Stocks in the news expected to move
Toyota Triples Loss Expectations
The Japanese car making company Toyota has announced that their predicted profit loss for 2008 has tripled from their previous estimate. The company reports the loss after demand for its vehicles dropped. In December 2008, Toyota estimated its full year operating loss to be 150 billion yen (US$1.65 billion). Now the company has tripled that number, forecasting a 450 billion yen (US$4.95 billion) loss. This would be the first yearly loss at Toyota in 70 years.
The firm also said that it predicts its global sales to fall by 17.87% to 7.32 million vehicles sold, compared to last year’s 8.91 million vehicles sold. Overall for 2008, Toyota’s car sales in the United States were down 15.4%, but that number was down from 2007 in which sales dropped 18%. For the month of January alone, Toyota’s sales fell 31.7% compared to the overall U.S. sales loss of 37.1%.
Treasury Delays Bank Rescue Plan so Congress Can Work on Bill
U.S. Treasury Secretary Timothy Geithner has postponed his bank bailout plan announcement to Tuesday to allow Congress to focus on economic stimulus legislation, the Treasury Department said Sunday.
Sam Zell the Escape Artist Shuffles Property Woes on to Blackstone
In 2007, Sam Zell, the billionaire Chicago investor, sold a portfolio of 573 properties he had assembled over three decades, Equity Office Properties Trust, to the Blackstone Group for $39 billion. It was the largest private equity deal in history, but Blackstone did not stop there: it immediately flipped hundreds of the buildings for $27 billion.
If the owners cannot make their loan payments, it could create a financial crisis for the pension funds, hedge funds and insurance companies that hold securities based on Equity Office mortgages.
The list of Equity Office buyers reads like a Who’s Who in American real estate.
The buyers found lenders only too willing to finance as much as 90 percent or more of the purchase price, even as profit margins shrank, on a bet that rents and values would continue to rise. The investment banks, including Morgan Stanley, Wachovia, Goldman Sachs, Bear Stearns and Lehman Brothers, in turn collected their fees as they packaged the loans as securities and sold them to investors.
Deutsche Bank recently sold two of the Macklowe buildings in New York to Shorenstein Properties for an average of $818 a square foot, or 25 percent less than the $1,100 a square foot that Mr. Macklowe paid. Real estate brokers say two other buildings from that portfolio will probably sell for a discount of at least 60 percent.
In Austin, when the Thomas Properties Group formed a partnership with the California teachers’ pension fund and Lehman Brothers, which was also a lender in the deal, to buy 10 Equity Office buildings downtown and in the surrounding suburbs for $1.15 billion, it instantly became the biggest commercial landlord in town.
In November, Thomas filed a motion in the Lehman bankruptcy case saying it would “run out of cash” in January. On behalf of the partnership, Thomas asked the court to compel Lehman to make good on its commitment to provide a $100 million revolving loan, or allow the partnership to raise new financing elsewhere. The money, it said, was to lease, maintain and market the buildings.
Without additional financing, the motion said, there could be a series of defaults “leading to the threat of foreclosures and bankruptcy.”
The Week Ahead From Reuters.com
G7 Meeting, Currency Woes for Europe, EU GDP #’s, Raising $ in a Liquidity Crisis, & Yield Curves Steepen
To Buy or Not to Buy in Pharmaceuticals
(Reuters) – Pfizer’s deal last week to buy Wyeth for $68 billion has fueled speculation among analysts and bankers of a coming wave of consolidation in the pharmaceuticals sector.
Yet many of the industry’s top executives appear wary. The following are a selection of recent comments by heads of leading drugmakers:
SEVERIN SCHWAN, CEO OF ROCHE – FEB 4
On whether the Pfizer-Wyeth deal will herald a new wave of consolidation: “It is difficult to predict, very difficult to predict.
“Our buys are very, very targeted and we are not interested in mega-mergers … We want to continue with smaller and medium-sized acquisitions. It is also part of our strategy that we have enough liquidity and means to do such transactions.”
Roche is currently seeking to buy out the rest of U.S. biotech partner Genentech.
CHICAGO (Reuters) – General Motors Corp. is developing a plan to fire up to 5,000 salaried employees as it tries to cut costs by a March 31 deadline to keep $13.4 billion in U.S. government aid, according to a Bloomberg report.
The total could match the number of salaried positions GM slashed in 2008, the report said, citing people familiar with the plan. The company will include the plan in a February 17 progress report to the U.S. government.
A spokesman for GM was not immediately available to comment on the report.
UBS and Credit Suisse Expecting to Report Dismal News this Week
GENEVA (Reuters) – Swiss newspapers expect the country’s top two banks, UBS AG (UBSN.VX) and Credit Suisse Group AG (CSGN.VX) to announce record losses for 2008 this week and predict UBS will unveil thousands of job cuts.
Losses at the biggest bank and world’s largest wealth manager, UBS, will range from 20 billion to 21 billion Swiss francs ($17-18 billion), including, according to NZZ am Sonntag, a 9 billion franc loss in the fourth quarter.
In an unsourced report, the paper also forecast Credit Suisse’s annual loss will range from 5 billion to 8 billion francs, with NZZ forecasting a fourth quarter loss of 6 billion francs.
A UBS spokeswoman and Credit Suisse spokesman declined to comment. UBS announces its annual results on February 10 and Credit Suisse on February 11.
A Reuters poll forecasts annual losses of 17.2 billion and 5.9 billion francs at UBS (UBS.N) and Credit Suisse, and fourth-quarter losses of 5.9 billion and 3.7 billion respectively.
UBS will also announce further cuts of 5,000-8,000 jobs, Sonntag said, while citing Credit Suisse spokesman Andres Luther saying Credit Suisse will not announce any reductions. NZZ put the likely UBS job cuts at 2,000-3,000.
The papers also forecast big reductions in the banks’ wage bills as bonuses are cut back.
All Eyes on AMZN as They Hold a “Secretive” Press Conference
Feb. 8 (Bloomberg) — Amazon.com Inc. is holding a press conference at the Morgan Library and Museum in New York tomorrow, fueling speculation that the company will release a new version of the Kindle, its electronic-book reader.
Amazon.com hasn’t given a topic for the event, hosted by Chief Executive Officer Jeff Bezos. Still, blogs and analysts say the timing is right for a new Kindle. The current model sold out before the holidays — the second year in a row that demand eclipsed supply.
“It almost seems self-evident they’re going to release the Kindle,” said Jim Friedland, an analyst at Cowen & Co. in New York. “It makes sense. The Kindle has been out of stock on Amazon since late November.”
Venezuela’s Finance Minister Says Oil May Fall to $20pb
CARACAS, Feb 8 (Reuters) – Venezuela’s finance minister believes oil could fall to $20 a barrel but not lower, he said in an interview printed on Sunday, and added that President Hugo Chavez’s government would try to avoid social spending cuts.
“We have prepared different scenarios that go from $20 upward. We don’t think it will fall below that level,” Finance Minister Ali Rodriguez told the Venezuelan daily El Universal.
If you enjoy the content at iBankCoin, please follow us on TwitterFeb. 7 (Bloomberg) — Advanced economies are already in a “depression” and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
“The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. “There’s a lot of downside risk.”
