(Bloomberg) -- Bank of America Corp. Chief Executive Officer Kenneth Lewis is losing shareholder support heading into today’s annual meeting amid speculation that government stress tests will show the bank needs more capital.
Lined up against Lewis’s re-election as chairman of the biggest U.S. bank by assets are the California Public Employees’ Retirement System -- the nation’s largest public pension fund -- as well as proxy advisers Glass Lewis & Co., RiskMetrics Group Inc. and Egan-Jones Proxy Services, among other investors. Shareholders have also targeted 70-year-old lead director Temple Sloan Jr.
Ballots will be cast at the bank headquarters in Charlotte, North Carolina on whether to re-elect directors and split the chairman and CEO jobs held by Lewis. Dislodging Lewis after eight years as chairman may depend on how mutual funds and brokerages vote, opponents including CtW Investment Group said.
“It’s largely up to the big mutual fund companies and they are usually very hesitant to cross with the management of financial services companies,” said William R. Atwood, executive director of the Illinois State Investment Board, which will vote its 1.5 million shares against Lewis’s re-election.
Lewis, 62, may face demands from regulators to raise capital after results of government stress tests are released May 4. The bank needs $60 billion to $70 billion of capital, according to Friedman, Billings, Ramsey Group Inc. analyst Paul Miller, who cited separate tests performed by his firm, which assumed a 12 percent jobless rate, compared with about 10 percent used by the government test.
Stress Tests
Bank of America is among 19 U.S. financial institutions assessing the results of the Treasury’s stress tests. Lewis has vowed the bank can recover without any more U.S. aid, while Treasury Secretary Timothy Geithner has said regulators may replace management and directors of banks that need “exceptional” assistance.
Lewis has presided over a 79 percent decline in Bank of America shares over the past year, and a $1.79 billion fourth- quarter loss, amid a worldwide credit crisis and recession. The bank slipped 77 cents, or 8.6 percent, to $8.15 yesterday in New York trading. Scott Silvestri, a Bank of America spokesman, declined to comment on Lewis yesterday.
The CEO has come under fire for failing to divulge spiraling losses at Merrill Lynch & Co. before shareholders voted in December to endorse Bank of America’s purchase of the largest securities brokerage. The Merrill Lynch acquisition was completed on Jan. 1, after the U.S. government provided loan guarantees to prop up the deal.
Lewis’s Future
Lewis’s future “is probably out of his hands at this point,” said Christopher Whalen, managing director of Institutional Risk Analytics, a California research firm that rates banks. “The time for Ken Lewis to hang tough was when he could have told the government, ‘No, I won’t buy Merrill Lynch,’” Whalen said in an interview yesterday.
The bank’s 18-member board solidly supports Lewis and shares his view that the acquisitions of Merrill Lynch and mortgage lender Countrywide Financial Corp. will be among its best long-term purchases, said Robert Stickler, a bank spokesman.
Both sides have said the vote may be close. Stuart Plesser, an analyst at Standard & Poor’s Corp., said a move against Lewis could deprive the bank of a 40-year company veteran skilled at handling acquisitions.
“Ken is the guy to integrate this thing, now that they own Merrill and Countrywide,” Plesser said in an interview. “He’s great at this kind of stuff.”
Chairman, CEO
Included in today’s vote is a resolution to divide the jobs of chairman and CEO. Such a split, whether by shareholders or at the behest of the board, has been a precursor to the ouster of other bank CEOs including Wachovia Corp.’s Kennedy Thompson and Washington Mutual Inc.’s Kerry Killinger.
Lewis is likely to win re-election to the board by a wide margin, the Wall Street Journal reported, citing unidentified people familiar with the preliminary results of the shareholder vote. With about 75 percent of the shares outstanding counted, slightly more than 50 percent favored splitting the chairman and CEO positions, the newspaper said.
Lewis may be aided by improvements at Merrill Lynch’s bond- trading business, plus a surge in home-loan refinancings that spurred a $4 billion profit in the first quarter. Because the profit included extraordinary gains from selling shares of a Chinese bank and accounting changes, the quarterly profit didn’t quiet critics or impress investors who drove shares down 24 percent on April 20, when the finances were disclosed.
