President Bush addressed Americans' anxiety about the effects that the U.S. economic downturn has taken on their wallets Tuesday, calling on Congress to pass legislation that will help reduce energy and food costs, keep people in their homes, and make student loans more available.
Speaking at a White House Rose Garden news conference, Bush said Congress has not passed legislation that he proposed to help ease the effects of the economic slump.
"I've repeatedly submitted proposals to help address these problems, yet time after time Congress chose to block them," said Bush.
Bush said Congress failed to pass bills that expand safe oil exploration and build new refineries that would help to reduce energy prices. The president said his proposal to expand oil production at home would result in about a 20% increase of crude oil production and it would likely mean lower gas prices.
He added that the farm bill that Congress is considering is "bloated," and would do little to reduce the cost of food.
"The bill Congress is now considering would fail to eliminate subsidy payments to multimillionaire farmers," said Bush. "America's farm economy is thriving ... and this is the right time to reform our nation's farm policies."
The president also called out Congress for failing to pass his proposed legislation to help modernize the home loan industry through Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500) reforms, and by allowing state housing agencies to issue tax-free bonds to refinance subprime loans.
Lastly, the president said lawmakers need to pass a bill that would temporarily give the federal government greater authority to buy federal student loans.
"This authority will safeguard student loans without permanently expanding the government's role in their financing," Bush said.
Bush said Americans are looking for politicians to come together to work on these issues in a bipartisan manner.
"I don't think it's just too much to ask even in an election year," he added.
Democrats shift blame to President: But Democratic leaders said the blame instead lies with the president.
Sen. Charles Schumer, D-N.Y., said in a press conference the president is out of touch with the troubles of the pains that Americans feel from the economic downturn.
"The president doesn't understand the struggles of American families," said Schumer. "Everyone is having a tough time to make ends meet"
Schumer also said that Bush has failed to address the most important factors that continue to drag down the economy.
"The president has lost control of the economy," said Schumer. ""He has ignored repeated shots across the bow: Record oil prices, the housing crisis ... none of these things are being addressed."
Schumer also scoffed at the president's claim that Congress supports legislation that would make energy even more expensive, saying the president continues to support the tax breaks on big oil companies.
"This administration has no energy policy," added Schumer.
Speaker of the House Nancy Pelosi, D-Calif, called on the President to drop his veto threat from House legislation that would give tax credits for renewable energy.
"[The bill would] save 116,000 green jobs and create hundreds of thousands more," Pelosi said in a statement.
Bush says economy not in a recession: Though the president maintained that the economy is not in a recession, he said that does not affect the pain some Americans are feeling from the recent downturn.
"Words that define the economy don't reflect the anxiety that Americans feel," said Bush.
Source: CNN
Tuesday, April 29, 2008
Wednesday, April 16, 2008
IBM's earnings jump 26%
Quarterly profits at IBM Corp. leaped 26% and blew past analysts' forecasts Wednesday, with U.S. operations showing surprising strength given the faltering economy. The technology company also increased its earnings forecast for the year.
In the first quarter, Armonk, N.Y.-based IBM (IBM, Fortune 500) earned $2.32 billion, or $1.65 per share, well ahead of its profit of $1.84 billion, or $1.21 per share, in the same period of 2007.
Revenue rose 11% to $24.5 billion, better than the $23.7 billion expected by analysts surveyed by Thomson Financial. The consensus earnings forecast had been $1.45 per share.
IBM's sales numbers were boosted by ongoing weakness in the dollar, since deals done in other currencies now translate into more greenbacks. IBM said its revenue would have risen just 4% if not for currency fluctuations.
Even so, this marked the second straight quarter that IBM showed relative immunity to broader economic troubles, especially those in the financial services sector, its largest customer segment.
IBM's chief financial officer, Mark Loughridge, said the performance reflected the company's balance between international and U.S. revenue, and the fact that IBM gets about half its money through contracts with recurring, annuity-like revenue streams. That makes IBM less vulnerable to downward cycles than companies that rely more heavily on selling stuff in individual transactions, which often get postponed when times turn rough.
