank, according to the filing. That’s not enough to dethrone Buffett as the biggest investor ; he added more than 6 million shares to Berkshire’s stake during the quarter and now owns about 320 million, or more than 6 percent. Last May, Buffett praised Wells Fargo because it “has a dramatically different business model” than its competitors. Regions and SunTrust have been hobbled by losses stemming from loans to developers and home builders in Florida and Georgia, where housing price declines and the unemployment rate are among the highest in the U.S. Paulson’s stake in Regions declined to 19 million shares from 35 million during the quarter, filings showed. Regions is based in Birmingham, Alabama, where it’s the state’s biggest bank. Fairholme Buys Regions While Paulson sold Regions shares, Fairholme Capital Management LLC reported a 43.4 million stake, or 3.7 percent. Fairholme is led by Bruce Berkowitz , named mutual fund manager of the decade by Morningstar for his $11.2 billion Fairholme Fund. Paulson spokesman Armel Leslie , SunTrust spokesman Barry Koling and Regions spokesman Tim Deighton declined comment. Buffett didn’t respond to a request for comment sent to an assistant after normal business hours yesterday. To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

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Qwest 4Q Profit Falls 39% As Consumers Switch To Cell Phones

February 16, 2010

Qwest Communications International Inc., the nation’s fourth largest phone company, on Tuesday said its fourth-quarter earnings fell 39 percent as customers disconnected traditional landline phones in favor of cell phones. Unemployment, a poor business climate and weak housing cut into earnings as well, the company said. Qwest operates in 14 states, mostly in the West, where the collapse of the housing market has been acute. Qwest has responded with a series of job cuts, decreasing its work force by 8.5 percent last year, or roughly 2,800 positions. The phone company took a 2-cent per share charge for severance in the fourth quarter. The 2008 quarter had a penny per share severance charge. And on Tuesday, the company said it expects revenue declines to slow this year while its pension and post-retirement costs fall. Shares rose 2 percent, or 9 cents, to $4.52 in premarket trading Tuesday. Qwest, based in Denver, earned $108 million, or 6 cents per share, in the quarter. That’s down from $177 million, or 10 cents per share, in the same quarter a year earlier. Revenue fell nearly 10 percent to a bit below $3 billion. For the year, Qwest earned $662 million, up 1.5 percent from the prior year, on revenue of $12.3 billion, down 8.6 percent from $13.5 billion. In the quarter, consumers and small businesses disconnected more than 12 percent of landlines to 6.8 million. Larger businesses cut their lines as well, by 9 percent to 2.4 million. Phone companies have been losing customers to cable’s discounted bundle of TV, Internet phone and broadband services. They’ve also seen customers cut ties to land lines completely. And DSL Internet service provided by phone companies has fallen out of favor as the appetite for online video has grown. Online requires faster hookups, which cable has delivered. Still, Qwest has upgraded its fiber-optics network to offer faster speeds to more households. In the quarter, it added 4.5 percent more high-speed Internet customers for a total of 3 million. Video customers, a service Qwest offers in partnership with DirecTV Inc., rose by 10 percent to 880,000. Cell phone subscriptions rose by 18.5 percent to 850,000. Qwest said it has completed its shift from Sprint Nextel Corp.’s cell phone service – but branded as Qwest – to Verizon Wireless.

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Tepper’s Appaloosa Raises Citigroup Stake, and Buys Stock in Four Airlines

February 13, 2010

By Miles Weiss Feb. 13 (Bloomberg) — David Tepper , the money manager with one of last year’s top-performing hedge funds, bought four U.S. airline stocks and raised his Citigroup Inc. stake by 73 percent in the fourth quarter, a regulatory filing shows. His Appaloosa Management LP’s holdings in Citigroup rose to 138.1 million common shares at yearend from 79.7 million shares at Sept. 30, according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. The shares of New York- based Citigroup had a market value of $457.2 million, making it the second-biggest position with about 13 percent of the holdings reported in the filing. Tepper invested in bank stocks as they declined during the market rout of early 2009, then pocketed gains when the financial industry recovered in April and May. That helped his flagship fund, Appaloosa Investment LP, deliver a 117.3 percent return for the nine months ended Sept. 30, the best showing among hedge funds with assets exceeding $1 billion, according to Bloomberg data. Appaloosa also acquired 11 million common shares of Wells Fargo & Co. in the quarter, supplementing its holdings of the bank’s preferred stock. According to Bloomberg data, financial stocks comprised 86 percent of the $3.4 billion in holdings listed in the Form 13F as of Dec. 31. The SEC requires money managers who oversee more than $100 million in U.S. equities to report their holdings on a Form 13F within 45 days of the end of each quarter. The filing must include all holdings in stocks that trade on U.S. exchanges, as well as options and convertible debt. Airlines Appaloosa’s hedge funds invested in four U.S. airline companies during the quarter: AMR Corp., Delta Air Lines Inc., UAL Corp. and US Airways Group Inc. The firm’s shares in the airlines had a combined market value of about $133 million at yearend. AMR, based in Fort Worth, Texas, is the parent of American Airlines, while Chicago-based UAL owns United Airlines. Delta is based in Atlanta and US Airways is in Tempe, Arizona. Tepper, whose firm is based in Short Hills, New Jersey, didn’t immediately return a telephone call for comment. To contact the reporter responsible for this story: Miles Weiss in Washington at mweiss@bloomberg.net

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Tepper’s Appaloosa Raises Citigroup Stake, and Buys Stock in Four Airlines

February 13, 2010

By Miles Weiss Feb. 13 (Bloomberg) — David Tepper , the money manager with one of last year’s top-performing hedge funds, bought four U.S. airline stocks and raised his Citigroup Inc. stake by 73 percent in the fourth quarter, a regulatory filing shows. His Appaloosa Management LP’s holdings in Citigroup rose to 138.1 million common shares at yearend from 79.7 million shares at Sept. 30, according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. The shares of New York- based Citigroup had a market value of $457.2 million, making it the second-biggest position with about 13 percent of the holdings reported in the filing. Tepper invested in bank stocks as they declined during the market rout of early 2009, then pocketed gains when the financial industry recovered in April and May. That helped his flagship fund, Appaloosa Investment LP, deliver a 117.3 percent return for the nine months ended Sept. 30, the best showing among hedge funds with assets exceeding $1 billion, according to Bloomberg data. Appaloosa also acquired 11 million common shares of Wells Fargo & Co. in the quarter, supplementing its holdings of the bank’s preferred stock. According to Bloomberg data, financial stocks comprised 86 percent of the $3.4 billion in holdings listed in the Form 13F as of Dec. 31. The SEC requires money managers who oversee more than $100 million in U.S. equities to report their holdings on a Form 13F within 45 days of the end of each quarter. The filing must include all holdings in stocks that trade on U.S. exchanges, as well as options and convertible debt. Airlines Appaloosa’s hedge funds invested in four U.S. airline companies during the quarter: AMR Corp., Delta Air Lines Inc., UAL Corp. and US Airways Group Inc. The firm’s shares in the airlines had a combined market value of about $133 million at yearend. AMR, based in Fort Worth, Texas, is the parent of American Airlines, while Chicago-based UAL owns United Airlines. Delta is based in Atlanta and US Airways is in Tempe, Arizona. Tepper, whose firm is based in Short Hills, New Jersey, didn’t immediately return a telephone call for comment. To contact the reporter responsible for this story: Miles Weiss in Washington at mweiss@bloomberg.net

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Inland Real Estate Corporation Reports Fourth Quarter and Year 2009 Results (Business Wire via Yahoo! Finance)

February 11, 2010

OAK BROOK, Ill.—-Inland Real Estate Corporation today announced financial and operational results for the quarter and fiscal year ended December 31, 2009.

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Bank Watch: Pacific Mercantile, First M&F To Restate Results, Upping Losses

February 10, 2010

Pacific Mercantile Bancorp has to restate its unaudited consolidated financial statements as of and for the quarter and nine months ended Sept. 30, 2009. The restatements follow a federal regulatory review of the Pacific Mercantile Bank, its wholly owned…

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TARP’s Barofsky Increased Misconduct Probes 41 Percent in Fourth Quarter

February 1, 2010

By Joshua Gallu Feb. 1 (Bloomberg) — Investigations of misconduct related to the $700 billion Troubled Asset Relief Program expanded in the fourth quarter as the U.S. rescue fund’s watchdog increased opened cases by 41 percent. Special Inspector General Neil Barofsky began 25 criminal and civil probes in the quarter, and had 77 total active cases, according to a quarterly report to Congress published yesterday. Through the third quarter of 2009, Barofsky’s Washington-based office opened 61 cases with 54 active, he said at the time. Examiners are looking into possible wrongdoing linked to the financial-industry bailout, including insider trading, accounting violations, mortgage fraud, obstruction of justice and money laundering, according to the report. Barofsky didn’t identify the targets of pending investigations, though details of some cases have emerged separately. Barofsky confirmed last week he is probing whether the Federal Reserve Bank of New York improperly limited release of information about payments to American International Group Inc.’s counterparties when the insurer was rescued. AIG’s first rescue was an $85 billion credit line from the New York Fed. The bailout was expanded three times and is now valued at $182.3 billion. Barofsky is also working with the Securities and Exchange Commission, Justice Department and the Federal Bureau of Investigation on the investigation into Bank of America’s merger with Merrill Lynch, the report said. Barofsky is opening a branch office in New York and satellite offices in Los Angeles and San Francisco to support probes. Calls to Barofsky’s toll-free hot line rose 41 percent in the quarter, to 9,900, according to the report. To contact the reporters on this story: Joshua Gallu in Washington at jgallu@bloomberg.net

