Ford Motor Co. will offer buyouts to about 1,300 workers at assembly plants in Chicago and Louisville, Ky., as part of the automaker's plan to adjust capacity with demand for its vehicles, a spokeswoman said Friday.
The buyouts will affect about 800 workers at the Chicago plant and 500 at the Louisville factory, Ford (F, Fortune 500) spokeswoman Angie Kozleski said.
Workers at an engine plant in Cleveland also will be offered buyout packages, but the company did not say how many.
All three plants will move from two shifts to one this summer. The restarting of an idled second engine plant in Cleveland will be delayed until the fourth quarter, Kozleski said.
Dearborn, Mich.-based Ford is trying to cut labor costs during a turnaround. The automaker announced in March that it would be making adjustments based on capacity.
Terms and dates of the buyouts are not being announced at this time.
The offers are "very targeted buyouts to affected employees," Kozleski said. "It's part of our ongoing plan to adjust capacity with demand."
Not all workers at each of the three plants will be offered buyouts, Kozleski added.
The Chicago factory makes the Ford Taurus and Mercury Sable sedans and Taurus X crossover vehicle, while the Louisville assembly plant makes the Ford Explorer and Mercury Mountaineer sport utility vehicles. The Cleveland plant makes engines.
Only 4,200 hourly workers -- just over half number the company wanted -- had accepted the company's latest buyout and early retirement offers, Ford said last month.
Source: Cnn
Showing posts with label News. Show all posts
Showing posts with label News. Show all posts
Saturday, May 3, 2008
Friday, May 2, 2008
Stocks jump on jobs report
Stocks rallied Friday morning after a report showed that employers cut fewer jobs from their payrolls in April than expected, adding to hopes that the economy is steadying.
The Dow Jones industrial average (INDU), the broader Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all gained at lest 0.6% in the early going.
Stocks surged Thursday as investors hailed better-than-expected readings on manufacturing and consumer spending, one day after the Fed cut interest rates and hinted the economic outlook seems to have stabilized. The stock advance continued Friday.
Source: CNN
The Dow Jones industrial average (INDU), the broader Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all gained at lest 0.6% in the early going.
Stocks surged Thursday as investors hailed better-than-expected readings on manufacturing and consumer spending, one day after the Fed cut interest rates and hinted the economic outlook seems to have stabilized. The stock advance continued Friday.
Source: CNN
Tuesday, April 29, 2008
Bush calls out Congress on economy
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
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
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).
Sunday, March 23, 2008
JPMorgan Chase makes $1B-plus on Visa IPO
Thanks to its stake in Visa's initial public offering this week, JPMorgan Chase & Co. has enough money to pay for its Bear Stearns purchase and still have about a billion dollars left over.
JPMorgan (JPM, Fortune 500) made at least $1.36 billion in Visa (V)'s IPO Wednesday, according to federal filings. JPMorgan is the largest of six principal bank stockholders of the the card processor, who all reaped big bucks from the offering. The debut was so successful that Visa sold additional shares, boosting the banks' takes.
"JPMorgan had a great week," said John Fitzgibbon Jr., founder of IPOScoop.com, an independent IPO rating service. "They walked away with $1 billion in their pocket and that's after buying Bear Stearns."
JPMorgan scooped up embattled Bear Stearns for the bargain basement sum of $342.6 million, based on the bank's closing share price on Thursday.
The Visa windfall couldn't come at a better time for banks, which are struggling to raise much needed funds amid a credit crunch on Wall Street and a faltering economy. It will help boost banks' first-quarter earnings, provide them more reserves for loan losses and improve their capital, an important measure of an institution's financial health.
"It's hard to raise that kind of cash in today's market," said Chip MacDonald, partner in the capital markets group of Jones Day law firm. "It gives them more flexibility."
The IPO should increase banks' first-quarter earnings by about $5.4 billion, Keith Horowitz, analyst at Citi Investment Research, wrote in a research note, according to the Associated Press.
Other banks receiving big windfalls from the IPO include: Bank of America Corp. (BAC, Fortune 500), $675.3 million; Citigroup Inc. (C, Fortune 500), $324 million; U.S. Bancorp (USB, Fortune 500), $298.7 million, and Wells Fargo & Co. (WFC, Fortune 500), $295 million, according to the IPO prospectus filed with the SEC.
National City Corp., which was listed in the prospectus as getting $470.5 million, announced Thursday that it would see a gain of $530 million from redeeming 39% of its stake.
The banks still hold a significant stake in the card processor. Based on Thursday's closing price of $64.35 per share, their ownership was worth $4 billion for JPMorgan, $2 billion for Bank of America, $1.4 billion for National City, $952 million for Citigroup, $878 million for U.S. Bancorp and $866 million for Wells Fargo.
