Archive for the 'Business & Finance' Category

12
Aug
10

BP Agrees to Record $50.6 Million Fine for Texas City Blast

NEWS
BP Agrees to Record $50.6 Million Fine for Texas City Blast

Thursday, August 12, 2010

BP has agreed to pay a record $50.6 million fine related to the deadly 2005 blast at its Texas City refinery and spend $500 million on safety improvements, U.S. officials said on Thursday.

The fine relates to BP’s repeated failure to meet safety standards both before and after the explosion that killed 15 workers and injured 170 others.

BP has also been slapped with huge fines for the pollution released from the troubled facility.

Those fines pale in comparison to the billions the British energy giant is liable for in the wake of the massive oil spill unleashed in the Gulf of Mexico after a deadly explosion sank the BP-leased Deepwater Horizon drilling rig in April.

The Occupational Safety and Health Administration initially fined BP a record $21 million after it determined that BP failed to protect its workers ahead of the 2005 blast.

The penalty was increased to $50.6 million in 2009 after inspections found that BP failed to correct significant safety deficiencies.

‘This agreement achieves our goal of protecting workers at the refinery and ensuring that critical safety upgrades are made as quickly as possible,’ said Secretary of Labor Hilda Solis.

‘The size of the penalty rightly reflects BP’s disregard for workplace safety and shows that we will enforce the law so workers can return home safe at the end of their day.’

The settlement does not impact ongoing litigation over the $30 million fine imposed for 439 new ‘willful violations’ discovered in the 2009 inspection.

‘It is perfectly within BP’s means to make that facility safe,’ OSHA Deputy Assistant Secretary Jordan Barab said in a conference call.

The settlement ‘commits them to a schedule to address those issues and it provides OSHA with an unprecedented level of oversight to make sure they do what they’re supposed to do,’ he added.
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12
Aug
10

Recovery still distant as GM turns a corner

NEWS
Recovery still distant as GM turns a corner
General Motors profits move past $1 billion

Thursday, August 12, 2010

••• General Motors said on Thursday its profits hit $1.3 billion in the second quarter, as the car company prepared to break free of U.S. government ownership by relisting on the stock exchange.

‘I am pleased with our progress on achieving our business objectives,’ said chief financial officer Chris Liddell, announcing the second consecutive quarter of growth.

The company erased a loss of $13 billion in the same period last year, as sales and revenues increased.

The firm saw stronger sales in North America in the quarter, even as sales in Europe floundered and market share around the world sank.

GM captured 15.4 percent of the U.S. market for cars versus 17.5 percent in the second quarter of last year, but elsewhere faired poorly.

GM’s executives have said that a public offering will come soon, a process that will help the U.S. government unwind its majority stake in the firm.

The U.S. Treasury Department still owns 61 percent of GM, which received $50 billion of U.S. government financing for its bankruptcy restructuring that led to mass layoffs, plant closures and billions of dollars in debt wiped out.

GM’s drive for an IPO will be boosted by news that the firm’s revenues swelled to $33 billion in the second quarter, a third more than the same period last year.

GM as well as its U.S. competitors Ford and Chrysler were hard hit by the recession which struck the United States in December 2007, caused by a home mortgage meltdown.

Of the so-called Detroit Three car makers, Ford was the only one to avoid bankruptcy, managing to stay afloat thanks to massive loans it had obtained prior to the credit crunch and because it moved more quickly to revitalise its product portfolio.
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12
Aug
10

Fed Effort to Aid Recovery Fails to Calm Investors

NEWS
Fed Effort to Aid Recovery Fails to Calm Investors

Thursday, August 12, 2010

More worried about the recovery, the U.S. Federal Reserve has taken a small step to bolster the U.S. economy.

Wrapping up a one-day meeting, the Fed said it will use money from its investments in mortgage securities to buy government debt on a small scale. That could help nudge down long-term rates on mortgages and corporate debt, but wouldn’t have a dramatic impact on stimulating economic growth, economists say.

Perhaps more importantly, the largely symbolic action sends a signal that the Fed sees the recovery weakening and that it stands ready to take more aggressive action, if needed, to keep it on track.