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Video: Silvia Says Economic Growth Continues at `Subpar’ Pace: Video

January 29, 2010

Jan. 29 (Bloomberg) — John Silvia, chief economist at Wells Fargo Securities LLC, talks with Bloomberg’s Betty Liu about U.S. fourth-quarter gross domestic product, which expanded at the fastest pace in six years as factories cranked up assembly lines to prevent inventories from plunging. GDP expanded 5.7 percent in the quarter, exceeding the median forecast of economists surveyed by Bloomberg News. (Source: Bloomberg)

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Franklin, T. Rowe Price Lead Money-Manager Profits as Investors Buy Bonds

January 28, 2010

By Sree Vidya Bhaktavatsalam and Christopher Condon Jan. 28 (Bloomberg) — Franklin Resources Inc. and T. Rowe Price Group Inc . led asset managers in reporting higher profit as investors poured money into bonds in the fourth quarter. Net income almost tripled at San Mateo, California-based Franklin and leapt sixfold for Baltimore’s T. Rowe Price as the two firms recorded a combined $21.6 billion in net inflows. Market gains helped profit triple at Atlanta-based Invesco Ltd . and increase fivefold at Janus Capital Group Inc. in Denver. The firms reversed gains in New York trading after stock markets in the U.S. and Europe declined, raising concern retail investors may be slow to return to stocks after they sat out a 60 percent rally from the March 9 low. T. Rowe’s Chief Executive Officer James Kennedy said mutual fund clients are “scared” to move back into equities. “The markets have fallen enough over the past week that people are concerned flows might follow,” Jeffrey Hopson , an analyst with Stifel Nicolaus & Co. in St. Louis, said in an interview. “The earnings themselves were strong,” especially for T. Rowe Price and Franklin, Hopson said. Asset managers benefited as last year’s stock market rally boosted the value of assets and mutual-fund investors in the U.S. poured $101.4 billion into bonds during the quarter, according to Chicago-based Morningstar Inc. Stock funds lost $9.77 billion in the quarter. Franklin recorded the biggest inflows, with clients adding a net $14.3 billion in the quarter, led by $12.7 billion inflows into global fixed-income funds. Clients pulled $2.2 billion from stock funds. T. Rowe attracted $7.3 billion, with $3.8 billion going into bond mutual funds and $800 million into stock mutual funds. ‘Bumpy Road’ “People have a little more confidence in the markets, but I think it will be a bumpy road,” Kennedy said in an interview. U.S. stocks slid and European shares reversed gains, while the dollar rose and Treasuries erased losses, as Qualcomm Inc.’s forecast disappointed investors and speculation of a Greece bailout was quelled. The Standard & Poor’s 500 Index slid 1.6 percent by 12:27 p.m. in New York , wiping out yesterday’s gain and sending the gauge below its lowest close since Nov. 6, while Europe’s Dow Jones Stoxx 600 Index reversed a 1.4 percent rally and fell 1.l percent. Franklin declined 5 percent to $98.86, after rising as much as 2.7 percent earlier. T. Rowe, which had gained as much as 2.8 percent, fell 6.6 percent. Invesco declined 6.8 percent and Janus reversed a 4.1 percent gain to drop 4.6 percent. ‘Scared’ BlackRock Inc . fell 4.6 percent to $216.30. The world’s largest asset-management firm yesterday reported $38 billion in net inflows during the fourth quarter, led by $18.1 billion in deposits into fixed-income funds. “There was a slight shift to equities, but only slight,” Kennedy said, referring to mutual fund flows at the start of this year. “People were scared and properly so.” T. Rowe’s profit reached $152.5 million, or 57 cents a share, beating the 55 cent average estimate of 17 analysts surveyed by Bloomberg. The firm, which reported a profit in every quarter over the past decade, is increasing its advertising spending to about $26 million in the first quarter of 2010, from $6.9 million in the previous quarter. Franklin, manager of the Franklin and Templeton mutual funds, said net income rose to $355.6 million, or $1.54 a share, from $120.9 million, or 52 cents, year earlier. Analysts had forecast earnings of $1.47 a share. Invesco, Janus Invesco, manager of the Aim and PowerShares funds, reported profit of $110.9 million, or 25 cents a share, compared with $31.9 million, or 8 cents, a year earlier, when the company recorded $43 million in costs related to market losses and job cuts. The firm had $5.1 billion in net outflows, driven by withdrawals of $7.7 billion from institutional money-market accounts. Janus said profit rose to $37 million, or 20 cents a share, from $7.8 million, or 5 cents, a year earlier. Outflows at the company’s Intech unit, which uses mathematical models to pick stocks, were offset by deposits in actively managed funds under the Janus and Perkins brand names. To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at Christopher Condon in Boston at ccondon4@bloomberg.net

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In a Surprise, Office Market Posts Unexpectedly Good Results

January 27, 2010

Even though the overall number of U.S. jobs continued to disappear through December of last year, the U.S. office market unexpectedly posted positive net absorption for the quarter. The most likely explanation is that jobs in the office sector increased…

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Japan’s Retail Sales Unexpectedly Slide for 16th Month as Stimulus Wanes

January 27, 2010

By Tsuyoshi Inajima and Aki Ito Jan. 28 (Bloomberg) — Japan’s retail sales unexpectedly fell for a 16th month in December as dwindling paychecks and deteriorating job prospects weighed on consumers in the world’s second-largest economy. Sales slid 0.3 percent from a year earlier, the Trade Ministry said today in Tokyo. The median estimate of 12 economists surveyed by Bloomberg News was for a 0.3 percent gain. The benefits of the nation’s export-led recovery haven’t spurred hiring or paychecks for the nation’s households, hurting companies including Right On Co. Stimulus from emergency government spending that helped pull the nation out of a recession is starting to fade, an indication that domestic demand won’t gain momentum, according to economist Junko Nishioka . “Until paychecks rebound, we’re not going to see a stable, sustainable recovery in consumer spending,” said Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “The recovery will start to stall as early as this quarter.” Sales at jeans and casual-wear maker Right On fell 21 percent from a year earlier in the month ended Jan. 20, marking the 14th straight drop, the company said this month. Its net income in the three months ended Nov. 20 slumped 80 percent. Sales fell a seasonally adjusted 1.2 percent last month, today’s report showed. Government measures have included incentives to purchase energy-saving appliances and cars and one-time cash handouts to households. Prime Minister Yukio Hatoyama unveiled a 7.2 trillion yen ($81 billion) stimulus package last month on concern falling prices and slower growth would hurt households once existing measures fade. Spending Flat Consumer spending was probably flat in the three months ended Dec. 31 because of the diminished boost from government incentives, according to Deutsche Securities Inc. in Tokyo. The company forecasts spending will drop this quarter and next. Household sentiment slipped to a six-month low in December. Job prospects are also worsening, which may weigh on consumer spending in coming months. A report tomorrow will show the unemployment rate rose for a second month to 5.3 percent in December, according to the median estimate of 28 economists surveyed by Bloomberg News. Employee compensation will slide a record 3.9 percent in the fiscal year ending March 31, and will probably decline 0.7 percent in following 12 months, the government said last week. Winter bonuses slid 15 percent in 2009, the Japan Business Federation said last month. Falling Wages Falling wages have entrenched consumers’ deflationary expectations, a sign they may delay purchases in anticipation of lower prices. A government report this month showed the portion of people who expect costs of household goods to decline exceeded those who see them becoming more expensive for the first time the survey began in April 2004. Bank of Japan Governor Masaaki Shirakawa told lawmakers yesterday that it’s “critical” that the central bank helps overcome falling prices. His policy board kept the benchmark interest rate at 0.1 percent this week and affirmed forecasts for deflation to continue through the year ending March 2012. To contact the reporter on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net ; Aki Ito in Tokyo at aito16@bloomberg.net

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Reliance Profit Beats Estimates as Natural Gas Sales Counter Refining Drop