Before its $19.1 billion IPO, which was the world's second largest, Visa was an association owned by its 16,600 member banks. The largest IPO was Industrial & Commercial Bank of China, which raised $21.9 billion in October 2006.
JPMorgan (JPM, Fortune 500) made at least $1.36 billion in Visa (V)'s IPO Wednesday, according to federal filings. JPMorgan is the largest of six principal bank stockholders of the the card processor, who all reaped big bucks from the offering. The debut was so successful that Visa sold additional shares, boosting the banks' takes.
"JPMorgan had a great week," said John Fitzgibbon Jr., founder of IPOScoop.com, an independent IPO rating service. "They walked away with $1 billion in their pocket and that's after buying Bear Stearns."
JPMorgan scooped up embattled Bear Stearns for the bargain basement sum of $342.6 million, based on the bank's closing share price on Thursday.
The Visa windfall couldn't come at a better time for banks, which are struggling to raise much needed funds amid a credit crunch on Wall Street and a faltering economy. It will help boost banks' first-quarter earnings, provide them more reserves for loan losses and improve their capital, an important measure of an institution's financial health.
"It's hard to raise that kind of cash in today's market," said Chip MacDonald, partner in the capital markets group of Jones Day law firm. "It gives them more flexibility."
The IPO should increase banks' first-quarter earnings by about $5.4 billion, Keith Horowitz, analyst at Citi Investment Research, wrote in a research note, according to the Associated Press.
Other banks receiving big windfalls from the IPO include: Bank of America Corp. (BAC, Fortune 500), $675.3 million; Citigroup Inc. (C, Fortune 500), $324 million; U.S. Bancorp (USB, Fortune 500), $298.7 million, and Wells Fargo & Co. (WFC, Fortune 500), $295 million, according to the IPO prospectus filed with the SEC.
National City Corp., which was listed in the prospectus as getting $470.5 million, announced Thursday that it would see a gain of $530 million from redeeming 39% of its stake.
The banks still hold a significant stake in the card processor. Based on Thursday's closing price of $64.35 per share, their ownership was worth $4 billion for JPMorgan, $2 billion for Bank of America, $1.4 billion for National City, $952 million for Citigroup, $878 million for U.S. Bancorp and $866 million for Wells Fargo.
Before its $19.1 billion IPO, which was the world's second largest, Visa was an association owned by its 16,600 member banks. The largest IPO was Industrial & Commercial Bank of China, which raised $21.9 billion in October 2006.
Saturday, March 8, 2008
High-cost mortgages just got cheaper
The size of loans that can be guaranteed by Freddie Mac and Fannie Mae was raised today by the Office of Federal Housing Enterprise Oversight. The new, higher loan limits will stay in effect through the end of the year, allowing the government sponsored enterprises (GSEs), to buy much higher-priced mortgages in some areas of the country.
Also today, the size of the loans that the Federal Housing Authority (FHA) can insure was raised by Housing and Urban Development (HUD).
Both moves will lower borrowing costs for buyers of higher priced homes, and aim to boost flagging real estate markets.
Best time to buy a home in four years
Previously, Fannie and Freddie could only insure mortgages of up to $417,000, called conforming loans. That meant, assuming a 20% down payment, that only buyers of homes costing $521,500 or less were eligible for mortgages with GSE backing.
The new loan limits for Fannie and Freddie vary by area based on local median home prices and go as high as $793,750 in Honolulu. (For details, see table below).
Loan limits for FHA-insured loans were even lower; no more than $362,790. Now mortgages of up to $729,750 will qualify for FHA insurance.
The problem was that there are whole swaths of the nation where the typical home cost far more than that, and non-conforming or "jumbo loans" carry interest rates of about a point higher. For a $500,000 mortgage, that's an additional spending of $330 a month.
In many parts of the country prices are much higher. In San Jose, Calif, the median priced home costs nearly $850,000, according to the latest figures from the National Association of Realtors. In San Francisco, the figure is nearly $780,000; in Anaheim, Calif.; $657,000; in Honolulu $625,000; and in the New York metro area, $525,000. That means more than half the loans in those markets would not qualify under conforming loan limits.
"Families in high-cost states have been priced out of FHA-backed loans," HUD Secretary Alphonso Jackson said earlier today, in a speech before the Las Vegas Association of Realtors. "This has created a vacuum, filled by exotic subprime loans."
During the liquidity squeeze that began during the summer of 2007, jumbo loans became very difficult to find even for well-qualified borrowers. that made it hard to buy homes in certain regions, freezing up real estate markets.