Merrill Lynch Deal
“Now is the appropriate time to change management because Mr. Lewis has lost the confidence of the investing public and the confidence of his employees,” said John Moore, a Charlotte insurance-agency owner who urged Lewis to drop his chairman’s title at last year’s annual meeting.
Lewis may face pressure also from federal regulators, whom he accused of pushing Bank of America to keep Merrill Lynch’s losses secret and to complete the acquisition, according to New York Attorney General Andrew Cuomo. The Wall Street Journal reported yesterday that a leak of the stress-test results shows that Bank of America may need billions of dollars in capital.
“The timing of this leak a day before the annual meeting is not any coincidence,” said Tony Plath, a University of North Carolina finance professor. “This is a clear attempt to bring down a sitting CEO.”
Board Members
Lewis’s opponents include pension funds representing judges in Illinois, teachers in Ohio and state government employees in Virginia, and the TIAA-CREF investment fund for educators. Yesterday, Lewis lost the support of Calpers, the California pension fund, which said it will vote its 22.7 million shares against the entire board.
The largest group to announce public opposition to Lewis’s re-election, TIAA-CREF, controls less than six-tenths of 1 percent of the bank’s 6.4 billion shares. Phone calls to Hye-Won Choi, TIAA-CREF’s head of corporate governance, weren’t returned.
Proxy adviser RiskMetrics Group’s ISS Governance Services has said it will vote against Lewis; Sloan, the lead director; and board members Frank P. Bramble Sr., 59, a former vice chairman at MBNA Corp.; Monica C. Lozano, 52, publisher of Impremedia LLC’s La Opinion magazine; Robert L. Tillman, 65, former CEO of Lowe’s Cos.; and Jacquelyn M. Ward, 69, a former managing director at Intec Telecom Systems Plc.
In addition to Lewis and Sloan, proxy adviser Glass Lewis said it will vote against directors Virgis W. Colbert, a former executive vice president at Miller Brewing Co.; Joseph W. Prueher, a retired Navy admiral; and Charles O. Rossotti, a Carlyle Group Inc. adviser.
Read more here
Tuesday, 28 April 2009
Monday, 27 April 2009
Is Bear's Alan Schwartz headed to Goldman Sachs?
(Fortune) -- One of the few remaining mysteries from the fall of Bear Stearns is where's Alan Schwartz? Schwartz, as you may remember, was the affable M&A banker who had the misfortune of becoming Bear Stearns CEO in January 2008, two months before the 85-year-old firm collapsed.
That mystery may soon be solved: Alan Schwartz appears to be headed to Goldman Sachs (GS, Fortune 500), the premier Wall Street investment bank turned bank holding company. According to a source familiar with the negotiations going on between Goldman and Schwartz, the chances are about "50-50" that Schwartz will soon be a partner-level Managing Director at Goldman (of which there are now about 400, out of 27,898 employees worldwide.)
His potential role at Goldman
In his new post, Schwartz's responsibilities will include cooking up deals in the media, telecom and healthcare sectors and being an all-around senior banker and executive. If Schwartz ends up at Goldman, he will join the firm's other senior M&A luminaries, Jack Levy and Gene Sykes, in covering the media and telecom industries. Schwartz, 58, would also help fill the banking holes left by the recent departures of Bryan Trott, Warren Buffett's favorite banker, and Jon Winkelried, who had been a co-president at the firm along with Gary Cohn.
Read more here
That mystery may soon be solved: Alan Schwartz appears to be headed to Goldman Sachs (GS, Fortune 500), the premier Wall Street investment bank turned bank holding company. According to a source familiar with the negotiations going on between Goldman and Schwartz, the chances are about "50-50" that Schwartz will soon be a partner-level Managing Director at Goldman (of which there are now about 400, out of 27,898 employees worldwide.)
His potential role at Goldman
In his new post, Schwartz's responsibilities will include cooking up deals in the media, telecom and healthcare sectors and being an all-around senior banker and executive. If Schwartz ends up at Goldman, he will join the firm's other senior M&A luminaries, Jack Levy and Gene Sykes, in covering the media and telecom industries. Schwartz, 58, would also help fill the banking holes left by the recent departures of Bryan Trott, Warren Buffett's favorite banker, and Jon Winkelried, who had been a co-president at the firm along with Gary Cohn.