Reflecting his confidence in that model, Loughridge said IBM now expects to earn at least $8.50 per share in 2008. Analysts had been expecting $8.25 per share.
IBM shares rose $3.30, 2.8%, to close at $120.47 before Wednesday's earnings report. The stock hit $124 in extended trading.
One particularly bright spot for IBM was its improved performance in its home market, which generates 35% of its revenue. U.S. sales increased 6%.
All of IBM's business units showed increased levels of profitability.
However, the services division's contract signings amounted to $10.8 billion, down 2%. That is a closely watched measure of future revenue. Services revenue actually booked in the quarter rose 17%.
Software revenue was up 14%, bolstered by several acquisitions.
Hardware revenue fell 7%, though it would have been 2% if not for IBM's 2007 sale of its printing division. The hardware numbers were helped by the launch of a new line of mainframe computers, partially overcoming weakness in lower-priced server lines.
Source: CNN
In the first quarter, Armonk, N.Y.-based IBM (IBM, Fortune 500) earned $2.32 billion, or $1.65 per share, well ahead of its profit of $1.84 billion, or $1.21 per share, in the same period of 2007.
Revenue rose 11% to $24.5 billion, better than the $23.7 billion expected by analysts surveyed by Thomson Financial. The consensus earnings forecast had been $1.45 per share.
IBM's sales numbers were boosted by ongoing weakness in the dollar, since deals done in other currencies now translate into more greenbacks. IBM said its revenue would have risen just 4% if not for currency fluctuations.
Even so, this marked the second straight quarter that IBM showed relative immunity to broader economic troubles, especially those in the financial services sector, its largest customer segment.
IBM's chief financial officer, Mark Loughridge, said the performance reflected the company's balance between international and U.S. revenue, and the fact that IBM gets about half its money through contracts with recurring, annuity-like revenue streams. That makes IBM less vulnerable to downward cycles than companies that rely more heavily on selling stuff in individual transactions, which often get postponed when times turn rough.
Reflecting his confidence in that model, Loughridge said IBM now expects to earn at least $8.50 per share in 2008. Analysts had been expecting $8.25 per share.
IBM shares rose $3.30, 2.8%, to close at $120.47 before Wednesday's earnings report. The stock hit $124 in extended trading.
One particularly bright spot for IBM was its improved performance in its home market, which generates 35% of its revenue. U.S. sales increased 6%.
All of IBM's business units showed increased levels of profitability.
However, the services division's contract signings amounted to $10.8 billion, down 2%. That is a closely watched measure of future revenue. Services revenue actually booked in the quarter rose 17%.
Software revenue was up 14%, bolstered by several acquisitions.
Hardware revenue fell 7%, though it would have been 2% if not for IBM's 2007 sale of its printing division. The hardware numbers were helped by the launch of a new line of mainframe computers, partially overcoming weakness in lower-priced server lines.
Source: CNN
eBay sales up 24%, but user growth is weak
Online auctioneer eBay reported first-quarter earnings that beat analysts’ estimates Wednesday, citing strong growth in classified listings, expansion at PayPal and Skype and the company’s global business.
The San Jose, Calif.-based company said revenues rose 24% to $2.19 billion, up from $1.8 billion in the same period last year, and beating Wall Street’s expectations of $2.08 billion.
eBay’s (EBAY) net income came in at $460 million, or 34 cents a share, in the first quarter, up 22% from a year ago. Excluding certain one-time charges, profits rose to $562 million, or 42 cents a share, above analysts’ consensus estimates of 39 cents per share.
“This was a very strong financial quarter for the company,” said new eBay chief executive John Donahoe, who took over in March after longtime CEO Meg Whitman stepped down. “The results reflect the strength provided by our diverse portfolio of businesses.”
Shares of eBay were largely unchanged after-hours. The stock finished the day up nearly 2% in regular trading on the Nasdaq.
“It was a case of they beat the numbers but it was anticipated,” said Piper Jaffray analyst Aaron Kessler.
Last January, eBay’s stock took a hit after its guidance fell below Wall Street’s estimates. And in February, eBay outraged some sellers when it reduced listing fees but increased the amount of money it takes out of each sale.
