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American Express Profit Doubles as Consumers Increase Credit-Card Spending

by on April 22, 2010

By Peter Eichenbaum April 22 (Bloomberg) — American Express Co. , the biggest U.S. credit-card issuer by purchases, said first-quarter profit doubled as consumers boosted spending. Income from continuing operations climbed to $885 million, or 73 cents a share, from $443 million, or 32 cents, in the same period in 2009, New York-based AmEx said today in a statement. The average estimate of analysts surveyed by Bloomberg was 63 cents. Chief Executive Officer Kenneth I. Chenault , 58, kept AmEx profitable during the recession, and the surge in credit-card spending adds to evidence that the industry may be mending. Last week , Bank of America Corp. posted its first profit from card services in almost two years and JPMorgan Chase & Co. reported a $303 million loss, less than a third of its own forecast. AmEx rose 78 cents, or 1.7 percent, to $46.77 as of 4 p.m. in New York Stock Exchange composite trading , setting a new 52- week high of $47.11 during the day. The shares have advanced 16.4 percent this year including dividends, more than twice the Dow Jones Industrial Average, on top of last year’s 126 percent total return. In March, AmEx had the lowest delinquency rate among the six biggest U.S. credit-card issuers. Loans at least 30 days overdue, a leading indicator for write-offs, fell to 3.3 percent, the lowest since 2008’s second quarter. Declining late payments may allow lenders to buttress profit by reducing reserves for future loan losses. Releasing reserves and more spending by wealthy and corporate cardholders “could drive material earnings per share outperformance over the next two years,” CLSA analyst Craig Maurer said in an April 15 research note. He rates the stock “buy” and predicts the shares could reach $52 within a year. AmEx is the top credit-card issuer among affluent consumers, with total spending per card averaging $8,665 last year, compared with $3,073 for Visa Inc.-branded cards and $2,588 for MasterCard Inc., according to the Nilson Report, an industry newsletter based in Carpinteria, California. To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net

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American Express Profit Doubles as Consumers Increase Credit-Card Spending

Qualcomm Raises Quarterly Forecasts on Semiconductor Demand; Shares Climb

by on March 25, 2010

By Katie Hoffmann March 25 (Bloomberg) — Qualcomm Inc. , the biggest maker of mobile-phone chips, climbed the most in more than a year in Nasdaq Stock Market trading after boosting its second-quarter profit and sales forecasts. Profit, excluding some items, will be 56 cents to 58 cents a share in the period ending this month, compared with an earlier target of as much as 53 cents, Qualcomm said today in a statement. Sales will amount to at least $2.55 billion, compared with a previous goal of at least $2.4 billion. Chief Executive Officer Paul Jacobs credited the increase to “favorable volume and product mix” in the chip business. Consumers are spending more on advanced phones, increasing the royalties Qualcomm receives from handset makers, said Bill Kreher , an analyst at Edward Jones & Co. in St. Louis. “Tech spending is certainly ramping up,” said Kreher, who recommends buying the shares and doesn’t own any. “Qualcomm stands to benefit more than anyone.” Qualcomm, based in San Diego, rose $2.92, or 7.3 percent, to $43.11 at 10:21 a.m. New York time in Nasdaq trading. Earlier, the shares climbed to $43.84, the most since November 2008. The shares had dropped 13 percent this year before today. The profit forecast indicates Qualcomm’s royalties are rebounding, calming investors after that figure fell short of estimates last quarter, said Stacy Rasgon , an analyst at Sanford C. Bernstein & Co. in New York. “People were really concerned,” said Rasgon, who rates the stock ‘outperform’ and doesn’t own any. Qualcomm gets most of its revenue from supplying chips to phone makers. Global handset sales may climb as much as 13 percent this year after dropping in 2009, according to researcher Gartner Inc. Analysts on average predicted profit of 52 cents a share on sales of $2.57 billion, according to a Bloomberg survey . On March 2, Qualcomm said its earnings would be at the high end of its previous forecast. To contact the reporters on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net

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Qualcomm Raises Quarterly Forecasts on Semiconductor Demand; Shares Climb