Read more here
Thursday, 23 April 2009
Time running out on Chrysler
(CNNMoney.com) -- Chrysler LLC faces the most difficult, and important, week in its 84-year history as the automaker tries to close three difficult deals in order to avoid bankruptcy.
The automaker has until Thursday, April 30, to reach a deal on an alliance with Italian automaker Fiat, convince banks holding $7 billion of its secure debt to accept pennies on the dollar and win additional wage and pension concessions from its unions.
The challenge is that all three parties negotiating with Chrysler will want to see terms of the other deals before they agree to their own deal. That's because Fiat, banks and the unions will all likely end up owning a stake in the troubled automaker. The value of those stakes depend upon how much equity each party receives, and what Chrysler's chances of avoiding bankruptcy are.
Failure to reach a deal is likely to put the company on the path towards closure and the sale of its assets. The Treasury Department's auto industry task force has declared that Chrysler is no longer viable as a stand-alone company and gave it only a month to reach a final deal with Fiat that would give the government enough confidence to extend Chrysler $6 billion more in loans.
Read more here
The automaker has until Thursday, April 30, to reach a deal on an alliance with Italian automaker Fiat, convince banks holding $7 billion of its secure debt to accept pennies on the dollar and win additional wage and pension concessions from its unions.
The challenge is that all three parties negotiating with Chrysler will want to see terms of the other deals before they agree to their own deal. That's because Fiat, banks and the unions will all likely end up owning a stake in the troubled automaker. The value of those stakes depend upon how much equity each party receives, and what Chrysler's chances of avoiding bankruptcy are.
Failure to reach a deal is likely to put the company on the path towards closure and the sale of its assets. The Treasury Department's auto industry task force has declared that Chrysler is no longer viable as a stand-alone company and gave it only a month to reach a final deal with Fiat that would give the government enough confidence to extend Chrysler $6 billion more in loans.
Read more here
Wednesday, 22 April 2009
Freddie Mac CFO found dead
(CNN) -- The acting chief financial officer of mortgage finance giant Freddie Mac, David Kellermann, was found dead Wednesday morning, police said.
The death "may have been an apparent suicide," said Lucy Caldwell, a spokeswoman for police in Fairfax County, Va.
Authorities said there were no signs of foul play when officers were called to Kellermann's home in Vienna shortly before 5 a.m. ET, Caldwell said. A source familiar with the investigation said Kellerman apparently hanged himself.
"The Freddie Mac family is truly saddened by the news this morning of David Kellermann's death," Freddie interim CEO John Koskinen said in a statement. "His extraordinary work ethic and integrity inspired all who worked with him. But he will be most remembered for his affability, his personal warmth, his sense of humor and his quick wit."
Treasury Secretary Tim Geithner, whose office works closely with Fannie and Freddie, also offered condolences.
"On behalf of the Treasury family, we are deeply saddened by the news this morning of David Kellermann's death," Geithner said. "Our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time."
Kellermann, 41, who also served as a senior vice president, had been with Freddie Mac (FRE, Fortune 500) for more than 16 years.
He was named to acting CFO and senior vice president positions in September 2008, and was responsible for the company's financial controls. This included overseeing financial reporting, compliance with tax requirements and regulations, and annual budgeting and financial planning.
Before assuming his current posts, Kellermann was corporate controller and principal accounting officer.
Kellermann held a master's degree in finance from George Washington University and a bachelor's in political science and accounting from the University of Michigan. He has served as a volunteer board member of the District of Columbia Coalition for the Homeless.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders.
The government took over Freddie Mac last year, as the nationwide subprime-loan crisis escalated. In September, Freddie Mac and Fannie Mae were placed under conservatorship by its regulator, the Federal Housing Finance Agency (FHFA).
"We at FHFA are very saddened by the death of David Kellermann," the government agency said in a statement. "As the acting chief financial officer of Freddie Mac during particularly challenging times, David was an inspiration to his staff and many others who were privileged to work with him."
Both companies back mortgages held by private homeowners, and have received massive cash infusions from the government to keep them afloat.
Read more here
The death "may have been an apparent suicide," said Lucy Caldwell, a spokeswoman for police in Fairfax County, Va.
Authorities said there were no signs of foul play when officers were called to Kellermann's home in Vienna shortly before 5 a.m. ET, Caldwell said. A source familiar with the investigation said Kellerman apparently hanged himself.