On a call with investors following Wednesday’s earnings release, eBay CEO Donahoe said he’s already seeing some positive momentum as a result of the restructured fee model.
“It’s only been about six weeks since the changes we announced have gone into place, but in both the U.S. and the U.K. we’re encouraged by the results we’re seeing,” said Donahoe.
According to the company, the number of listings on the site in the first quarter grew 10% from the prior year.
But the growth rate of the company’s gross merchandise volume, or the total dollar amount for items sold, is down, coming in at $16.04 billion — an increase of 12% over the first quarter of 2007 but down from the 14% growth seen in last year’s first quarter.
“Sustained GMV [gross merchandise volume] growth acceleration in eBay’s core U.S., UK and German markets is key, we believe, to the company’s fundamentals and stock price,” Citigroup analyst Mark Mahaney said in a written report.
The growth rate of active eBay users is also down, coming in at 1% compared to 10% in the year-ago quarter. And according to a recent Nielsen Online report, Web traffic to eBay decreased three percent year-over-year.
New CEO Donahoe told investors that 2008 would be a year of “bold changes” for eBay. His three top priorities are making the company’s sites easier and safer to use, improving pricing and incentives and growing PayPal, an eBay subsidiary.
But, as the company’s CFO Bob Swan conceded, there’s still a lot of work to be done.
“For the remainder of 2008 we’ll continue to focus on the strategies we’ve put into motion,” Swan said in a written release.
For the second quarter, the company says it expects revenues in the range of $2.1 billion to $2.15 billion, roughly in line with current estimates of $2.11 billion. Profits, excluding charges, are expected to come in at 39 cents to 41 cents per share, also in line with analysts’ forecasts of 40 cents per share.
Source: CNN
The San Jose, Calif.-based company said revenues rose 24% to $2.19 billion, up from $1.8 billion in the same period last year, and beating Wall Street’s expectations of $2.08 billion.
eBay’s (EBAY) net income came in at $460 million, or 34 cents a share, in the first quarter, up 22% from a year ago. Excluding certain one-time charges, profits rose to $562 million, or 42 cents a share, above analysts’ consensus estimates of 39 cents per share.
“This was a very strong financial quarter for the company,” said new eBay chief executive John Donahoe, who took over in March after longtime CEO Meg Whitman stepped down. “The results reflect the strength provided by our diverse portfolio of businesses.”
Shares of eBay were largely unchanged after-hours. The stock finished the day up nearly 2% in regular trading on the Nasdaq.
“It was a case of they beat the numbers but it was anticipated,” said Piper Jaffray analyst Aaron Kessler.
Last January, eBay’s stock took a hit after its guidance fell below Wall Street’s estimates. And in February, eBay outraged some sellers when it reduced listing fees but increased the amount of money it takes out of each sale.
On a call with investors following Wednesday’s earnings release, eBay CEO Donahoe said he’s already seeing some positive momentum as a result of the restructured fee model.
“It’s only been about six weeks since the changes we announced have gone into place, but in both the U.S. and the U.K. we’re encouraged by the results we’re seeing,” said Donahoe.
According to the company, the number of listings on the site in the first quarter grew 10% from the prior year.
But the growth rate of the company’s gross merchandise volume, or the total dollar amount for items sold, is down, coming in at $16.04 billion — an increase of 12% over the first quarter of 2007 but down from the 14% growth seen in last year’s first quarter.
“Sustained GMV [gross merchandise volume] growth acceleration in eBay’s core U.S., UK and German markets is key, we believe, to the company’s fundamentals and stock price,” Citigroup analyst Mark Mahaney said in a written report.
The growth rate of active eBay users is also down, coming in at 1% compared to 10% in the year-ago quarter. And according to a recent Nielsen Online report, Web traffic to eBay decreased three percent year-over-year.
New CEO Donahoe told investors that 2008 would be a year of “bold changes” for eBay. His three top priorities are making the company’s sites easier and safer to use, improving pricing and incentives and growing PayPal, an eBay subsidiary.
But, as the company’s CFO Bob Swan conceded, there’s still a lot of work to be done.