January 22, 2010

By Rakteem Katakey Jan. 23 (Bloomberg) — Reliance Industries Ltd. , India’s biggest company by market value, reported its first profit increase in more than a year as higher natural gas sales outweighed lower earnings from processing oil. Net income in the three months ended Dec. 31 rose 16 percent to 40.08 billion rupees ($868 million) from a year earlier, the Mumbai-based energy explorer and refiner said in an e-mailed statement yesterday. The first increase in profit in five quarters beat the 39.14 billion-rupee median estimate of nine analysts surveyed by Bloomberg News. Reliance increased output at India’s biggest gas field after starting production in April and higher earnings may help fund the company’s bid to acquire bankrupt chemicals and fuels maker LyondellBasell Industries AF. The Indian company, controlled by billionaire Mukesh Ambani , plans to expand globally and has said it may buy oil fields in the Gulf of Mexico and Brazil. “Gas is the primary driver for the profits and will continue to be,” Maulik Patel , head of research at K.R. Choksey Shares & Securities Pvt., said by telephone from Mumbai. “We can expect more positive surprises on the exploration and production side.” Reliance , which has the biggest weighting in the benchmark Sensitive Index, was little changed at 1,053.85 rupees at the close in Mumbai trading yesterday. The stock has advanced 85 percent in the past year, trailing the 91 percent increase in the Sensitive Index. Gas Profits Pretax profit from oil and gas sales exceeded gains from refining for the first time, according to the statement. Earnings from oil and gas more than doubled to 14.77 billion rupees while those from refining declined 27 percent to 13.79 billion rupees. Reliance earned $5.90 on every barrel of crude it turned to fuels in the quarter compared with $10 a barrel a year earlier, the company said. Global refining margins, or earnings from processing oil into fuel, fell to $1.49 a barrel in the three months ended Dec. 31 from $6.2 a barrel in the quarter ended March 31, according to BP Plc data. Net sales in the quarter rose 92 percent to 568.6 billion rupees, Reliance said in the statement. Reliance, which also operates chemical plants and a nationwide, 950-store retail business, said in November it made a non-binding bid to buy LyondellBasell in an all-cash deal. The company raised about $2 billion selling shares since September, Alok Agarwal , chief financial officer, said in Mumbai yesterday. The money “will increase our ability to make large capital expenditure decisions and look for international growth opportunities,” Agarwal told reporters. Debt, Cash Reliance had outstanding debt of 700 billion rupees and cash and cash equivalent of 159.6 billion rupees as of Dec. 31, according to yesterday’s statement. Buying the Netherlands-based chemicals maker, which may be valued at as much as $14.5 billion, would create a company with more than $80 billion in revenue and give Reliance chemical plants and two crude oil refineries in the U.S. and Europe. Acquiring assets overseas may help Reliance hedge the risk of investing in India. Reliance is awaiting the verdict of India’s Supreme Court in a lawsuit over the sale of gas from the KG-D6 field in the Bay of Bengal. Anil Ambani , Mukesh Ambani’s estranged brother, wants Reliance Industries to supply gas to his company at a rate agreed when the family business was split. Reliance says it can’t sell the fuel at less than the rate set later by the government. The court reserved judgment after arguments concluded last month. Fertilizer, Power Producers The field currently produces 60 million cubic meters a day of gas that is sold to customers including fertilizer and power producers selected by the government. The company didn’t produce any gas from the KG-D6 field a year earlier. Peak output of 80 million cubic meters a day may be reached by mid-2010, the government said last month. That will double the availability of gas in India and make Reliance the biggest producer of the fuel in the South Asian nation. Reliance completed the world’s largest oil-processing complex in December 2008 in Jamnagar in western India, where two adjacent refineries have a combined capacity to process 1.24 million barrels of oil a day. Reliance processed 44.25 million metric tons of crude oil in the nine months ended Dec. 31, according to the statement. The refiner exported 23.6 million tons of oil products in the period compared with 16.2 million tons a year earlier. Oil in New York has gained 63 percent in the past year. Prices climbed 12 percent in the quarter compared with a 56 percent decline a year earlier. To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net .

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GE 4Q Profit Falls 19 Percent As Company Ends One Of Its Worst Years

January 22, 2010

General Electric Co.’s fourth-quarter net income fell 19 percent, but the industrial bellwether is seeing signs of stability as it moves into a key rebuilding year. The drop in profit was smaller than previous quarters on gains in areas like power plant turbines and oil field equipment. Orders for big equipment improved near the end of the year. And results surpassed Wall Street forecasts for the conglomerate, which is coming off one of the worst years in its 117-year history. Company shares rose 48 cents, or 3 percent, to $16.50 in morning trading. “We saw some encouraging signs at year-end,” GE Chairman and CEO Jeff Immelt said Friday in a statement announcing quarterly and 2009 results. But some familiar problems that hampered GE in 2009 persisted. Profits for engines used in commercial and military jets fell, along with demand for GE’s train locomotives, a likely sign that businesses remain hesitant to buy expensive equipment after a painful recession. Overall revenue fell 10 percent in the quarter to $41 billion. The big GE Capital finance unit – the source of most of GE’s problems in 2009 – squeezed out a modest profit in the fourth quarter. But it was still dogged by problems in its holdings and lending in commercial real estate. GE Capital’s $336 million in overall earnings dropped 67 percent from a year earlier. Profits fell 30 percent at NBC Universal, which has struggled with much lower advertising income and other problems. GE is selling its majority stake in the ailing entertainment unit. For the quarter, GE posted net income of $2.94 billion, or 28 cents per share. That compared with $3.65 billion, or 35 cents, a year earlier. Analysts expected 26 cents per share in earnings. One of world’s largest companies, Fairfield, Conn.-based GE is considered a barometer of the nation’s economic health since it is involved in sectors ranging from energy to finance. Homeowners buy GE kitchen appliances, power plants use GE gas turbines and hospitals buy GE MRI machines. Consumers use credit cards backed by GE money and businesses turn to the company for loans to buy expensive equipment. GE’s results for 2009 – a 37 percent drop in annual earnings – indicate just how deeply the recession affected the company. It lost its top credit rating, cut its dividend by 68 percent, and saw its stock retreat to depths not hit since the early 1990s. GE’s quarterly profits were down substantially as the recession gouged its industrial businesses and the financial crisis battered its GE Capital lending arm. In an effort to achieve stability, GE is trying to rely much less on GE Capital’s profits, which once made up half of the conglomerate’s earnings. GE says that some segments, like consumer credit cards, are in better shape after GE Capital took steps like scaling back on lending and tightening credit. But GE Capital will remain a sore point for GE in 2010. The company expects that losses from soured loans won’t peak until this year. And the unit remains broadly exposed to commercial real estate, a market that is still in decline. That unit posted a $593 million quarterly loss and lost a whopping $1.5 billion on the year. GE expects to amass $26 billion in cash by the end of this year, much of it from its deal to sell its majority stake in NBC Universal to cable operator Comcast. GE has said little about how it plans to use that money.

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Goldman Sachs Profit Beats Estimates as Company Slashes Compensation Ratio

January 21, 2010

By Christine Harper Jan. 21 (Bloomberg) — Goldman Sachs Group Inc. , the most profitable securities firm in Wall Street history, reported record earnings that beat analysts’ estimates as the bank slashed its bonus pool. Net income of $4.95 billion, or $8.20 per share, for the three months ended Dec. 31 compared with a loss of $2.12 billion, or $4.97 per share, for the same period in 2008, when the fiscal year ended in November, the New York-based company said today in a statement. The average estimate of 21 analysts surveyed by Bloomberg was for $5.18 a share. Goldman Sachs, under Chairman and Chief Executive Officer Lloyd Blankfein , relied on gains from trading and investments with the firm’s own money to help it recover last year from the worst financial crisis since the Great Depression. Blankfein made up for a slowdown in trading revenue in the fourth quarter by taking back money the bank had set aside for pay earlier in the year, resulting in the lowest percentage of compensation to revenue since Goldman Sachs went public in 1999. “The big story is the compensation,” said Keith Davis , an analyst at Farr, Miller & Washington LLC in Washington, which manages about $650 million, including Goldman Sachs shares. “They got the message that politically they can’t be paying out close to 50 percent of revenues anymore, at least for the time being. Obviously, that’s the primary reason for the beat.” Goldman Sachs climbed to $168.22 in New York trading , from $167.79 at the close on the New York Stock Exchange yesterday. Taxpayer Support While last year’s profits helped Goldman Sachs’s stock double from 2008, the firm also became the target of politicians and pundits who blamed company executives for profiting from taxpayer support. Labor unions led a protest demanding bonus payments be canceled, a Rolling Stone magazine writer labeled the firm a “great vampire squid wrapped around the face of humanity” and the bank was lampooned on the television comedy show Saturday Night Live. On the first day of hearings of the Financial Crisis Inquiry Commission earlier this month, Blankfein, 55, was the target of questions about the firm’s products and its relationship with American International Group Inc., whose bailout by the Federal Reserve in 2008 funneled more cash to Goldman Sachs than to any of AIG’s other trading counterparties. Revenue Decline Fourth-quarter revenue slid to $9.62 billion from $12.4 billion in the third quarter and compares with a negative $1.58 billion in the three months that ended Nov. 28, 2008. The average estimate of 13 analysts surveyed by Bloomberg was for fourth-quarter revenue of $9.65 billion, with estimates ranging from $8.5 billion to $11.2 billion. Compensation, which includes salaries, benefits and year- end bonuses, was cut to negative $519 million in the fourth quarter from $5.35 billion in the third quarter. The full-year compensation expense of $16.2 billion was up 48 percent from 2008, and below the record $20.2 billion expense in 2007. It was equal to an average of about $498,246 per employee. In the fourth quarter, Goldman Sachs subtracted $519 million from money set aside for compensation earlier in the year to fund a charitable contribution to Goldman Sachs Gives, a company philanthropy. The bank had set aside 47 percent of revenue in the first nine months for compensation. Analysts had been expecting a decline in the ratio of compensation to revenue in the quarter, with Guy Moszkowski at Bank of America Corp. anticipating a 23.5 percent ratio. Top Executives Last month Goldman Sachs said its top 30 executives, including Blankfein, Chief Financial Officer David Viniar and President Gary Cohn , wouldn’t receive any cash bonuses for 2009. Instead, their bonuses will consist entirely of restricted stock that they can’t sell for five years. Goldman Sachs’s business model, which includes deposit- taking as well as trading for its own account and managing hedge funds and private-equity funds, may be affected by a proposal expected today from U.S. President Barack Obama . Obama is planning to announce new rules after meeting with former Federal Reserve Chairman Paul Volcker , who has advocated separating deposit-taking from proprietary trading and other risky investing, an administration official said. For the full year, net income was $13.4 billion, or $22.13 per share, more than five times 2008’s $2.32 billion and exceeding the record $11.6 billion the firm generated in 2007. “Despite significant economic headwinds, we are seeing signs of growth and remain focused on supporting that growth by helping companies raise capital and manage their risks, by providing liquidity to markets and by investing for our clients,” Blankfein said in the statement. Fixed Income Fixed-income , currencies and commodities, the biggest source of revenue, generated $3.97 billion in the fourth quarter compared with $5.99 billion in the third quarter and a negative $3.4 billion in the fourth quarter of 2008. That fell short of some analysts’ estimates. Jeff Harte , an analyst at Sandler O’Neill & Partners in Chicago, expected fixed-income revenue to drop 33 percent from the third quarter to just over $4 billion. Equity sales and trading revenue fell 30 percent to $1.93 billion from $2.78 billion in the third quarter, and compared with $2.64 billion in the fourth quarter of 2008. Securities services, which includes the prime brokerage division that serves hedge funds, generated $443 million in revenue, down from $472 million in the third quarter. Value at risk, a measure of how much the firm estimates it could lose in a single day of trading, fell to $181 million in the quarter from $208 million in the previous three months after reaching a high of $245 million in the second quarter. Principal Investments Principal investments, which represents gains or losses from the firm’s stakes in companies and real estate, produced a $507 million gain in the quarter. That compares with a third- quarter gain of $1.26 billion and a loss of $3.6 billion in the previous fourth quarter. Investment-banking revenue of $1.64 billion in the quarter compared with $899 million in the third quarter and $1.03 billion in the fourth quarter of 2008. Within that, fees for advisory services such as assistance on mergers and acquisitions doubled to $673 million from $325 million in the third quarter and $574 million in the prior year. Equity underwriting fees were $624 million compared with third- quarter revenue of $363 million, while debt underwriting was up 60 percent to $338 million from $211 million in the previous three months. Asset management, the division that oversees money for institutions and wealthy individuals, reported a 16 percent gain in revenue to $1.13 billion from $974 million in the third quarter and $945 million in the fourth quarter of 2008. Assets under management climbed to $871 billion from $848 billion at the end of September. To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net .