"The Freddie Mac family is truly saddened by the news this morning of David Kellermann's death," Freddie interim CEO John Koskinen said in a statement. "His extraordinary work ethic and integrity inspired all who worked with him. But he will be most remembered for his affability, his personal warmth, his sense of humor and his quick wit."
Treasury Secretary Tim Geithner, whose office works closely with Fannie and Freddie, also offered condolences.
"On behalf of the Treasury family, we are deeply saddened by the news this morning of David Kellermann's death," Geithner said. "Our deepest sympathies are with his family and his colleagues at Freddie Mac during this difficult time."
Kellermann, 41, who also served as a senior vice president, had been with Freddie Mac (FRE, Fortune 500) for more than 16 years.
He was named to acting CFO and senior vice president positions in September 2008, and was responsible for the company's financial controls. This included overseeing financial reporting, compliance with tax requirements and regulations, and annual budgeting and financial planning.
Before assuming his current posts, Kellermann was corporate controller and principal accounting officer.
Kellermann held a master's degree in finance from George Washington University and a bachelor's in political science and accounting from the University of Michigan. He has served as a volunteer board member of the District of Columbia Coalition for the Homeless.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders.
The government took over Freddie Mac last year, as the nationwide subprime-loan crisis escalated. In September, Freddie Mac and Fannie Mae were placed under conservatorship by its regulator, the Federal Housing Finance Agency (FHFA).
"We at FHFA are very saddened by the death of David Kellermann," the government agency said in a statement. "As the acting chief financial officer of Freddie Mac during particularly challenging times, David was an inspiration to his staff and many others who were privileged to work with him."
Both companies back mortgages held by private homeowners, and have received massive cash infusions from the government to keep them afloat.
Read more here
Monday, 20 April 2009
Asian Stocks Slump on Growth Concerns; China Mobile, Orix Fall
(Bloomberg) -- Asian stocks slumped, dragging the regional benchmark index from a three-month high, as lower-than- expected profit at China Mobile Ltd. curbed optimism the global economy is recovering.
China Mobile, the world’s biggest wireless carrier, sank 5.8 percent in Hong Kong trading. Orix Corp., Japan’s No. 1 non- bank financial company, slid 8 percent as Nomura Holdings Inc. downgraded the stock and Bank of America Corp. set aside more money to cover loan losses. BHP Billiton Ltd., the world’s largest mining company, lost 4.3 percent as oil and metals prices slumped.
The MSCI Asia Pacific Index lost 2.9 percent to 87.36 as of 12:22 p.m. in Tokyo, retreating from its highest close since Jan. 7. A 27 percent rally through yesterday from a five-year low reached on March 9 had lifted the valuation of companies on the gauge to the highest since November 2007.
“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “It’s encouraging that a bottom has been perceived, but given the likelihood of a protracted period of low growth, some of these share prices ran ahead of reality.”
Japan’s Nikkei 225 Stock Average tumbled 3.4 percent to 8,625.69. Mitsubishi Corp., Japan’s No. 1 trading company, led declines with a 6.5 percent drop after the Nikkei newspaper said falling coal prices will erode profits. Australia’s S&P/ASX 200 Index slumped 2.7 percent. All markets open for trading declined.
Futures on the Standard & Poor’s 500 Index were little changed at 832.90. The gauge slid 4.3 percent yesterday, the most since March 2, as Bank of America increased reserves for future loan losses by 57 percent since the end of December. The MSCI World Index slumped 3.7 percent yesterday.
Safe Haven
Prospects for more bank losses spurred demand for the yen and gold as havens. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday. Bullion climbed 2.3 percent in New York yesterday. Treasuries advanced for a second day.
Speculation the worst of the global recession has passed drove valuations on the MSCI Asia Pacific Index to 19 times reported profit yesterday, the highest since Nov. 2, 2007. The 14-day relative strength index for the gauge rose to 67.7 yesterday, nearing the 70 threshold that some traders see as a sign to sell.
China Mobile slid 5.8 percent to HK$70.15. First-quarter net income rose 5.2 percent to 25.2 billion yuan ($3.3 billion), the company reported yesterday, the slowest growth rate in five years. The result missed the 26.5 billion yuan median estimate of five analysts in a Bloomberg survey as intensifying competition undermined earnings.