“For the remainder of 2008 we’ll continue to focus on the strategies we’ve put into motion,” Swan said in a written release.
For the second quarter, the company says it expects revenues in the range of $2.1 billion to $2.15 billion, roughly in line with current estimates of $2.11 billion. Profits, excluding charges, are expected to come in at 39 cents to 41 cents per share, also in line with analysts’ forecasts of 40 cents per share.
Source: CNN
Saturday, April 12, 2008
Paulson: 'Expect more bumps' ahead
Top financial leaders, faced with the biggest crisis to hit the global economy in at least a decade, are pledging to strengthen their regulation of banks and other financial institutions while anxiously hoping the slump in the United States will be a short one.
After an opening round of talks among the world's seven richest industrial countries, financial officials were scheduled to reconvene Saturday for discussions focused on the 185-nation International Monetary Fund and the IMF's sister lending institution, the World Bank.
The IMF, the lender of last resort for countries in trouble, is facing its own economic hard times. Officials were to discuss a proposal that would trim 15 percent of the agency's staff and sell about $11 billion in the institutions' vast gold reserves.
The biggest agenda item during the three days of meetings was the severe credit crisis that hit last August and could result in losses approaching a staggering $1 trillion before it is over, according to an IMF estimate released this week.
Treasury Secretary Henry Paulson assured the IMF's policy-setting panel on Saturday that the Bush administration was moving aggressively to deal with the economic slowdown in the United States, but he said risks remain.
"The weak housing market, together with high energy prices and stress in financial markets, is penalizing U.S. economic growth," he said. "We must expect more bumps in the road."
In a joint statement after talks Friday, the Group of Seven nations -- the United States, Japan, Germany, Britain, France, Italy and Canada -- endorsed an action plan to bolster regulation of big banks, investment houses and other financial firms that have already announced billions of dollars in losses from a credit crisis that began with rising defaults on subprime mortgages in the United States, but quickly spread to other types of investments around the world.
"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," the G-7 officials said in their joint statement. In their comments, the officials left no doubt that they are all watching to see how developments unfold in the United States.
"The U.S. economy has to get over the economic unrest," Japanese Finance Minister Fukushiro Nukaga told reporters, because what happens in the United States will affect Asia and other parts of the world.
The IMF issued an economic outlook that predicted the United States would endure a mild recession this year and that weakness in the world's biggest economy raised the risks of a global recession to one in four.
Paulson and Federal Reserve Chairman Ben Bernanke tried to reassure their colleagues that U.S. policymakers are doing everything possible to unfreeze credit markets in the United States so that businesses and consumers will be able to get loans more easily and the economy will start to pull out of the slowdown.
The crisis claimed its biggest victim last month with the forced sale of Bear Stearns (BSC, Fortune 500), the nation's fifth largest investment house.
Axel Weber, head of Germany's central bank, said the "measures that were taken in the US have already had some effect" and the aggressive interest rate cuts from the Federal Reserve should help bolster growth in the second half of this year.
While Democrats in Congress are pushing for a more aggressive program to help an estimated 2 million homeowners at risk of defaulting on their mortgages, Paulson said the administration believed its plan, which relies heavily on voluntary efforts by the private sector, was the best approach.
Regarding the larger proposals, Paulson told reporters Friday night, "I see very little likelihood that anything like that will pass."
The G-7 communique's biggest change from the joint statement the group issued at their last meeting in February revolved around the discussion of currencies.
Europeans won in an effort to note "concern" about the sharp fluctuations that have been occurring in currency values. It was the first major change in the G-7 language on currencies in four years and was meant to underscore European worries about the dollar's decline to record lows against the euro. That has led to cries of protests from European manufacturers losing sales to American producers whose goods are now more competitive.
French Finance Minister Christine Lagarde said the true test of the changed currency language would come on Monday when currency markets reopen. However, there was no expectation that the words would be backed up by any joint intervention to prop up the dollar.
The action plan to beef up financial regulation was developed by the Financial Stability Forum, led by Mario Draghi, head of Italy's central bank.
It calls for strengthening oversight to make sure financial companies have sufficient capital to protect against losses and improved risk-management procedures and establishes deadlines in an effort to make sure countries move quickly to implement the regulatory reforms.