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EBay’s Profit Beats Estimates as More Holiday Shoppers Sought Online Deals

January 20, 2010

By Joseph Galante Jan. 20 (Bloomberg) — EBay Inc. , the most-visited U.S. e-commerce site, reported fourth-quarter profit that topped analysts’ estimates, boosted by the holiday shopping season and the sale of its Skype Internet-calling business. Net income rose to $1.35 billion, or $1.02 a share, from $367.2 million, or 29 cents, a year ago, the San Jose, California-based company said today in a statement. Excluding some items, profit was 44 cents a share. Analysts had estimated 40 cents on average in a survey by Bloomberg. EBay’s stock rose 69 percent last year, driven by growth in its PayPal payment processing unit and improvements to its main e-commerce site. Chief Executive Officer John Donahoe also has made it easier for retailers to put excess inventory on EBay. He expects the company to keep pace with the broader e-commerce market in 2010 after slumping the past two years. “It’s good to see them show a reacceleration of the business,” said Aaron Kessler , an analyst at Kaufman Brothers LP in San Francisco. He recommends the stock, which he doesn’t own. EBay rose 70 cents, or 3.2 percent, to $22.93 in late trading after the announcement. The shares had fallen $1.03, or 4.4 percent, to $22.23 in regular Nasdaq Stock Market trading. Fourth-quarter sales climbed 16 percent to $2.37 billion, compared with the $2.3 billion predicted by analysts. First Quarter Revenue in the first quarter will be $2.1 billion to $2.2 billion, EBay said. Profit will be 39 cents to 41 cents a share, excluding some items. Analysts had anticipated sales of $2.16 billion and profit of 40 cents a share. For the full year, EBay forecast revenue of $8.8 billion to $9.1 billion, representing growth of as much as 12 percent — excluding the impact of Skype. Earnings will be $1.63 to $1.68 a share, the company said. Analysts had projected sales of $9 billion and profit of $1.61. Total online retail spending for the November-to-December holiday season rose 4 percent to $29.1 billion from the year earlier, according to Reston, Virginia-based research firm ComScore Inc. That contrasts with a 1.1 percent gain in total retail holiday sales, according to the National Retail Federation. Forrester Research Inc. predicts that online sales in the U.S. will expand 13 percent this year and 10 percent in 2011. “They’ve benefited from both a much healthier global economy and a pretty strong holiday shopping season for online retail,” said Scott Kessler , an equity analyst at Standard & Poor’s in New York. He recommends buying the shares, which he doesn’t own himself. Gross Volume Gross merchandise volume, the value of all goods that users sold on EBay sites, rose 24 percent to $14.2 billion last quarter. Investors watch gross merchandise volume to gauge the strength of EBay’s businesses, according to Benchmark Co. The Marketplaces unit, which includes the main e-commerce site, ticket reseller StubHub and the classified advertising service Kijiji, has typically accounted for most of EBay’s revenue . EBay’s Payments business, made up of PayPal and BillMeLater, saw total payment volume rise 34 percent to $21.4 billion. Revenue at PayPal and BillMeLater rose 28 percent to $795.6 million. EBay expects PayPal’s sales to reach $5 billion by 2011, making the unit its biggest moneymaker. PayPal estimates that it controls about 10 percent of online payments worldwide. Skype, the biggest provider of international calling services, contributed $112 million in revenue through the midpoint of the quarter. On Nov. 19, the business was sold to a group of investors led by private-equity firm Silver Lake for about $2 billion. EBay retained a 30 percent stake in Skype. To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

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BHP Iron Ore Output Rises 11% to Record as Demand From China Drives Gains

January 19, 2010

By Rebecca Keenan Jan. 20 (Bloomberg) — BHP Billiton Ltd. , the world’s largest mining company, said second-quarter iron ore production rose 11 percent to a record as commodity prices recovered because of demand from China and the developed economies. Output of the ore, its biggest earner in fiscal 2009, was 32.45 million metric tons in the three months ended Dec. 31, compared with 29.4 million tons a year earlier, the Melbourne- based company said today in a statement. BHP joins rival Rio Tinto Group and Posco, Asia’s most profitable steelmaker, in raising production as demand from automakers and builders rebounds with the global economic recovery. Most key indicators across developed economies showed improvement in the quarter, BHP said today. “Over the next three to five years, you would be very confident that the steel market should grow,” said Tim Schroeders , who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne, including BHP. He expects its earnings estimates to be upgraded about 5 percent. “They met expectations.” BHP gained 1 percent to A$43.76 at 10:10 a.m. Sydney time on the Australian stock exchange. Citigroup Inc. added BHP to its “most favored” list of stocks on Jan. 18, citing growing production and a strong balance sheet. China’s exports jumped 17.7 percent in December and U.S. manufacturing expanded at the fastest pace in more than three years, boosting demand for raw materials and London metal prices by 18 percent. The steel market will grow by 9.2 percent in 2010, on rising demand from the U.S., Japan and Europe, the World Steel Association has said. Price Recovery “During the December quarter we saw strong price recovery across the commodity suite driven by demand in China and restocking in the developed world,” BHP said today in the statement. “Going forward the speed of recovery in the developed economies remains uncertain, particularly considering the eventual withdrawal of government stimulus,” BHP had iron ore production of 30.1 million tons in the quarter ended Sept. 30. Rio Tinto, the second-largest iron ore exporter, last week reported a 49 percent jump in December quarter output. Vale SA is the largest iron ore exporter. This year “should see the return of real physical demand for commodities,” Deutsche Bank AG analysts led by Paul Young said in a report this month. Young increased his 2011 full-year earnings per share forecast for BHP by 26 percent on increased metal price forecasts. BHP’s output of petroleum, its third-biggest earner, rose 16 percent to 38.4 million barrels of oil equivalent, the company said. UBS AG forecast iron ore production of 27.3 million tons in the second quarter and total petroleum output of 39 million barrels of oil equivalent. Alumina, Zinc Production also increased for alumina, zinc, diamonds and nickel, the company said. Coking coal, used to make steel and BHP’s second-biggest earning unit, declined 12 percent because of maintenance. Uranium production from Olympic Dam, the world’s largest uranium deposit, was 60 percent lower as repair work on the damaged main ore-transport shaft continued. Copper output was also cut. BHP declared force majeure after a mechanical failure forced the shutdown of the shaft at the underground mine on Oct. 6. Shaft production is expected to resume this quarter, though the repair work will be regularly reviewed, it said. Rio and BHP last month agreed to the terms of an iron ore joint venture that will save them at least $10 billion. The plan, announced in June, is to combine mines rail, ports and workforces in Western Australia’s Pilbara region. The venture is expected to be completed in the second half of this year, Rio said last week. To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

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Akorri Continues Rapid Growth With Record Quarter; New CEO Announced to Lead Company’s Future Growth

January 12, 2010

Company Grows Revenues 134% Over Same Quarter Last Year; Tech Executive Veteran Allan Wallack Appointed President and CEO

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Alcoa’s Quarterly Profit Trails Estimates on Higher Energy, Currency Costs

January 11, 2010

By Edmond Lococo Jan. 11 (Bloomberg) — Alcoa Inc. , the largest U.S. aluminum producer, reported fourth-quarter profit that trailed analysts’ estimates as the company faced higher energy and currency costs. The profit excluding certain items was 1 cent a share, trailing analysts’ average estimate for earnings of 6 cents. The net loss of $277 million, or 28 cents a share, compares with a loss of $1.19 billion, or $1.49, a year earlier, Alcoa said today in a statement. Sales fell 4.5 percent to $5.43 billion. Profit in the quarter was hurt by the dollar’s decline against the euro and the Brazilian real and energy prices that began to rebound after the recession kept electricity expenses low for most of 2009, Deutsche Bank AG analyst Jorge Beristain said. The costs outweighed some of the benefit of aluminum prices that rose 18 percent in the quarter to $2,230 a ton on the London Metal Exchange. “They are benefitting partially from higher aluminum prices, but the cost honeymoon the company has had for the past nine months is rapidly drawing to a close,” Beristain said in a Jan. 5 interview. “Some input variables are starting to move against them as foreign currencies strengthen against the dollar.” Alcoa, the first company in the Dow Jones Industrial Average to report results for the three months through December, fell 7 cents to $17.38 at 4:19 p.m. after the close of regular trading on the New York Stock Exchange. The shares increased 43 percent last year. Chief Executive Officer Klaus Kleinfeld cut about 19,000 jobs from June 2008 through October 2009 as the deteriorating global economy reduced demand for aluminum. In March, he pledged to eliminate $2.4 billion in annual costs for items from raw materials to transportation, and had completed 83 percent of that goal by the end of the third quarter. The company returned to profit in the third quarter, with adjusted per-share earnings of 4 cents, after reporting adjusted losses of 26 cents a share in the second quarter, 54 cents in the first quarter and 28 cents in the fourth quarter of 2008. The net loss in the quarter included a $250 million charge to idle two smelters in Italy while the company appeals a European Commission ruling that special electricity tariffs Alcoa received there didn’t comply with state-aid rules. Alcoa said in November the charge would be $300 million to $500 million. To contact the reporter on this story: Edmond Lococo in Boston at elococo@bloomberg.net .