Financial Shares
Financial companies accounted for 31 percent of the MSCI Asia Pacific Index’s decline today. Orix, whose shares have more than doubled in the past month, retreated 8 percent to 4,370 yen. Wataru Ohtsuka, an analyst at Nomura, lowered Orix to “neutral” from “buy,” on the view that recent gains have reduced the attractiveness of the shares.
Westpac Banking Corp., Australia’s third largest, dropped 3.3 percent to A$19.60. Shinhan Financial Group Co., South Korea’s second-biggest financial company, dropped 4.4 percent to 28,550 won.
Toyota Motor Corp., the world’s largest automaker, fell 4.4 percent to 3,700 yen on concern demand will take longer than expected to recover. Sony Corp., the world’s second-biggest consumer electronics maker, lost 5.1 percent to 2,520 yen after Nikko Citigroup Ltd. cut the stock to “hold” from “buy.”
China Mobile, the world’s biggest wireless carrier, sank 5.8 percent in Hong Kong trading. Orix Corp., Japan’s No. 1 non- bank financial company, slid 8 percent as Nomura Holdings Inc. downgraded the stock and Bank of America Corp. set aside more money to cover loan losses. BHP Billiton Ltd., the world’s largest mining company, lost 4.3 percent as oil and metals prices slumped.
The MSCI Asia Pacific Index lost 2.9 percent to 87.36 as of 12:22 p.m. in Tokyo, retreating from its highest close since Jan. 7. A 27 percent rally through yesterday from a five-year low reached on March 9 had lifted the valuation of companies on the gauge to the highest since November 2007.
“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “It’s encouraging that a bottom has been perceived, but given the likelihood of a protracted period of low growth, some of these share prices ran ahead of reality.”
Japan’s Nikkei 225 Stock Average tumbled 3.4 percent to 8,625.69. Mitsubishi Corp., Japan’s No. 1 trading company, led declines with a 6.5 percent drop after the Nikkei newspaper said falling coal prices will erode profits. Australia’s S&P/ASX 200 Index slumped 2.7 percent. All markets open for trading declined.
Futures on the Standard & Poor’s 500 Index were little changed at 832.90. The gauge slid 4.3 percent yesterday, the most since March 2, as Bank of America increased reserves for future loan losses by 57 percent since the end of December. The MSCI World Index slumped 3.7 percent yesterday.
Safe Haven
Prospects for more bank losses spurred demand for the yen and gold as havens. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday. Bullion climbed 2.3 percent in New York yesterday. Treasuries advanced for a second day.
Speculation the worst of the global recession has passed drove valuations on the MSCI Asia Pacific Index to 19 times reported profit yesterday, the highest since Nov. 2, 2007. The 14-day relative strength index for the gauge rose to 67.7 yesterday, nearing the 70 threshold that some traders see as a sign to sell.
China Mobile slid 5.8 percent to HK$70.15. First-quarter net income rose 5.2 percent to 25.2 billion yuan ($3.3 billion), the company reported yesterday, the slowest growth rate in five years. The result missed the 26.5 billion yuan median estimate of five analysts in a Bloomberg survey as intensifying competition undermined earnings.
Financial Shares
Financial companies accounted for 31 percent of the MSCI Asia Pacific Index’s decline today. Orix, whose shares have more than doubled in the past month, retreated 8 percent to 4,370 yen. Wataru Ohtsuka, an analyst at Nomura, lowered Orix to “neutral” from “buy,” on the view that recent gains have reduced the attractiveness of the shares.
Westpac Banking Corp., Australia’s third largest, dropped 3.3 percent to A$19.60. Shinhan Financial Group Co., South Korea’s second-biggest financial company, dropped 4.4 percent to 28,550 won.
Toyota Motor Corp., the world’s largest automaker, fell 4.4 percent to 3,700 yen on concern demand will take longer than expected to recover. Sony Corp., the world’s second-biggest consumer electronics maker, lost 5.1 percent to 2,520 yen after Nikko Citigroup Ltd. cut the stock to “hold” from “buy.”
Thursday, 16 April 2009
AIG sells auto insurer for $2 billion
(Fortune) -- AIG made the first big dent Thursday in its mountain of IOUs to taxpayers.