Delivering a more downbeat assessment, the Fed now believes economic growth will be ‘more modest’ than it had anticipated at its late June meeting.

The Fed, citing ‘subdued’ inflation, said it would keep its target for a key interest rate at zero to 0.25 percent for an ‘extended period’.
Investors reacted positively to the statement. Stocks that were down sharply before the announcement made up some lost ground. The Dow Jones industrial average, down about 100 points just before the Fed decision, was down about 40 a short time later. However, the market was likely to fluctuate, as it usually does while investors pore over the Fed’s statement.

Treasury prices rose slightly as investors were pleased by the Fed’s plan to buy government debt, which would reduce the amount of Treasury securities in the market. The yield on the Treasury’s 10-year note, which moves in the opposite direction from its price, fell to 2.77 percent from 2.82 percent just before the announcement.

Economists doubt the Fed can turn around the economy on its own. Some believe additional help from Congress is needed. Others are sceptical that easier credit or even more government aid will persuade Americans to shop more and hire more. Yet others think some jobs – like in construction – will never return to pre-recession levels, as the economy makes a structural shift.
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05
Aug
10

Rupert Murdoch says Apple’s iPad is a ‘game-changer’ for news media

NEWS
Rupert Murdoch says Apple’s iPad is a ‘game-changer’ for news media

Thursday, August 05, 2010

••• Global media chief Rupert Murdoch says Apple’s iPad will be a ‘game changer’ for newspapers.

The chairman and chief executive of News Corporation said the iPad would allow publishers to attract new readers to their mastheads.

‘It’s a real game changer in the presentation of news,’ Mr. Murdoch said on Thursday during a conference call for the company’s full year profit results.

‘We will have young people reading newspapers. We will have different looking types of newspapers.’

News Corp owns newspapers in the U.S., U.K., Australia and elsewhere.

Mr. Murdoch said he expected to see hundreds of millions of these devices around the world.

‘There will be all sorts of things we can do with them,’ Mr. Murdoch said.

‘As they develop technologically, we have got to to develop our methods of presentation of news.’

News Corp chief operating officer Chase Carey said the iPad ‘really starts to deliver on the promise of multimedia’ for the first time.

In terms of charging for online content, The Times and Sunday Times newspapers in the U.K. started slugging users $1.59 (£1) a day, or $3.18 (£2) a week, to access their content online from the start of July.

Mr. Murdoch said there had been a positive response, but declined to say how many people had paid for subscriptions.

‘We have had a very encouraging number of people subscribing at a good price,’ he said.

‘But we think we are on the right strategy there and we think it’s going well.’

Mr. Murdoch also flagged changes to News Corp’s social networking portal MySpace, which he said was going through a major overhaul under a new management team.

‘It will look very, very different in a few months to what it’s looked for the last few years,’ Mr Murdoch said.

‘We are going to see it out for some time yet.’
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• Source(s): News Corporation
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04
Aug
10

News Corp. Posts $875 Million Profit as Ad Sales Rise

NEWS
News Corp. Posts $875 Million Profit as Ad Sales Rise

Wednesday, August 04, 2010

••• Media and entertainment giant News Corp. reported, Wednesday, that it has swung to profit in the fiscal fourth quarter on the back of strong performance from its television networks division which posted impressive ad sales.

News Corp. said its net profit in June quarter was $875 million or $0.33 per share as against loss of $203 million or $0.08 per share in the year ago period.

The company said its revenue moved up 5.7 percent to $8.11 billion.

Analysts, on average, had expected News Corp. to report profit of $0.20 per share on revenue on $7.87 billion.

However, operating profit, or sales minus the cost of goods sold and administrative expenses, slipped 1.7 percent year-on-year in June quarter to $932 million from $948 million.

The media conglomerate said its earnings were driven by strong performance put up by its television networks division, which accounted for more than half of its operating income.