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Education Realty Trust Declares Fourth Quarter Dividend

January 8, 2010

MEMPHIS, Tenn., Jan. 8, 2010 (GLOBE NEWSWIRE) — Education Realty Trust, Inc. (NYSE:EDR), a leader in the ownership, management and development of student housing, today announced that its board of directors has approved a quarterly cash dividend of $0.05 per share of common stock for the quarter ended December 31, 2009. The dividend will be payable February 15, 2010 to shareholders of record as of January 29, 2010.

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Abu Dhabi’s Property Prices Remain Stable

December 29, 2009

Property prices in Abu Dhabi remain stable in the quarter-four and buyers continued to look for distressed sales, a property consultancy said. A report by real estate consultancy Landmark Advisory showed that property prices in the capital remain stable

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My Casualty List Shows Stocks Ready to Rebound: John Dorfman

December 28, 2009

Commentary by John Dorfman Dec. 28 (Bloomberg) – From 1999 through early 2007, I compiled a quarterly Casualty List of banged-up stocks that I believed had good rebound potential. I’m resurrecting this idea. Here is the Fourth Quarter 2009 Casualty List, focusing on stocks that are down 15 percent or more for the quarter as of Dec. 24, and that I think are likely to recover smartly in 2010. In the leadoff spot is Jacobs Engineering Group Inc. of Pasadena, California. Joseph Jacobs , a engineer from Brooklyn, New York, founded the company in 1947. It has grown to a corporation with more than 160 offices in 20 countries, and with revenue of more than $11 billion in a year, according to the company’s Web site. A series of acquisitions fueled the growth at Jacobs. Often, acquisitive companies borrow heavily to finance their conquests. Not so with Jacobs. It carries debt equal to less than 1 percent of stockholders’ equity. Jacobs doesn’t have a nice, smooth earnings growth curve. Earnings bounce up and down from year to year. But I hope that the adoration of smoothness went out with Bernie Madoff . In any case, Jacobs has turned a profit every year going back at least to 1987, which is as far as the Bloomberg database carries me. Jacobs shares fell as much as 15 percent in a single day on Nov. 17, when the company forecast that it would earn $2.00 to $2.60 a share in 2010. Analysts had been expecting about $2.80. For the quarter, it is down about 16 percent. Room for Buyers Fidelity Management & Research, the Boston mutual fund giant, was once the largest shareholder , but it has been selling in 2009. I believe that Fidelity has now unloaded the vast majority of its stake, so that the coast is clear for buyers to come in without worrying about being trampled by an oversize seller. I like Jacobs because it has expertise in many aspects of engineering, because it has large customers who can undertake big, complex projects, and because of its sterling balance sheet. Harte-Hanks Inc. , based in San Antonio, has fallen about 20 percent this quarter. It publishes direct-mail marketing publications, notably the Pennysaver and The Flyer in California and in Florida. In its three best years, Harte-Hanks earned $1.26 to $1.39 a share. Analysts are predicting only 82 cents a share in 2010 , but I suspect the company might earn a dollar a share as the economy revives more rapidly than people expect. The stock is trading a little below $11. If I’m right, it is selling for about 11 times 2010 earnings, a pretty multiple. If I’m wrong and the analysts’ consensus is right, it’s at 13 times earnings, still reasonably attractive. Time Horizon While I think Jacobs Engineering is a good three year-to- five year pick, Harte-Hanks is more of a one-year strategy. I think the Internet will continue stealing advertising market share from print products over time. But as a play on a reviving economy, I think Harte-Hanks is timely. If you achieve a gain, I’d sell the stock as soon as the gain qualifies for long-term capital-gains tax treatment. Frontier Oil Corp. , based in Houston, is having a terrible year. Analysts expect that when it closes the books on 2009 it will have earned 26 cents a share, the worst showing since 2003, and a mere shadow of peak earnings, which were $4.62 a share in 2007. That year, Frontier shares hit a high of about $48 a share. Today they languish at less than $12. Oil Prices It seems to me that earnings between $1 and $2 a share would suffice to lift the stock price substantially. I think Frontier will enter that earnings zone in 2011, as oil prices rise. I think oil will rise because of increased demand by reviving economies in the U.S. and Europe. The price might also be pushed higher — though I hope not — by political turmoil in the Middle East, Russia or Nigeria. Frontier’s specialty is refining heavy oil, which is thicker than so-called light, sweet crude. Many refineries are unable to cope with the more gunky grades of oil. At present, demand isn’t especially heavy. When demand intensifies, the ability to refine heavy crude becomes a desirable capability — especially if light, sweet crude is in short supply. I think Frontier’s competitive position is likely to improve in 2010 and 2011, and so is its pricing power. The stock trades for eight times earnings and just over book value (corporate net worth per share). I’ll round out the list with another niche energy stock, Cal Dive International Inc. of Houston. If you need divers to lay pipe or to repair an offshore rig under water, Cal Dive is one of the leading suppliers. Earnings Decline Since it went public in 2006, Cal Dive has struggled. Diluted earnings per share declined in 2007 and 2008, and seem likely to decline again in 2009. The consensus calls for earnings of 94 cents a share this year, down from $1.91 in 2006. Why on earth would I want a stock whose earnings are in their third straight year of decline? I like it because it provides a useful service, and because the stock is just plain cheap, trading at six times earnings and at very close to book value. Disclosure note: I currently have no long or short positions in any of the stocks discussed in this week’s column, personally or for clients. ( John Dorfman , chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com .

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GDP Up 2.2% In 3Q, But Recovery Is Much Slower Than Previously Thought

December 22, 2009

WASHINGTON — All signs suggest the economic recovery will end the year on firmer footing despite a report Tuesday that the economy grew at a 2.2 percent pace in the third quarter, less than previously thought. The Commerce Department’s new reading on gross domestic product for the July-to-September quarter was weaker than the 2.8 percent growth rate estimated a month ago. Economists had predicted this figure would remain the same in the final estimate of the quarter’s GDP – the value of all goods and services produced in the United States. The main factors behind the downgrade were that consumers didn’t spend as much, commercial construction was weaker, business investment in equipment and software was softer and companies cut back more on their stockpiles of goods. Even so, the economy managed to return to growth during the quarter, after a record four straight quarters of decline. That signaled that the deepest and longest recession since the 1930s had ended and the economy had entered a new fragile phase of recovery. And many analysts still think the economy is on track for a better finish in the current quarter. One sign was a separate report Tuesday that home resales surged last month to their highest level in nearly three years, thanks to an extraordinary level of federal support. The report added to evidence that the housing market, which led the country into recession, is on the mend. The economy is probably growing at nearly 4 percent in the October-to-December quarter, analysts say. A few peg it closer to 5 percent. If they’re right, that would mark the strongest showing since 5.4 percent growth in the first quarter of 2006 – well before the recession began. The government will release its first estimate of fourth-quarter economic activity on Jan. 29. Growth in the final quarter is expected to be driven mainly by companies restocking depleted inventories. Stocks of goods were slashed at a record pace during the recession. So even the smallest pickup in customer demand will force factories to step up production and boost overall economic activity in the final quarter. Stronger sales of exports to foreign customers, as well as spending by U.S. consumers and businesses, also will help underpin fourth-quarter growth. “We expect a better performance in the fourth quarter, but the core problems for the economy – bust banks and a massively overleveraged consumer – have not gone away,” said Ian Shepherdson, chief economist at High Frequency Economics. That’s why many economists predict growth will slow to a pace of around 2 or 3 percent in the first three months of 2010. Consumers are likely to stay frugal. And the big lift from inventory restocking isn’t expected to last. With unemployment high and credit tight, growth won’t likely be as energetic as in the early phases of previous recoveries. The unemployment rate, now at 10 percent, is expected to remain high. The economy has been on a wild ride this year. In the first three months, it shrank at a pace of 6.4 percent – its worst slide in 27 years. The recession eased in the second quarter, with the economy dipping at a pace of just 0.7 percent. The economy returned to growth in the third quarter. Much of the third quarter’s growth was supported by government stimulus spending. The Cash for Clunkers rebates and a tax credit for first-time home buyers buoyed sales of cars and homes. The clunkers program ended in August, though the tax credit has been extended and expanded beyond first-time buyers. The government makes three estimates of GDP each quarter. Each estimate is based on more complete data. The government’s initial estimate for the third quarter was more energetic, showing the economy’s growth at a 3.5 percent pace. But subsequent estimates showed the recovery was actually slower. Tuesday’s report showed consumer spending grew at a 2.8 percent pace. That was slightly weaker than the 2.9 percent pace previously estimated and was one of the factors behind the lower overall reading. Retail sales, though, showed momentum in October and November. That raised hopes that holiday sales would fare better than last year’s season, the worst in nearly four decades. Still, unlike in previous recoveries, consumers, whose spending accounts for 70 percent of overall economic activity, aren’t expected to power this one alone. Businesses and the government are having to contribute more. It’s unclear how much the recovery might weaken once the government withdraws stimulus programs put in place to combat the financial crisis and the recession. If consumers pull back on spending, the economy could tip back into recession. Economists at Capital Economics predict the recovery will slow, with the economy’s growth fading to just 1.5 percent in 2011. Against that backdrop, the Federal Reserve pledged last week to keep interest rates at a record low to help the recovery gain traction. Faced with the prospects of high unemployment well into the 2012 presidential election year, President Barack Obama wants the government to take further steps to put Americans back to work. The House last week passed some provisions that Obama has pushed to aid job growth. But it didn’t include new tax breaks for small businesses that hire. The administration credits its $787 billion package of tax cuts and increased government spending with improving employment, though Republicans argue it did not help much.