By making it easier for buyers to get loans, regulators hope to get these markets moving again.
The new loan limits affect 71 metropolitan areas, as well as 21 counties outside of those metro areas.
Also today, the size of the loans that the Federal Housing Authority (FHA) can insure was raised by Housing and Urban Development (HUD).
Both moves will lower borrowing costs for buyers of higher priced homes, and aim to boost flagging real estate markets.
Best time to buy a home in four years
Previously, Fannie and Freddie could only insure mortgages of up to $417,000, called conforming loans. That meant, assuming a 20% down payment, that only buyers of homes costing $521,500 or less were eligible for mortgages with GSE backing.
The new loan limits for Fannie and Freddie vary by area based on local median home prices and go as high as $793,750 in Honolulu. (For details, see table below).
Loan limits for FHA-insured loans were even lower; no more than $362,790. Now mortgages of up to $729,750 will qualify for FHA insurance.
The problem was that there are whole swaths of the nation where the typical home cost far more than that, and non-conforming or "jumbo loans" carry interest rates of about a point higher. For a $500,000 mortgage, that's an additional spending of $330 a month.
In many parts of the country prices are much higher. In San Jose, Calif, the median priced home costs nearly $850,000, according to the latest figures from the National Association of Realtors. In San Francisco, the figure is nearly $780,000; in Anaheim, Calif.; $657,000; in Honolulu $625,000; and in the New York metro area, $525,000. That means more than half the loans in those markets would not qualify under conforming loan limits.
"Families in high-cost states have been priced out of FHA-backed loans," HUD Secretary Alphonso Jackson said earlier today, in a speech before the Las Vegas Association of Realtors. "This has created a vacuum, filled by exotic subprime loans."
During the liquidity squeeze that began during the summer of 2007, jumbo loans became very difficult to find even for well-qualified borrowers. that made it hard to buy homes in certain regions, freezing up real estate markets.
By making it easier for buyers to get loans, regulators hope to get these markets moving again.
The new loan limits affect 71 metropolitan areas, as well as 21 counties outside of those metro areas.
Bush: 'Economy has slowed'
President Bush said Friday that "it's clear our economy has slowed," hours after a government report showed a decline in payrolls for the second straight month.
But he said the long-term outlook is good, with a stimulus package enacted last month by Congress providing support for the economy.
"I know this is a difficult time for our economy," the president said. "But we recognized the problem early and we provided the economy with a booster shot."
Bush said the effects of the stimulus package are "just starting to kick in" and that the plan will "put money into the hands of American workers and businesses."
Earlier in the day, Bush's chief economic adviser Edward Lazear said that the nation's economy could contract in the current quarter. But he added that, "we expect that the economy will get stronger, primarily in the third quarter."
The statements come after the Labor Department said employers made their deepest cut in staffing in almost five years during February, highlighting concerns that a recession is imminent.
Senate Majority Leader Harry Reid, D-Nev., said in remarks made on the Senate floor that Americans are "burdened by an economy that is spiraling downward every day."
Reid noted that Bush does not think the economy is headed for a recession, but argues that the facts prove otherwise.
"This morning, all signs point in that direction," Reid said. "But regardless of what label we use, there is no doubt whatsoever that the American people are suffering."
Meanwhile, oil prices spiked to a record high above $106 a barrel Friday, raising concerns that higher gas prices will hurt consumers and increase inflation.
On Wall Street, stocks fell to their lowest level in nearly 18 months as recession fears continued to spook investors.
But he said the long-term outlook is good, with a stimulus package enacted last month by Congress providing support for the economy.
"I know this is a difficult time for our economy," the president said. "But we recognized the problem early and we provided the economy with a booster shot."
Bush said the effects of the stimulus package are "just starting to kick in" and that the plan will "put money into the hands of American workers and businesses."
Earlier in the day, Bush's chief economic adviser Edward Lazear said that the nation's economy could contract in the current quarter. But he added that, "we expect that the economy will get stronger, primarily in the third quarter."
The statements come after the Labor Department said employers made their deepest cut in staffing in almost five years during February, highlighting concerns that a recession is imminent.
Senate Majority Leader Harry Reid, D-Nev., said in remarks made on the Senate floor that Americans are "burdened by an economy that is spiraling downward every day."
Reid noted that Bush does not think the economy is headed for a recession, but argues that the facts prove otherwise.
"This morning, all signs point in that direction," Reid said. "But regardless of what label we use, there is no doubt whatsoever that the American people are suffering."
Meanwhile, oil prices spiked to a record high above $106 a barrel Friday, raising concerns that higher gas prices will hurt consumers and increase inflation.
