Posts Tagged ‘Shareholders

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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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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21
Jul
10

Obama signs historic finance reform bill

NEWS
Obama signs historic finance reform bill
Historic financial overhaul signed to law by Obama

Wednesday, July 21, 2010

President Barack Obama on Wednesday signed into law the most sweeping reform of the U.S. finance industry since the 1930s, promising U.S. taxpayers would no longer get the bill for Wall Street excess.

The legislation, which some Republicans have pledged to repeal, introduces new consumer protections, checks the power of big banks and cracks down on deceptive practices by credit card firms.

“Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more tax-funded bailouts,” Obama promised.

Seeking to restore public confidence in his economic leadership as unemployment flirts with double digits, Obama said the bill would repair the fractures and abuses of which the financial meltdown was born.

“It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington,” said Obama, before adding the legacy-boosting law to his huge health care reform passed earlier this year.

“These reforms represent the strongest consumer financial protections in history,” Obama said, before signing the new law, passed by Congress last week.

“These protections will be enforced by a new consumer watchdog with just one job: looking out for people – not big banks, not lenders, not investment houses.”

The financial reform bill finally squeezed through Congress with just a handful of Republican votes, as the opposition party continued with its policy of trying to block Obama’s ambitious reform program at all costs.

Republican leaders on Wednesday condemned the new law, saying it would crimp growth, and handcuff the might of America’s financial titans.

Republican National Committee chairman Michael Steele accused Obama of trying to convince “sceptical Americans that he is doing everything he can to lower unemployment.”

“President Obama has signed into law a 2300 page behemoth that will saddle the business community with innumerable unintended consequences, tighter credit, and countless job-killing regulations,” Steele said.

Obama, facing record low approval ratings in some polls, hopes the financial reforms will eventually become popular, but much of the bill, like the health care bill, is so complicated that it will not come into force for months.

For instance, it will be up to a year before a new Consumer Financial Protection Bureau is set up to protect American consumers from hidden fees and deceptive lending practices when they get a new mortgage or credit card.

It could be 18 months before new regulations emerge to stop banks from engaging in impermissible proprietary trading and investment in hedge funds – under the Volcker rule, named after former Federal Reserve chief Paul Volcker.

In a bid to highlight the help the bill will grant to the middle classes, Obama was joined at the signing ceremony by several Americans who suffered unfair treatment at the hands of credit card firms and banks.

The legislation closes loopholes in regulations and requires greater transparency and accountability for hedge funds, mortgage brokers and payday lenders, as well as arcane financial instruments called derivatives.

The measure has drawn praise but also skepticism from economists and analysts.

The bill “addresses a number of key weaknesses in the U.S. financial regulatory structure that led to the financial meltdown in 2008 and early 2009,” said Brian Bethune at IHS Global Insight.

But Diane Swonk at Mesirow Financial warned that much of the impact is not known.

“We will have more regulators overseeing – but not necessarily averting – risk, and with a bill so large and undefined, we are likely to get more, in terms of unintended than intended consequences, going forward,” she said.

The law is likely to generate heated debate ahead of congressional elections in November as Republicans call for its reversal.

House Republican leader John Boehner said recently the law “ought to be repealed” and replaced with “common-sense things that we should do to plug the holes in the regulatory system.”
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• Source(s): The White House
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15
May
10

Weekly Address: Wall Street Reform & Main Street

NEWS
Weekly Address: Wall Street Reform & Main Street

President Obama “Wall Street Reform Will Bring Greater Security to Folks on Main Street”

Saturday, May 15, 2010

In his weekly address, President Barack Obama discussed how reforming Wall Street will strengthen Main Street. The reform bill moving through Congress will empower and protect American families with the strongest consumer financial protections in history, level the playing field for community banks by making sure all lenders are subject to tough oversight, and strengthen small businesses by curbing excessive risk taking on Wall Street, which will help protect credit for our small businesses. As the economy recovers in the short term, we need to build a new foundation for growth and prosperity for the long term. This bill helps to do just that.

On Thursday, I paid a visit to a small business in Buffalo, New York, a town that’s been hard hit in recent decades. I heard from folks about the struggles they’ve been facing for longer than they care to remember. And I talked with them about what my administration is doing to help our families, our small businesses, and our economy rebound from this recession.

Jumpstarting job creation in the private sector and fostering a climate that encourages businesses to hire again is vitally important – and I’ll continue working hard to make sure that happens. But my responsibility as President isn’t just to help our economy rebound from this recession – it’s to make sure an economic crisis like the one that helped trigger this recession never happens again.

That’s what Wall Street reform will help us do. In recent weeks, there’s been a lot of back and forth about the reform bill currently making its way through Congress. There’s been a lot of discussion about technical aspects of the bill, and a lot of heated – and frankly, sometimes misleading – rhetoric coming from opponents of reform.

All of this has helped obscure what reform would actually mean for you, the American people. So, I just wanted to take a few minutes to talk about why every American has a stake in Wall Street reform.

First and foremost, you have a stake in it if you’ve ever been treated unfairly by a credit card company, misled by pages and pages of fine print, or ended up paying fees and penalties you’d never heard of before. And you have a stake in it if you’ve ever tried to take out a home loan, a car loan, or a student loan, and been targeted by the predatory practices of unscrupulous lenders.

The Wall Street reform bill in Congress represents the strongest consumer financial protections in history. You’ll be empowered with the clear and concise information you need to make the choices that are best for you. We’ll help stop predatory practices, and curb unscrupulous lenders, helping secure your family’s financial future.

That’s why families have a stake in it. And our community banks also have a stake in reform. These are banks we count on to provide the capital that lets our small businesses hire and grow.

The way the system is currently set up, these banks are at a disadvantage because while they are often playing by the rules, many of their less scrupulous competitors are not. So, what reform will do is help level the playing field by making sure all our lenders – not just community banks – are subject to tough oversight. That’s good news for our community banks, which is why we’ve received letters from some of these banks in support of reform.

What’s true for our community banks is also true for small businessmen and women like the ones I met in Buffalo. These small businesses were some of the worst victims of the excessive risk-taking on Wall Street that led to this crisis. Their credit dried up. They had to let people go. Some even shut their doors altogether. And unless we put in place real safeguards, we could see it happen all over again.

That’s why Wall Street reform is so important. With reform, we’ll make our financial system more transparent by bringing the kinds of complex, backroom deals that helped trigger this crisis into the light of day. We’ll prevent banks from taking on so much risk that they could collapse and threaten our whole economy. And we’ll give shareholders more of a say on pay to help change the perverse incentives that encouraged reckless risk-taking in the first place. Put simply, Wall Street reform will bring greater security to folks on Main Street.

The stories I heard in Buffalo this week were a reminder that, despite the progress we’ve made, we need to keep working hard, so we can build on that progress and rebound from this recession in the short-term. But even as we do, we also need to lay a new foundation for growth and shared prosperity over the long-term.

Next week, we have a chance to help lay a cornerstone in that foundation. The reform bill being debated in the Senate will not solve every problem in our financial system – no bill could. But what this strong bill will do is important, and I urge the Senate to pass it as soon as possible, so we can secure America’s economic future in the 21st century.

• Source(s): The White House
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