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Barnwell Industries, Inc. Reports Year-End and Fourth Quarter Results

December 14, 2009

HONOLULU, Dec. 14, 2009 (GLOBE NEWSWIRE) — Barnwell Industries, Inc. (NYSE Amex:BRN) today reported a loss of $24,362,000 ($2.96 per share – diluted) for the year ended September 30, 2009, as compared to earnings of $11,732,000 ($1.39 per share – diluted) for the year ended September 30, 2008. For the quarter ended September 30, 2009, Barnwell reported a loss of $4,554,000 ($0.55 per share – diluted) as compared to net earnings of $3,195,000 ($0.38 per share – diluted) for the quarter ended September 30, 2008.

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Production, Housing Starts in U.S. Probably Climbed as Economy Picked Up

December 12, 2009

By Bob Willis Dec. 13 (Bloomberg) — Industries in the U.S. boosted production in November for a fifth consecutive month and housing starts rebounded, showing the world’s largest economy is picking up speed heading into 2010, economists said before reports this week. A 0.5 percent gain in output last month, based on the median estimate of 62 economists surveyed by Bloomberg News ahead of a Federal Reserve report Dec. 15, would follow a 0.1 percent October advance. Builders may have broken ground on 579,000 houses at an annual pace, up 9.5 percent. Fed Chairman Ben S. Bernanke last week said the economy faces “formidable headwinds,” signaling policy makers may reiterate a pledge to keep interest rates low following their last meeting of the year this week. Gains in consumer spending and lean inventories are prompting companies such as Ford Motor Co. to rev up assembly lines, giving the expansion a lift. “Businesses are scrambling to slow the considerable pace of inventory decline against a backdrop of expanding sales, including rising exports and some pickup in domestic demand,” said Aaron Smith , a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “Part of manufacturing with ties to housing and the consumer will take the handoff from autos and drive manufacturing gains this quarter.” The Fed’s industrial production figures may show the proportion of plant capacity in use probably rose to 71.1 percent from 70.7 percent, according to the survey median. Auto Sales Auto sales are climbing again after plunging in September, the month after the government’s “cash-for-clunkers” plan expired. General Motors Co., Toyota Motor Corp., Ford and Chrysler Group LLC all posted November sales that beat analysts estimates. The seasonally adjusted sales rate was 10.9 million vehicles, up from 10.45 million in October, according to industry figures released this month. Ford, the only major U.S. automaker to avoid bankruptcy, plans to boost first-quarter North American production by 58 percent from a year earlier to 550,000 vehicles. Deere & Co., the world’s largest maker of farm equipment, last week said early order combine sales in North America, those for equipment that won’t be used until the middle of next year, topped its estimates and November demand was better than anticipated. “Bottom line — business has strengthened a bit from what we were expecting,” Marie Ziegler , vice president of investor relations, said at a presentation Dec. 10. Exports, Dollar Manufacturers are benefiting from rising demand overseas as the global economy recovers from the worst slump since World War II. A 12 percent drop in the value of the dollar from a four-year high on March 3 against its major trading partners is making American goods more competitive. Exports have risen for six consecutive months since reaching a three-year low in April. The Standard & Poor’s 500 Index is up 4.7 percent so far this quarter after rising 32 percent in the six months to September, the biggest two-quarter gain since 1975, on signs the economy was improving. A report from the Commerce Department on Dec. 16 may show housing starts rebounded last month after dropping 11 percent in October. Concern over the looming expiration of a government tax credit and the wettest October in more than a century of record-keeping held back builders that month, economists said. A federal tax credit for first-time homebuyers, due to expire on Nov. 30, was extended last month until April 30 and expanded to include current owners. The incentive had helped boost sales and construction, marking stabilization in the housing market from the worst slump since the 1930s. Consumer Prices The rebound in global growth and the drop in the dollar have also pushed fuel costs up. Consumer prices probably rose 0.4 percent in November on higher gasoline prices, according to the survey median before a Labor Department report Dec. 16. Core consumer prices, which exclude food and energy, rose 0.1 percent after a 0.2 percent October gain, the survey showed. Bernanke, in comments Dec. 7 at the Economic Club of Washington, cited a weak labor market and tight credit as ongoing drags “likely to keep the pace of expansion moderate.” The Fed’s decision on interest rates is due Dec. 16, at the end of two days of meetings. To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net .

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(AFX UK Focus) 2009-12-09 22:17 CORRECTED-Calpers up 8.6 pct for quarter despite property losses (Interactive Investor)

December 9, 2009

SAN FRANCISCO, Dec 8 (Reuters) – Calpers, the biggest U.S. public pension fund, posted an 8.6 percent return in the quarter ended in September after suffering a steep decline in its real estate portfolio in the previous quarter, according to a report on the fund’s web site on Tuesday. Property plays by Calpers, the roughly $200 billion California Public Employees’ Retirement System, are under … Originally posted here: (AFX UK Focus) 2009-12-09 22:17 CORRECTED-Calpers up 8.6 pct for quarter despite property losses (Interactive Investor)

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Stock Trading by Individual Investors to Slow in 2010, Ameritrade CEO Says

December 8, 2009

By Whitney Kisling Dec. 8 (Bloomberg) — TD Ameritrade Holding Corp. , the third-largest brokerage for individual investors by assets, sees a slowdown in equity trading next year as share prices swing less than in 2009, Chief Executive Officer Fred Tomczyk said. A decline in volatility that began this quarter will probably continue through the end of the company’s fiscal year in September 2010, curbing the number of transactions by TD Ameritrade’s customers, Tomczyk said in an interview. Knight Capital Group Inc. , which counts hedge funds and institutional investors as clients, said last week it expects trading to rebound in January as money managers are forced to buy and sell stocks after holding off on taking positions at the end of 2009. The 12 months ended in September were a “very strong trading year for us,” said Tomczyk, who is based in Omaha, Nebraska. “We had lots of news, lots of volatility , lots of things going on, and so we had record trading volume. Our activity rate was at a very high level, and I expect that will come in a bit in 2010,” he said. Volatility surged in November 2008, with the Chicago Board Options Exchange Volatility Index reaching a high of 80.86, as the collapse of Lehman Brothers Holdings Inc. added to the financial crisis that has led to $1.72 trillion in writedowns and credit-related losses worldwide. Traders, taking advantage of the price swings, bought and sold more shares, helping bring in more money for TD Ameritrade, where commissions and transaction fees account for more than half of revenue. Knight’s Outlook Trading by professional money managers probably will recover in 2010, after activity stagnates in the fourth quarter, with investors having “locked in their profits for ‘09,” Knight’s CEO Thomas Joyce said last week. Since the Standard & Poor’s 500 Index’s hit a 12-year low in March, the average monthly stock trading volume has fallen 36 percent. Fewer than 7.87 billion shares changed hands each day on U.S. exchanges during November, the lowest average since August 2008, according to monthly data compiled by Bloomberg. “Knight is a more diversified business, and a lot of their order flow is institutional,” said Roger Freeman , an analyst with Barclays Capital Inc. in New York. “The institutional side could be stronger next year. The consumer is still fairly risk- averse and the average retail investor is not trading as much. Historically, the retail investor will follow institutional flow by three to six months.” The majority of TD Ameritrade’s clients are retail investors. The Professionals Money managers are showing signs they’re returning to equities, with hedge funds boosting bets last quarter to the highest level since the end of 2007, according to data compiled by Goldman Sachs Group Inc. They’ve continued to buy, according to data from Goldman Sachs, industry consultants and Bloomberg. That quarter, Knight’s daily average trading surged 53 percent to 3.95 million a day from the 2008 period, while TD Ameritrade rose 35 percent to 410,576 trades a day on average. The S&P 500 climbed 15 percent in the quarter ended Sept. 30 and has rallied 63 percent from the March low through yesterday, on signs the world’s largest economy is recovering. The VIX, a measure of volatility, fell 2.8 percent during the quarter, signaling investors’ fear diminished. It has since dropped another 14 percent to 22.10 yesterday. TD Ameritrade’s net income will decline 12 percent to $161.7 million during the fiscal first quarter ending Dec. 30, according to the average of analyst estimates compiled by Bloomberg. While earnings have fallen for more than a year, the company beat forecasts last quarter. Tomczyk has projected earnings next year of $1.10 to $1.40 a share and average daily trades of 398,000 to 476,000. Beating Knight TD Ameritrade fell 0.7 percent to $18.52 at 9:43 a.m. in New York. It is beating Knight , the largest trader of U.S. shares by volume, based in Jersey City, New Jersey, this year, gaining 31 percent before today compared with Knight’s 8.3 percent decline. While Tomczyk said TD Ameritrade is “positioned well” for when the economy recovers enough for the Federal Reserve to raise interest rates, he also said he doesn’t expect a quick economic recovery or growth in profits. “The first real opportunity to see that will be our second or third quarter,” Tomczyk said. “That’s when the full impact of the interest rates are out of the previous year’s number. It could take a little longer depending on trading volumes.” To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net .