On Wall Street, stocks fell to their lowest level in nearly 18 months as recession fears continued to spook investors.
Friday, March 7, 2008
Goldman CEO Gets $54M in Compensation
Goldman Sachs Group Inc. Chairman and Chief Executive Lloyd Blankfein did better than any of his colleagues in 2007, a year in which the world's largest investment bank profited despite the subprime market collapse.
Blankfein, the highest-paid CEO among the investment banks, received compensation valued at $54 million.
He drew $600,000 in salary plus a performance-related bonus of $27 million, according to documents filed Friday with the Securities and Exchange Commission. He also received restricted stock and stock options valued at $26 million on the day they were granted.
Other compensation Goldman Sachs awarded Blankfein _ $384,157 in 2007 _ includes a car and driver and security.
The AP's total pay calculations include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission.
Blankfein has come out of the credit crisis relatively unscathed so far compared to some colleagues at competing firms. Jimmy Cayne, the longtime leader of Bear Stearns Cos., was forced to give up the CEO title to remain chairman; while Merrill Lynch & Co. CEO Stanley O'Neal was ousted from the company.
Morgan Stanley CEO John Mack passed up his bonus after racking up steep write-downs in 2007, as did Cayne and other top Bear Stearns executives. Lehman Brothers Inc.'s Richard Fuld received compensation valued at $22.1 million in 2007.
Goldman Sachs was able to largely avoid the mortgage-losses that plagued its competitors, leading it to post record profits during the year. Goldman Sachs posted $3.17 billion in profit in its fourth quarter alone, far surpassing its peers.
Shares, which fell about 13 percent in fiscal 2007, rose $1.42 to $160.07 on Friday.
Blankfein, the highest-paid CEO among the investment banks, received compensation valued at $54 million.
He drew $600,000 in salary plus a performance-related bonus of $27 million, according to documents filed Friday with the Securities and Exchange Commission. He also received restricted stock and stock options valued at $26 million on the day they were granted.
Other compensation Goldman Sachs awarded Blankfein _ $384,157 in 2007 _ includes a car and driver and security.
The AP's total pay calculations include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission.
Blankfein has come out of the credit crisis relatively unscathed so far compared to some colleagues at competing firms. Jimmy Cayne, the longtime leader of Bear Stearns Cos., was forced to give up the CEO title to remain chairman; while Merrill Lynch & Co. CEO Stanley O'Neal was ousted from the company.
Morgan Stanley CEO John Mack passed up his bonus after racking up steep write-downs in 2007, as did Cayne and other top Bear Stearns executives. Lehman Brothers Inc.'s Richard Fuld received compensation valued at $22.1 million in 2007.
Goldman Sachs was able to largely avoid the mortgage-losses that plagued its competitors, leading it to post record profits during the year. Goldman Sachs posted $3.17 billion in profit in its fourth quarter alone, far surpassing its peers.
Shares, which fell about 13 percent in fiscal 2007, rose $1.42 to $160.07 on Friday.
Wednesday, March 5, 2008
Top Google exec jumps to Facebook
Now it's Google's turn to be hounded by an upstart. Facebook, the popular social networking site, has lured top Google executive Sheryl Sandberg to serve as its chief operating officer.
Sandberg, who ran Google's online sales unit, is the first senior executive to jump from Google's management team to another company. George Reyes, Google's chief financial officer, announced his retirement in August, but is staying on until a successor is named.
News of Sandberg's exit comes amid a steady drop in Google shares. Since hitting a high of $747 in December, Google shares have dropped 41% as the days of hyper growth appear to have ended for the Net colossus.
Sandberg's move to the No. 2 job at Facebook was first reported by Kara Swisher on her BoomTown blog, which is run by The Wall Street Journal, and confirmed by Fortune's GoWest blogger Adam Lashinsky.
At Google, Sandberg ran the automated advertising operations for the search giant, the unit responsible for a large part of the company's profits and revenue.
Sandberg is expected to apply her deep operations skills to Facebook and transform the social networking site into a full-fledged business. She replaces Owen Van Natta, who announced his exit last month.
"The focus for Facebook is scaling," Sandberg said in an interview Tuesday. "That's what I've done at Google. Another similar challenge is building an advertising network, which I also did at Google."
Facebook has become the leading challenger to MySpace the online social networking unit of News Corp (NWS, Fortune 500). Facebook was founded by Mark Zuckerberg, who is also chief executive.