Profits at domestic channels surged by 30 percent while international channels improved 40 percent. Overall, operating profit at cable television networks division, which include channels such as Fox News Channel and FX, surged 31 percent to $563 million on the back of advertising revenue which jumped 11 percent. The division also saw double-digit growth in revenue from fees paid by cable, satellite and fiber video providers.

Operating profit at News Corp.’s broadcast television division also surged 13 percent to $113 million on improved ad sales offsetting higher programming expenses at the company’s national broadcast network – Fox Broadcasting.

The group’s filmed entertainment division also did well but could not beat third quarter performance. Operating income in June quarter dropped 32 percent year-on-year to $137 million. In March quarter, profit stood at $497 million. At the time of announcing third quarter earnings, News Corp. had warned that one should not expect stellar performance from this division in the fourth quarter, largely due to an expected year-over-year decline in the film business due to the timing of releases.

The newspapers and information services division, which include the Wall Street Journal, Barron’s, MarketWatch and Dow Jones, also reported 20 percent surge in profit to $115 million on higher ad revenue, though it was below Street estimates.

The company’s digital media division, which include social networking site MySpace, however, disappointed, reporting an operating loss of $174 million in the June quarter on lower search and advertising revenue. News Corp. said MySpace is set for a “major overhaul.”

News Corp.’s satellite TV division also disappointed, reporting a 37 percent slide in operating income to $97 million on the back of continued weakness at Sky Italia.

To reduce dependence on the economically sensitive advertisement-based revenue, News Corp. said it is beefing up its portfolio of subscription-based assets. In June, it said it has made a bid for the 61 percent stake of pay-TV operator British Sky Broadcasting Group Plc (BSkyB) it doesn’t already own.

“The opportunity for us to expand the scale of our franchises is significant, including through taking advantage of the continual technological advances that will broaden the reach of our core content and distribution businesses,” News Corp. CEO Rupert Murdoch said in a statement.

The company’s full-year results were more impressive.

News Corp. said its net profit in fiscal year 2010 was $2.5 billion, helped primarily by blockbuster movie “Avatar.” DVD sales of other films like “Ice Age: Dawn of the Dinosaurs,” “X-Men Origins: Wolverine” and “Night at the Museum: Battle of the Smithsonian” also bumped up its profits. In the prior year, News Corp. incurred a net loss of $3.4 billion, which included a one-time pre-tax impairment and other charges of $9.2 billion.

“These results underscore just how well positioned we are – fiscally, operationally and strategically – for further growth across all of our markets,” Murdoch said.

Shares of News Corp., which owns Dow Jones, Wall Street Journal, New York Post, MySpace and 20th Century Fox among other things, closed up 1.61 percent at $13.85. Following the financial results announcement, the company’s shares were up 3.25 percent in the after-market hours.
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• Source(s): News Corporation
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04
Aug
10

MasterCard 2Q profit jumps 31 percent, tops view

NEWS
MasterCard 2Q profit jumps 31 percent, tops view

Wednesday, August 04, 2010

••• Anaemic consumer spending in the U.S. was offset by strong international growth to help boost MasterCard Inc’s second-quarter profit by 31 percent.

The gain topped Wall Street profit expectations, but fell short of the 38 percent leap in operating income posted by the company’s larger rival, Visa Inc., last week.

MasterCard shares slipped $1.76, to $200.70 in midday trading as the broader market sputtered.

MasterCard’s gains showed the Purchase, NY-based payment processor’s reliance on overseas use of its cards and networks. Worldwide purchasing volume rose eight per cent, while U.S. purchasing volume eked out a gain of less than 1 percent.

Worldwide, credit card use rose 10 percent, while debit card use leaped 29 percent.

Chief Financial Officer Martina Hund-Mejean said in an interview that card use was particularly strong in Latin America and Asia Pacific, which both saw double-digit growth rates.

‘Even in Europe,’ she said, alluding to the economic turmoil on the Continent in recent months. ‘We do not see any significant impact on our numbers in terms of the Europeans not spending.’

U.S. credit card use edged down 1.5 percent, continuing a two-year decline, but showing the smallest drop since the third quarter of 2008.