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U.S. CEOs More Optimistic About Economy, Business Roundtable Index Shows

December 8, 2009

By Courtney Schlisserman Dec. 8 (Bloomberg) — Optimism among chief executive officers about the U.S. economy rose to a one-year high as more said they expect stronger sales and plan to boost spending while limiting hiring. The Business Roundtable’s economic outlook index increased this quarter to 71.5, the highest since July-September 2008, from 44.9 in the previous three months. Readings higher than 50 are consistent with economic expansion. Sixty-eight percent of executives said they expect sales to grow, compared with 51 percent in the third quarter, and 84 percent plan to either boost capital spending or hold it steady. Most respondents said they would limit hiring, posing a hurdle for the recovery next year. “The economy is in the throes of a long transition back to health; recovery will be long, extending beyond 2010,” Ivan G. Seidenberg , chairman of the Business Roundtable and chief executive officer of New York-based Verizon Communications Inc. , said in a statement. The survey, completed between Nov. 5 and Nov. 30, showed that CEOs estimate the economy will expand 1.9 percent in 2010. Fifty percent of executives said there would be no change in employment at their company during the next six months and 31 percent projected a decrease. Nineteen percent said they planned on increasing headcount. In the third quarter, 47 percent said employment would be unchanged, 40 percent forecast a drop, while 13 percent anticipated adding to payrolls. Manpower Survey The employment results are more pessimistic than those reported by Manpower Inc. today. The world’s second-largest provider of temporary workers said 12 percent of the more than 28,000 companies it surveyed planned to hire additional staff in the first quarter, matching the share that anticipated more cutbacks. Seventy-three percent projected payrolls will be unchanged. The economy has lost 7.2 million jobs since the recession began in December 2007. Labor Department data last week showed job losses eased. Payrolls fell by 11,000 in November, the smallest decline since the start of the recession. President Barack Obama today will propose upgrading infrastructure and helping small businesses as ways to spur job growth, an administration official said. The president said yesterday he will look at “selective approaches” to using a portion of the $700 billion Troubled Asset Relief Program to bolster employment, such as opening up more credit for small- and medium-sized businesses. Health Care Thirty-three percent of executives surveyed said health care is their greatest cost concern. That was followed by 18 percent citing pension costs and 17 percent citing labor. The projected gains in spending and sales corroborate reports from some service companies in the U.S. FedEx Corp. said yesterday its fiscal second-quarter profit will exceed its forecast as international and ground shipments increased, signaling a strengthening in the global economic recovery. The world’s largest cargo airline flies goods ranging from industrial parts to electronic equipment to financial documents, making its business a proxy for overseas commerce. International air volumes rose each month during the quarter as companies replenished inventories, according to the Memphis, Tennessee-based company, which also cited improvements in U.S. ground deliveries. Overseas demand has “improved significantly,” Alan Graf , chief financial officer of FedEx, said in a statement. The company is No. 2 in the world in package deliveries behind United Parcel Service Inc. The Business Roundtable is an association of CEOs of corporations representing a combined workforce of 12 million employees and almost $6 trillion in annual revenue. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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Toronto-Dominion, CIBC Profits Beat Analysts’ Estimates on Advisory Fees

December 3, 2009

By Doug Alexander and Sean B. Pasternak Dec. 3 (Bloomberg) — Toronto-Dominion Bank and Canadian Imperial Bank of Commerce reported fourth-quarter profits that topped analysts’ estimates on higher investment-banking earnings and trading revenue. Toronto-Dominion, Canada’s second-biggest bank by assets, said profit for the period ended Oct. 31 was little changed at C$1.01 billion, or C$1.12 a share. Canadian Imperial, the No. 5 bank, said net income rose 48 percent to C$644 million, or C$1.56 a share. National Bank of Canada , the sixth-biggest bank, reported that earnings tripled to C$241 million, or C$1.39 a share, missing analysts’ estimates. The banks benefited from higher fees for arranging stock sales and increased trading revenue after the Standard & Poor’s/TSX Composite Index soared 31 percent this year. Bank of Montreal and Canadian Western Bank also beat or matched analysts’ estimates for the quarter. “They’ve all done well on the investment banking side,” said Doug Davis , chief executive officer of Davis-Rea Ltd. in Toronto, which manages C$390 million, including bank shares. “They’ve been good for all the Canadian banks and that’s made up for any failing in any other part of the bank.” Toronto-Dominion fell 49 cents to C$67.30 at 10 a.m. in Toronto Stock Exchange composite trading. CIBC climbed C$2.03, or 3 percent, to C$70.51, the biggest gain in more than three months. National Bank fell C$2.82, or 4.4 percent, to C$61.80, the largest drop in five months. CIBC Tops Estimates Toronto-Dominion said it earned C$1.46 a share before one- time items, higher than the C$1.30-a-share median estimate of eight analysts surveyed by Bloomberg News. Toronto-based CIBC earned C$1.41 a share excluding one-time items, topping the C$1.33-a-share median estimate of 13 analysts. Toronto-Dominion’s investment bank had record profit of C$372 million, compared with a year-earlier loss of C$228 million when the bank recorded trading losses and debt-related writedowns. The bank set aside C$521 million in provisions for loan losses, compared with a year-earlier C$288 million. Canadian consumer banking profit climbed 4 percent to C$622 million, while U.S. consumer banking declined 51 percent to C$122 million due to restructuring charges and other costs. Toronto-Dominion bought Commerce Bancorp Inc. in March for about $7.1 billion, giving the lender about 1,000 branches in the U.S. U.S. Expansion “Their acquisition, albeit timed a little early, will serve them well in the long run,” said Bob Decker , who helps manage about C$4.5 billion in assets at Aurion Capital in Toronto. “Consumer lending in the Northeast will continue to drive their fortunes.” Asset-management earnings, which include results from the bank’s stake in TD Ameritrade Holding Corp., declined 8.2 percent to C$156 million. For the full year, Toronto-Dominion earned C$3.1 billion, or C$3.47 a share, compared with C$3.83 billion, or C$4.87 a share in fiscal 2008. Canadian Imperial’s investment banking profit rose 18 percent to C$154 million in the quarter on higher trading income and fees from arranging equity financings. Trading revenue was C$361 million, compared with a C$599 million trading loss a year earlier, the firm said. Consumer banking profit fell 17 percent to C$474 million on rising credit provisions. The bank set aside C$424 million for bad loans, mostly in its consumer lending unit, up from C$222 million a year ago. Loan Losses “Loan losses were below our estimate,” RBC Capital Markets analyst Andre-Philippe Hardy wrote in a note to investors this morning. Hardy rates CIBC shares “sector perform.” For the full year, CIBC earned C$1.2 billion, or C$2.65 a share, compared with a net loss of C$2.1 billion, or C$5.89, a year ago. National Bank, based in Montreal, said consumer banking profit fell 8 percent to C$112 million, while financial markets, which includes its investment bank, more than doubled to C$140 million. Asset management earnings dropped 42 percent to C$26 million as operating expenses increased. Before one-time items, National Bank earned C$1.40 a share. That missed the C$1.45-a-share median estimate of 14 analysts surveyed by Bloomberg. “National Bank is the one bank that missed consensus in the quarter,” said John Aiken , an analyst at Barclays Capital. “The expenses came in higher than expected.” Bank of Montreal, which reported Nov. 24, said profit rose 16 percent to C$647 million, or C$1.11 a share. Canadian Western Bank, the country’s eighth-largest bank, yesterday reported record profit of C$30.4 million, or 39 cents a share. Royal Bank of Canada , the country’s largest lender, reports results tomorrow, and Bank of Nova Scotia, the No. 3 bank, reports Dec. 8. (National Bank will hold a conference call at 1:30 p.m. to discuss results. To listen, dial +1-416-340-8018 or +1-866-223- 7781.) (Toronto-Dominion will hold a conference call at 3 p.m. Toronto time. To listen, dial +1-416-644-3414 or +1-800-814-4859.) To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net ; Sean B. Pasternak in Toronto at +1- spasternak@bloomberg.net

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U.S. Economy Grows at 2.8% Rate on Higher Deficit, Lower Consumer Spending