The New York-based insurer agreed to sell its U.S. car insurance business to a unit of Zurich Financial Services for $2 billion in cash, notes and debt assumption. The sale, which is subject to regulatory approval, is expected to close later this year, an AIG spokesman said.
The sale of 21st Century Insurance to Farmers Group comes just a month after AIG (AIG, Fortune 500) -- which has received federal assistance exceeding $182 billion since its derivatives-fueled implosion last fall -- had the terms of its federal lifeline restructured for the third time.
The company is trying to sell assets to raise cash to whittle down its gigantic obligations to the Treasury and the Federal Reserve Bank of New York. But progress has been slow. Financing for would-be buyers has been hard to come by, and Congress has been extremely critical of the ever-rising price tag of AIG's bailout.
"We are very pleased to reach agreement on a $2 billion transaction, especially in this market environment," said CEO Edward Liddy. "In addition, we are moving forward with discussions for several other transactions, and we continue to evaluate how best to assure the continued strength and success of all of AIG's businesses."
Liddy was installed last September after the government took a 79% stake in AIG in exchange for what started out as an $85 billion emergency loan. In return, AIG pledged to sell assets to raise cash that would be used to repay taxpayers.
Read more here
The New York-based insurer agreed to sell its U.S. car insurance business to a unit of Zurich Financial Services for $2 billion in cash, notes and debt assumption. The sale, which is subject to regulatory approval, is expected to close later this year, an AIG spokesman said.
The sale of 21st Century Insurance to Farmers Group comes just a month after AIG (AIG, Fortune 500) -- which has received federal assistance exceeding $182 billion since its derivatives-fueled implosion last fall -- had the terms of its federal lifeline restructured for the third time.
The company is trying to sell assets to raise cash to whittle down its gigantic obligations to the Treasury and the Federal Reserve Bank of New York. But progress has been slow. Financing for would-be buyers has been hard to come by, and Congress has been extremely critical of the ever-rising price tag of AIG's bailout.
"We are very pleased to reach agreement on a $2 billion transaction, especially in this market environment," said CEO Edward Liddy. "In addition, we are moving forward with discussions for several other transactions, and we continue to evaluate how best to assure the continued strength and success of all of AIG's businesses."
Liddy was installed last September after the government took a 79% stake in AIG in exchange for what started out as an $85 billion emergency loan. In return, AIG pledged to sell assets to raise cash that would be used to repay taxpayers.
Read more here
Google First-Quarter Profit Rises 8.9%; Sales Slow
(Bloomberg) -- Google Inc., owner of the world’s most popular search engine, reported an 8.9 percent increase in first-quarter profit after cutting jobs and jettisoning some businesses. Sales growth slowed as demand ebbed for online ads.
Net income climbed to $1.42 billion, or $4.49 a share, the company said today. Excluding revenue passed on to partner sites, sales were $4.07 billion last quarter, compared with the average analyst estimate of $4.1 billion in a Bloomberg survey.
Customers scaled back ad campaigns last quarter, leading to the first sequential drop in quarterly sales since the company went public in 2004. Google is now reining in research and marketing expenses to maintain profit growth. It has eliminated sales jobs and shut down its newspaper and radio ad units.
“We’re still basically in uncharted territory,” Chief Executive Officer Eric Schmidt said on a conference call. “The current economic environment, which everybody is all very, very familiar with, remains tough.”
Google, based in Mountain View, California, climbed as high as 6 percent in extended trading after the earnings report was released. The shares then drifted back down during the conference call. Google’s stock has climbed 26 percent this year in Nasdaq Stock Market trading.
Conference Call
The downbeat tone of the call may have changed investor sentiment, said Richard Fetyko, an analyst with Merriman Curhan Ford & Co. in New York. He recommends buying the shares. “They were talking things down,” he said.
Excluding costs such as stock-based compensation, earnings were $5.16 a share, compared with the $4.95 estimated by analysts. Net income was $1.31 billion, or $4.12 a share, a year earlier. While sales rose 6.2 percent, Google’s total expenses were little changed from last year, at $3.63 billion.
Revenue from outside the U.S. made up 52 percent of total sales, up from 50 percent in the fourth quarter.
The company also announced that its head of global sales, Omid Kordestani, will become a senior adviser to Chief Executive Officer Eric Schmidt and Google’s founders. Nikesh Arora will take over Kordestani’s old job.