Debit card use edged up less than 1 percent. That reflects more frequent use of debit cards, but was held down by MasterCard’s loss of several debit card deals with banks, most notably the former Washington Mutual, which was bought by JPMorgan Chase in 2008. Hund-Mejean said US debit growth was closer to 20 percent if the banks winding down their MasterCard programs are stripped out.

U.S. spending, particularly with credit cards, picked up in April but was less robust later in the quarter, Hund-Mejean said. ‘People still feel a little careful and cautious, and I think that’s what we saw in May and June,’ she said.

Analysts noted the growth compared with a weak quarter last year. Thomas McCrohan from Janney Capital Marketssaid it is hard to read into the results to say whether they indicate any real improvement in the economy. But there was ‘nothing alarming’ in the results.

‘There’s nothing that would support a double dip’ of the recession, McCrohan said.

The number of transactions MasterCard handled was basically flat at 5.6 billion. Cross-border volume jumped 15.2 percent.

Net income rose to $458 million, or $3.49 per share, compared with $349 million, or $2.67 per share, a year ago.

Revenue rose 7 percent to $1.37 billion from $1.28 billion in the 2009 second quarter. MasterCard said the revenue increase reflected the higher cross-border volumes, higher gross dollar volume of the transactions it processed and the impact of price increases of 4 percent.

Wall Street expected earnings of $3.33 per share on revenue of $1.38 billion.

Total operating expences dropped 10 percent to $648 million. The decrease was led by a drop in severance and compensation costs as a result of layoffs in 2009.

President and CEO Ajay Banga said it is too early to tell what results MasterCard will feel from the limits on debit card fees included in the financial overhaul bill signed by President Barack Obama last month.

‘I know that everybody is eager to fully understand the impact on our business, but the truth is we just have to wait for the (Federal Reserve) to develop the regulations, and for our customers to react, before we will know the full implications both for the industry and for our company,’ he said during a conference call.

Banga noted there are a number of options for implementing the new rules, and quipped that MasterCard benefits in this case from having a smaller market share of U.S. debit than Visa.

Regardless of the new regulations, Banga said he doesn’t see the shift from cash and checks to electronic payments slowing down. He spoke enthusiastically about a number of pilot projects and overseas ventures MasterCard has to expand its network beyond card payments. Deals the company struck on mobile payments in Latin America, money transfer services in China and contactless payments in the U.S. position MasterCard for continued growth as the payments market evolves, he said.

David Parker, an analyst with Lazard Capital Markets, said it will be a few years before ‘electronic wallets’ are a reality, and there are some challenges in terms of customer and merchant adoption, but it is clear the market is moving in that direction.

MasterCard’s investments in this area could help it overcome its disadvantage in debit cards.

‘I think there is an opportunity there with mobile commerce,’ he said.
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03
Aug
10

BP Agrees to Sell Colombian Business to Ecopetrol and Talisman

NEWS
BP Agrees to Sell Colombian Business to Ecopetrol and Talisman

Tuesday, August 03, 2010

British oil giant BP says it will sell its Colombian business for a total of $1.9 billion.

The divestment is part of BP’s recently announced plans to sell off up to $30 billion of assets, as it struggles with the soaring cost of the Gulf of Mexico oil spill disaster.

‘BP today announced that it has agreed to sell its oil and gas exploration, production and transportation business in Colombia to a consortium of Ecopetrol, Colombia’s national oil company (51 percent), and Talisman of Canada (49 percent),’ it said in a statement.
‘The two companies will pay BP a total of 1.9 billion dollars in cash… for 100 percent of the shares in BP Exploration Company (Colombia) Limited (BPXC), the wholly-owned BP subsidiary company that holds BP’s oil and gas exploration, production and transportation interests in Colombia.’

The transaction, which is subject to regulatory and other approvals, is expected to complete by the end of 2010.

News of the sell-off comes one week after BP’s vilified chief executive Tony Hayward resigned in the wake of a record second-quarter loss of $16.9 billion – the biggest quarterly loss in British corporate history.

Hayward will step down in October and hand over the reigns to American executive Bob Dudley.
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• Source(s): BP PLC
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