November 24, 2009

By Timothy R. Homan Nov. 24 (Bloomberg) — The U.S. economy expanded at a 2.8 percent annual rate in the third quarter, less than the government reported last month, reflecting a smaller gain in consumer spending and a bigger trade deficit. The increase in gross domestic product from July through September reported today by the Commerce Department in Washington compares with a 3.5 percent gain previously estimated. Corporate profits climbed by the most in five years. Smaller increases in spending show the U.S. was dependent on government stimulus programs to help dig the world’s largest economy out of its worst recession since the 1930s. Growing profits lifted purchases of equipment and software, indicating investment by companies such as Verizon Communications Inc. will help make up for smaller gains in household purchases as unemployment mounts. “We expect profits to continue climbing this quarter as GDP rises further,” Joseph Brusuelas , a director at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “This will add momentum to the recovery by motivating firms to expand and hire again early next year.” Stock-index futures trimmed gains after personal consumption trailed economists’ estimates. Futures on the Standard & Poor’s 500 Index added 0.2 percent to 1,105.5 at 8:49 a.m. in New York after climbing as much as 0.3 percent. The pace of growth matched the median forecast of 78 economists in a Bloomberg survey. Estimates ranged from gains of 2.4 percent to 3.5 percent. Consumer Spending Consumer spending, which accounts for about 70 percent of the economy, rose at a 2.9 percent pace, compared with the 3.2 percent rate forecast by economists and a 0.9 percent decline in the prior quarter. Spending added 2.1 percentage points to GDP. The GDP report is the second for the quarter and will be revised in December as more information becomes available. The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades. The four consecutive decreases through the second quarter marks the longest stretch of declines since quarterly records began in 1947. “The recovery did not begin as strongly as first thought,” Nigel Gault , chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “The evidence is still positive and continues to point to a nascent recovery, but the feeble strength of spending in the recovery clearly suggests that strong policy support will be needed for some period of time.” Auto Rebates Much of the boost last quarter was provided by the administration’s auto-incentive program known as “cash for clunkers,” which offered buyers payments of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The plan, which ended in August, boosted sales by about 700,000 vehicles, according to the Transportation Department. Third-quarter corporate profits, reported for the first time today, increased 11 percent, the biggest gain since the first three months of 2004. Productivity gains are boosting company earnings as payrolls are reduced. Labor costs fell at a 5.2 percent rate last quarter, capping the biggest 12-month drop since records began in 1948, Labor Department figures showed earlier this month. Productivity, a measure of employee output per hour, surged 9.5 percent in the third quarter, the fastest pace in six years. The economy has lost 7.3 million jobs since the recession began in December 2007. Payroll cuts peaked at 741,000 in January. The economy lost 190,000 jobs in October. Unemployment Rate The unemployment rate last month reached a 26-year high of 10.2 percent, up from 7.6 percent from when President Barack Obama took office in January. Economists surveyed by Bloomberg this month forecast the jobless rate will remain above 10 percent through the first half of next year. The Fed’s preferred inflation gauge, increased less than forecast. The measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.3 percent annual pace following a 2 percent increase in the prior quarter. Trade subtracted 0.8 percentage point from third-quarter GDP. The gap between exports and imports climbed to $358 billion at an annual pace. Today’s report showed purchases of equipment and software increased at a 2.3 percent pace, more than the Commerce Department estimated last month. Verizon, the second-largest U.S. phone company, has committed to spending $23 billion through next year on high- definition television and Web service. The New York-based company last month reported third-quarter profits that topped analysts’ estimates. Leaner Inventories Inventories dropped at a $133.4 billion annual pace, more than first estimated. The decrease was still smaller than the record $160.2 billion decrease in the second quarter. Leaner stockpiles set the stage for recovery in production. The improving economy, cost-cutting and higher productivity have helped companies from Saks Inc. to Campbell Soup Co. turn a profit. The world’s largest soup-maker said yesterday that first-quarter profit climbed 17 percent. “Increased productivity in our supply chain” contributed to profits, Douglas R. Conant , president and chief executive officer of Campbell, said in a statement. The economy will likely expand at a 3 percent annual rate from October through December, the median forecast in a survey earlier this month showed. GDP will grow 2.6 percent next year and 3 percent in 2011, the survey showed, compared with an average of 3.4 percent growth over the past six decades. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Thailand’s Economy Contracts 2.8% as Recession Eases Amid Global Recovery

November 23, 2009

By Suttinee Yuvejwattana Nov. 23 (Bloomberg) — Thailand’s economy contracted less than estimated last quarter as a nascent global recovery and government spending began to pull the nation out of its first recession in a decade. Gross domestic product fell 2.8 percent from a year earlier in the third quarter, after contracting 4.9 percent in the previous three months, the government said today. The median estimate of 16 economists in a Bloomberg News survey was for a 3.2 percent decline. The benchmark stock index has risen two straight quarters since the start of April and the baht gained 4.5 percent against the U.S. dollar this year as companies including Hana Microelectronics Pcl report rising orders. The government, which predicted today the economy will resume growth this quarter, said a stable political situation is crucial for the recovery. “In recent months, we have seen a stronger-than-expected recovery in exports,” said Rahul Bajoria , an economist at Barclays Capital in Singapore. “We believe that domestic consumption and manufacturing output should continue to increase in the coming months.” Asia is leading a global recovery from recession as economies including China and India expand. Singapore , which raised its 2009 GDP estimate in October, said last week its economy will grow 3 percent to 5 percent in 2010 after shrinking as much as 2.5 percent this year. Malaysia said Nov. 20 that its recession eased last quarter. ‘Early Stage’ The Bank of Thailand said last month Southeast Asia’s second-largest economy is “out of recession”, citing improving employment and quarter-on-quarter GDP expansion. Still, the central bank has kept its benchmark interest rate unchanged at 1.25 percent since cutting it by 2.5 percentage points from December to April, refraining from following Australia in raising borrowing costs in recent weeks as it judged the nation’s recovery to be at “an early stage.” The baht gained 0.1 percent to 33.21 per dollar as of 10 a.m. in Bangkok, according to Bloomberg data. Manufacturing declined 5.9 percent last quarter, compared with an 8.7 percent drop in the previous three months. Private consumption fell 1.3 percent, the smallest drop in three quarters, while government spending rose 4.7 percent. Total investment slid 6.3 percent, easing from a 10.2 percent fall the previous three months. Thai exports may expand 10 percent in 2010 after declining 13.7 percent this year, the government said today. Signs of Recovery “The third quarter numbers show clear signs of recovery,” Ampon Kittiampon , secretary-general at the National Economic and Social Development Board, the government’s economic advisory body, said in Bangkok today. “The government has to go ahead full steam on investments and restore confidence in the country. The political situation must be stable to ensure continued policy implementation. This is the most important thing.” The government expects the Thai economy to expand 2.7 percent to 3.2 percent this quarter, Ampon said. Thailand’s exports dropped the least in a year in October as more than $2 trillion in stimulus by governments worldwide helped revive global demand. Hana Microelectronics , which makes parts for computers and mobile phones including Apple Inc.’s iPhone, has restored its workforce to “pre-crisis” levels and will spend about $20 million by March 31 to expand capacity and meet rising demand, Chief Executive Officer Richard Han said Nov. 17. Minor International Pcl, a Thai operator of hotels and restaurants, expects its revenue to grow at least 10 percent next year as the economy recovers, the Bangkok Post cited Chief Financial Officer Pratana Mongkolkul as saying last week. Full-Year Forecast The economy grew 1.3 percent in the third quarter from the previous three months, the government said. That compared with the 2.3 percent median forecast of 12 economists surveyed by Bloomberg News. The $261 billion economy won’t shrink more than 3 percent this year and may expand 3 percent to 4 percent next year, the economic agency said today. The Bank of Thailand expects GDP to decline as much as 3.5 percent in 2009 and expand as much as 5.3 percent next year. Thailand’s consumer confidence fell for the first time in five months in October on concern that the economic recovery may be derailed by rising oil prices, political tension and a court case that has stalled 76 government-approved projects amid pollution complaints. Political Unrest At least five people were injured after a bomb exploded at a Nov. 15 protest against former Prime Minister Thaksin Shinawatra , the Nation newspaper reported last week. Power in Thailand has shifted between parties allied to Thaksin and his opponents since the 2006 coup that ousted him, with protests and leadership changes hurting successive governments’ ability to implement spending plans. “The economic recovery may be disrupted if political unrest reemerges,” said Dusit Nontanakorn , Chairman of the Thai Chamber of Commerce. “We just hope all parties can reconcile soon. We shouldn’t fight when the economy remains in crisis.” Prime Minister Abhisit Vejjajiva has managed to stay in power for almost a year and implemented a 116.7 billion-baht stimulus package in the first half of 2009. He plans to spend 1.3 trillion baht on transportation, logistics, health and education projects over three years to help revive the economy. To contact the reporters on this story: Suttinee Yuvejwattana in Bangkok at Suttinee1@bloomberg.net

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Sonesta Announces 2009 Third Quarter Earnings

November 16, 2009

BOSTON, Nov. 16, 2009 (GLOBE NEWSWIRE) — Sonesta International Hotels Corporation (Nasdaq:SNSTA) today reported net income of $27,379,000, or $7.41 per share, in the quarter ended September 30, 2009, compared to net income of $2,792,000, or $0.76 per share, in the quarter ended September 30, 2008. Operating revenues, excluding other revenues from managed and affiliated properties, were $14,517,000 in the 2009 quarter, compared to $16,398,000 in the 2008 quarter. The Company had operating income of $148,000 in the third quarter of 2009, compared to operating income of $4,411,000 during the same period in 2008.

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UniCredit Reports Third-Quarter Profit of $590 Million, Beating Estimates

November 11, 2009

By James Amott and Sonia Sirletti Nov. 11 (Bloomberg) — UniCredit SpA, Italy’s biggest bank, said in a stock-exchange statement today that third-quarter profit was 394 million euros, beating the 360 million-euro median estimate of 14 analysts surveyed by Bloomberg. The company had revenue of 6.73 billion euros in the period, while loan-loss provisions were 2.16 billion euros. The core tier 1 ratio, a measure of financial strength, was 7.55 percent as of Sept. 30. Net interest income was 3.93 billion euros in the quarter, and net commissions were 1.93 billion euros. Trading income was 715 million euros.

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