U.S. online advertising spending growth will slow to 4.5 percent this year, according to New York-based research firm EMarketer Inc. That’s down from 10 percent in 2008.
Internet Searches
Still, the ad market might have stabilized in March, said Marianne Wolk, an analyst with Susquehanna International Group LLLP. The number of online searches surged 9 percent in March over February, according to ComScore Inc. of Reston, Virginia.
Google, which gets almost all its sales from online searches, handled 64 percent of U.S. queries in March, according to ComScore. Yahoo! Inc. was No. 2 with 21 percent, and Microsoft Corp. had 8.3 percent.
Google is seeking to expand beyond search-based text ads, which provide its biggest chunk of revenue. The company acquired DoubleClick last year to extend its reach into display advertising, including banner ads.
Google said last month that it was testing new kinds of ads on its YouTube video service and partner sites. The ads target users based on the types of sites they visit and their interests, rather than just what they’re searching for.
After hiring for years, Google slimmed down last quarter. The company said last month it would eliminate about 200 jobs in sales and marketing, about 1 percent of its workforce.
Read more here
Net income climbed to $1.42 billion, or $4.49 a share, the company said today. Excluding revenue passed on to partner sites, sales were $4.07 billion last quarter, compared with the average analyst estimate of $4.1 billion in a Bloomberg survey.
Customers scaled back ad campaigns last quarter, leading to the first sequential drop in quarterly sales since the company went public in 2004. Google is now reining in research and marketing expenses to maintain profit growth. It has eliminated sales jobs and shut down its newspaper and radio ad units.
“We’re still basically in uncharted territory,” Chief Executive Officer Eric Schmidt said on a conference call. “The current economic environment, which everybody is all very, very familiar with, remains tough.”
Google, based in Mountain View, California, climbed as high as 6 percent in extended trading after the earnings report was released. The shares then drifted back down during the conference call. Google’s stock has climbed 26 percent this year in Nasdaq Stock Market trading.
Conference Call
The downbeat tone of the call may have changed investor sentiment, said Richard Fetyko, an analyst with Merriman Curhan Ford & Co. in New York. He recommends buying the shares. “They were talking things down,” he said.
Excluding costs such as stock-based compensation, earnings were $5.16 a share, compared with the $4.95 estimated by analysts. Net income was $1.31 billion, or $4.12 a share, a year earlier. While sales rose 6.2 percent, Google’s total expenses were little changed from last year, at $3.63 billion.
Revenue from outside the U.S. made up 52 percent of total sales, up from 50 percent in the fourth quarter.
The company also announced that its head of global sales, Omid Kordestani, will become a senior adviser to Chief Executive Officer Eric Schmidt and Google’s founders. Nikesh Arora will take over Kordestani’s old job.
U.S. online advertising spending growth will slow to 4.5 percent this year, according to New York-based research firm EMarketer Inc. That’s down from 10 percent in 2008.
Internet Searches
Still, the ad market might have stabilized in March, said Marianne Wolk, an analyst with Susquehanna International Group LLLP. The number of online searches surged 9 percent in March over February, according to ComScore Inc. of Reston, Virginia.
Google, which gets almost all its sales from online searches, handled 64 percent of U.S. queries in March, according to ComScore. Yahoo! Inc. was No. 2 with 21 percent, and Microsoft Corp. had 8.3 percent.
Google is seeking to expand beyond search-based text ads, which provide its biggest chunk of revenue. The company acquired DoubleClick last year to extend its reach into display advertising, including banner ads.
Google said last month that it was testing new kinds of ads on its YouTube video service and partner sites. The ads target users based on the types of sites they visit and their interests, rather than just what they’re searching for.
After hiring for years, Google slimmed down last quarter. The company said last month it would eliminate about 200 jobs in sales and marketing, about 1 percent of its workforce.
Read more here
Wednesday, 15 April 2009
Crude Oil Rises as U.S. Equity Rally Spurs Demand Expectations
(Bloomberg) -- Crude oil rose for the first time in a week as equities in the U.S., the world’s biggest oil user, rallied and the Federal Reserve said some of the country’s biggest regional economies slowed the pace of their decline.
Oil gained as much as 1.2 percent after stocks climbed in the last hour of trading yesterday. Fed districts reporting a slower economic decline or signs of stabilization include San Francisco, the largest district, New York, Chicago, Kansas City and Dallas, the Fed said in its Beige Book business survey.