McDonald’s Worldwide January Sales Rise 2.6%, Topping Analysts’ Estimates

February 9, 2010

By Courtney Dentch Feb. 9 (Bloomberg) — McDonald’s Corp ., the world’s largest restaurant company, said global sales rose 2.6 percent in January, topping some analysts’ estimates, as demand in Asia and the U.K. countered a decline the in U.S. Sales at U.S. stores open at least 13 months fell 0.7 percent and climbed 4.3 percent in Europe, the Oak Brook, Illinois-based company said today in a statement. Sales in Asia, the Middle East and Africa also rose 4.3 percent. McDonald’s introduced a $1 breakfast menu in January and added a wrap version of its Big Mac sandwich to revive U.S. sales hurt by a slowdown in consumer spending and poor weather in the first half of the month. Longer opening hours in the U.K. and France drove sales in those markets, and demand for breakfast and staples such as french fries added to sales in Australia and Japan. “Underlying trends, excluding weather, improved from December, helped by the successful launches of newer initiatives,” David Tarantino , an analyst with Robert W. Baird & Co. wrote in a note today. He rates the stock “outperform.” McDonald’s rose 21 cents to $63.13 at 10:08 a.m. in New York Stock Exchange composite trading. The shares gained less than 1 percent last year. Global sales were predicted to rise 2 percent, the average of estimates from analysts at Barclays Capital, Jefferies & Co. and Robert W. Baird. U.S. sales were projected to be unchanged. The analysts projected gains of 4 percent in Europe and 1.3 percent in Asia, the Middle East and Africa. McDonald’s also said the closure of about 430 restaurants in Japan over the next 12 to 18 months will cost about $40 million to $50 million after taxes, primarily in the first half. To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net .

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Google Profit Increases as Ad Market Shows Signs of Recovery; Shares Gain

October 15, 2009

By Brian Womack Oct. 15 (Bloomberg) — Google Inc. reported a 27 percent increase in third-quarter profit, beating analysts’ estimates, after the recovering economy boosted demand for online ads and e-commerce. The shares gained in late trading. Net income rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06, a year earlier, the company said today in a statement. Excluding revenue passed on to partner sites, sales were $4.38 billion, compared with an estimate of $4.25 billion in a Bloomberg survey of analysts. Search advertising, Google’s main source of revenue, rebounded last quarter as marketers sought a cost-effective way to promote themselves. Spending on U.S. search ads rose 5 percent from the previous period, according to Efficient Frontier , a search marketing firm in Sunnyvale, California. The number had dropped 3 percent in the second quarter. “Advertisers want to stay in front of people who are spending,” said Sameet Sinha , an analyst with JMP Securities LLC in San Francisco, who rates the stock a buy and doesn’t own it. “They are willing to pay up for it.” Leaving out some costs such as stock-based compensation, profit was $5.89 a share. Analysts had estimated $5.43. Google, the most used Internet search engine, rose $7.76 or 1.5 percent, to $537.67 in extended trading, after closing at $529.91 on the Nasdaq Stock Market. Shares of the Mountain View, California-based company have climbed 72 percent this year. Worst Is Over? Chief Executive Officer Eric Schmidt said this month that the “worst is behind us.” He also has said that Google will step up acquisitions again as the economy improves. Google eliminated jobs and shuttered underperforming business units this year. In March, the company cut about 200 sales and marketing positions, or 1 percent of its workforce . Even as companies pared marketing budgets, Google benefited from a shift to online ads from traditional media. Search advertising will grow 3.6 percent in the U.S. this year, while the entire ad industry declines 15 percent, according to Magna Global in New York. Google has maintained its dominance in the Internet search market this year, warding off an attack from Microsoft Corp. ’s Bing, which debuted in June. Microsoft is joining forces with Yahoo! Inc. to form a bigger search competitor to Google. The partnership, slated to take effect next year, would put Bing on Yahoo’s Web sites. Google had 64.9 percent of the U.S. market last month, compared with 65 percent in May, according to ComScore Inc. in Reston, Virginia. Microsoft’s share grew to 9.4 percent from 8 percent over that period — mostly at the expense of Yahoo, which fell to 18.8 percent from 20.1 percent. To contact the reporter on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net

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