This isn't the first time Facebook has raided Google. In the last seven months, it brought in Gideon Yu, the former chief financial officer of YouTube, a Google (GOOG, Fortune 500) unit, as its CFO. Facebook also nabbed Benjamin Ling, the engineer credited with creating Google Checkout, to run its software platform.
Sandberg joined Google in 2001, three years before it went public.
Sandberg, who ran Google's online sales unit, is the first senior executive to jump from Google's management team to another company. George Reyes, Google's chief financial officer, announced his retirement in August, but is staying on until a successor is named.
News of Sandberg's exit comes amid a steady drop in Google shares. Since hitting a high of $747 in December, Google shares have dropped 41% as the days of hyper growth appear to have ended for the Net colossus.
Sandberg's move to the No. 2 job at Facebook was first reported by Kara Swisher on her BoomTown blog, which is run by The Wall Street Journal, and confirmed by Fortune's GoWest blogger Adam Lashinsky.
At Google, Sandberg ran the automated advertising operations for the search giant, the unit responsible for a large part of the company's profits and revenue.
Sandberg is expected to apply her deep operations skills to Facebook and transform the social networking site into a full-fledged business. She replaces Owen Van Natta, who announced his exit last month.
"The focus for Facebook is scaling," Sandberg said in an interview Tuesday. "That's what I've done at Google. Another similar challenge is building an advertising network, which I also did at Google."
Facebook has become the leading challenger to MySpace the online social networking unit of News Corp (NWS, Fortune 500). Facebook was founded by Mark Zuckerberg, who is also chief executive.
This isn't the first time Facebook has raided Google. In the last seven months, it brought in Gideon Yu, the former chief financial officer of YouTube, a Google (GOOG, Fortune 500) unit, as its CFO. Facebook also nabbed Benjamin Ling, the engineer credited with creating Google Checkout, to run its software platform.
Sandberg joined Google in 2001, three years before it went public.
Yahoo buys time to handle Microsoft bid
Slumping Internet pioneer Yahoo on Wednesday postponed a key deadline in a looming battle with spurned suitor Microsoft, hoping to gain more wiggle room as it tries to escape a takeover.
The Sunnyvale-based company's maneuver means that March 14 is no longer the deadline for Microsoft to nominate a slate of candidates to replace Yahoo's current board - the 10 directors who rejected the world's largest software maker's initial takeover offer of $44.6 billion.
Microsoft had already signaled it was prepared to oust the board if Yahoo didn't come to the negotiating table before March 14.
Yahoo hasn't offered a new nominating deadline. It will be set once Yahoo announces the date of its annual shareholders meeting. Microsoft will have up to 10 days after the public notice to nominate directors and begin what's known as a "proxy" battle.
"Our objective here is to enable our board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest," Yahoo Chief Executive Jerry Yang and Chairman Roy Bostock wrote in an e-mail sent to the company's employees.
Microsoft didn't immediately respond to requests for comment.
Yahoo could wait a few more months before announcing its annual meeting, which can be held as late as July 12 this year. But Yahoo is more likely to set the date within the next week or two, according to a person familiar with the company's thinking. The person wasn't authorized to speak publicly.
Monday, March 3, 2008
Dollar falls to 3-year low against yen
The dollar plunged to a three-year low against the yen Monday in Asia on concerns about the state of the U.S. economy.
The dollar traded at 103.18 yen at midafternoon, down from 103.96 yen late Friday in New York. It fell earlier in the day to 102.92 yen, its lowest point since Jan. 28, 2005, when the greenback stood at 102.37 yen.
The euro, meanwhile, rose to $1.5215 from $1.5194.
The dollar began its descent last week after U.S. economic indicators, such as consumer sentiment data, were weaker than expected.
"The bottom line is that players think the U.S. economy may be entering, or already has entered, a recession," said Jun Kato, a senior dealer at Shinkin Central Bank.
Kato said even if the U.S. Federal Reserve cuts its rates further, that wouldn't help the U.S. economy and unit recover much.
"Long-term interest rates are still at high levels, meaning banks are reluctant to lend," he said. "If people can't borrow the money they need, the U.S. economy won't be able to pick up in the near term."
Finance Minister Fukushiro Nukaga told reporters that exchange rates are "moving on various economic indicators," adding that he didn't feel it was "appropriate" for him to comment on rate moves.
The yen's strength, which hurts Japan's exporters by making their products more expensive abroad, has also helped push Japanese stocks lower. The benchmark Nikkei 225 index fell 4.5% Monday.
The dollar was mostly higher against other Asian currencies. It rose 0.37% against the Philippine peso to 40.525 and gained 0.82% against the South Korean won to 946.6. The U.S. unit also rose 0.30% against the Taiwan dollar to 31.009.
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