“The sentiment is becoming more bullish for all commodities, perhaps prematurely but that is the market,” said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. “With the speculation that things aren’t getting as bad as they were previously, it’s providing support to commodity prices.”
Crude oil for May delivery rose as much as $1.05, or 2.1 percent, to $50.30 a barrel on the New York Mercantile Exchange. It was at $50.08 a barrel at 9:52 a.m. Singapore time. Prices are up 12 percent so far this year.
Yesterday, oil fell 16 cents, or 0.3 percent, to $49.25 a barrel, the lowest settlement on the Nymex since April 7, after a government report showed that U.S. stockpiles climbed to the highest level in almost 19 years as demand dropped.
The Dow Jones Industrial Average jumped 109.44 points, or 1.4 percent, to 8,029.62 yesterday.
The trend of higher equity prices continued into Asian trading. The Nikkei 225 Stock Average climbed 1 percent, to 8,832.99 as of 9:05 a.m. in Tokyo, breaking a three-day slide. The broader Topix index rose 10.13, or 1.2 percent, to 845.38.
Read more at Bloomberg
Oil gained as much as 1.2 percent after stocks climbed in the last hour of trading yesterday. Fed districts reporting a slower economic decline or signs of stabilization include San Francisco, the largest district, New York, Chicago, Kansas City and Dallas, the Fed said in its Beige Book business survey.
“The sentiment is becoming more bullish for all commodities, perhaps prematurely but that is the market,” said David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd. “With the speculation that things aren’t getting as bad as they were previously, it’s providing support to commodity prices.”
Crude oil for May delivery rose as much as $1.05, or 2.1 percent, to $50.30 a barrel on the New York Mercantile Exchange. It was at $50.08 a barrel at 9:52 a.m. Singapore time. Prices are up 12 percent so far this year.
Yesterday, oil fell 16 cents, or 0.3 percent, to $49.25 a barrel, the lowest settlement on the Nymex since April 7, after a government report showed that U.S. stockpiles climbed to the highest level in almost 19 years as demand dropped.
The Dow Jones Industrial Average jumped 109.44 points, or 1.4 percent, to 8,029.62 yesterday.
The trend of higher equity prices continued into Asian trading. The Nikkei 225 Stock Average climbed 1 percent, to 8,832.99 as of 9:05 a.m. in Tokyo, breaking a three-day slide. The broader Topix index rose 10.13, or 1.2 percent, to 845.38.
Read more at Bloomberg
Goldman reports $1.8 billion profit
(Fortune) -- Goldman Sachs reported a much stronger-than-expected first-quarter profit Monday, bouncing back from its worst quarter as a public company.
Goldman (GS, Fortune 500) also set plans to raise $5 billion through a sale of stock, saying it wants to become the first big bank to repay the federal loans extended during last fall's financial sector meltdown.
In reporting its results a day earlier than expected, New York-based Goldman said it earned $1.81 billion, or $3.39 a share, for the quarter ended March 31. Analysts surveyed by Thomson Financial were looking for a profit of $1.64 a share.
Goldman shares, which have surged more than 70% during the past month, continued rising late Monday, gaining about 4.7% for the day. Shares were down slightly in after-hours trading.
Read more at Fortune
Goldman (GS, Fortune 500) also set plans to raise $5 billion through a sale of stock, saying it wants to become the first big bank to repay the federal loans extended during last fall's financial sector meltdown.
In reporting its results a day earlier than expected, New York-based Goldman said it earned $1.81 billion, or $3.39 a share, for the quarter ended March 31. Analysts surveyed by Thomson Financial were looking for a profit of $1.64 a share.
Goldman shares, which have surged more than 70% during the past month, continued rising late Monday, gaining about 4.7% for the day. Shares were down slightly in after-hours trading.
Read more at Fortune
Tuesday, 14 April 2009
Infosys Shares Fall 7.8%, Biggest Drop in Five Years on Forecast
(Bloomberg) -- Infosys Technologies Ltd. shares fell as much as 7.8 percent, the biggest drop in almost five years, after India’s second-largest software-services provider forcecast its first sales decline in dollar terms for this year.
Read more at Bloomberg
Read more at Bloomberg
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