In an effort to get a reading on the crisis from the private sector, the G-7 officials met over dinner Friday night with executives of some of the world's biggest financial companies including Citigroup (C, Fortune 500), Deutsche Bank (DB), Credit Suisse (CS) and Barclays (BCS).
After an opening round of talks among the world's seven richest industrial countries, financial officials were scheduled to reconvene Saturday for discussions focused on the 185-nation International Monetary Fund and the IMF's sister lending institution, the World Bank.
The IMF, the lender of last resort for countries in trouble, is facing its own economic hard times. Officials were to discuss a proposal that would trim 15 percent of the agency's staff and sell about $11 billion in the institutions' vast gold reserves.
The biggest agenda item during the three days of meetings was the severe credit crisis that hit last August and could result in losses approaching a staggering $1 trillion before it is over, according to an IMF estimate released this week.
Treasury Secretary Henry Paulson assured the IMF's policy-setting panel on Saturday that the Bush administration was moving aggressively to deal with the economic slowdown in the United States, but he said risks remain.
"The weak housing market, together with high energy prices and stress in financial markets, is penalizing U.S. economic growth," he said. "We must expect more bumps in the road."
In a joint statement after talks Friday, the Group of Seven nations -- the United States, Japan, Germany, Britain, France, Italy and Canada -- endorsed an action plan to bolster regulation of big banks, investment houses and other financial firms that have already announced billions of dollars in losses from a credit crisis that began with rising defaults on subprime mortgages in the United States, but quickly spread to other types of investments around the world.
"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," the G-7 officials said in their joint statement. In their comments, the officials left no doubt that they are all watching to see how developments unfold in the United States.
"The U.S. economy has to get over the economic unrest," Japanese Finance Minister Fukushiro Nukaga told reporters, because what happens in the United States will affect Asia and other parts of the world.
The IMF issued an economic outlook that predicted the United States would endure a mild recession this year and that weakness in the world's biggest economy raised the risks of a global recession to one in four.
Paulson and Federal Reserve Chairman Ben Bernanke tried to reassure their colleagues that U.S. policymakers are doing everything possible to unfreeze credit markets in the United States so that businesses and consumers will be able to get loans more easily and the economy will start to pull out of the slowdown.
The crisis claimed its biggest victim last month with the forced sale of Bear Stearns (BSC, Fortune 500), the nation's fifth largest investment house.
Axel Weber, head of Germany's central bank, said the "measures that were taken in the US have already had some effect" and the aggressive interest rate cuts from the Federal Reserve should help bolster growth in the second half of this year.
While Democrats in Congress are pushing for a more aggressive program to help an estimated 2 million homeowners at risk of defaulting on their mortgages, Paulson said the administration believed its plan, which relies heavily on voluntary efforts by the private sector, was the best approach.
Regarding the larger proposals, Paulson told reporters Friday night, "I see very little likelihood that anything like that will pass."
The G-7 communique's biggest change from the joint statement the group issued at their last meeting in February revolved around the discussion of currencies.
Europeans won in an effort to note "concern" about the sharp fluctuations that have been occurring in currency values. It was the first major change in the G-7 language on currencies in four years and was meant to underscore European worries about the dollar's decline to record lows against the euro. That has led to cries of protests from European manufacturers losing sales to American producers whose goods are now more competitive.
French Finance Minister Christine Lagarde said the true test of the changed currency language would come on Monday when currency markets reopen. However, there was no expectation that the words would be backed up by any joint intervention to prop up the dollar.
The action plan to beef up financial regulation was developed by the Financial Stability Forum, led by Mario Draghi, head of Italy's central bank.
It calls for strengthening oversight to make sure financial companies have sufficient capital to protect against losses and improved risk-management procedures and establishes deadlines in an effort to make sure countries move quickly to implement the regulatory reforms.
In an effort to get a reading on the crisis from the private sector, the G-7 officials met over dinner Friday night with executives of some of the world's biggest financial companies including Citigroup (C, Fortune 500), Deutsche Bank (DB), Credit Suisse (CS) and Barclays (BCS).
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