Business News
ARMONK, N.Y. and CHICAGO, July 28 /PRNewswire-FirstCall/ — IBM (NYSE: IBM) and SPSS Inc. (Nasdaq: SPSS – News) today announced that the two companies have entered into a definitive merger agreement for IBM to acquire SPSS, a publicly-held company headquartered in Chicago, in an all cash transaction at a price of $50/share, resulting in a total cash consideration in the merger of approximately $1.2 billion. The acquisition is subject to SPSS shareholder approval, applicable regulatory clearances and other customary closing conditions. It is expected to close later in the second half of 2009.
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Most Asian Markets Trade Slightly Higher
By Patrick Rial and Shani Raja
July 28 (Bloomberg) — Asian stocks climbed, lifting the MSCI Asia Pacific Index for an 11th day, as brokerages upgraded banks and steelmakers ahead of earnings announcements.
Sumitomo Mitsui Financial Group Inc., Japan’s third-largest lender, rose 3.9 percent as Nomura Holdings Inc. recommended investors buy the shares. JFE Holdings Inc., Japan’s No. 2 steelmaker, jumped 7.3 percent after Goldman Sachs Group Inc. said earnings are set to improve from this quarter. Tata Motors Ltd., the Indian truckmaker that owns Jaguar Land Rover, jumped 11 percent after reporting profit that beat analyst estimates.
“Investors have been taking comfort that the reporting season hasn’t been horrific,” said Chris Hall, who helps manage $2.6 billion at Argo Investments Ltd. in Adelaide. “The market’s looking like fair value right now, but definitely not what I’d call cheap.”
The MSCI Asia Pacific Index rose 1.3 percent to 110.50 as of 7:39 p.m. in Tokyo. An acceleration in China’s economic growth and better-than-expected U.S. earnings have helped drive a 13 percent climb in the past 11 days. That’s the longest winning streak since January 2004.
Hong Kong’s Hang Seng Index gained 1.8 percent, while Australia’s S&P/ASX 200 Index rose 0.7 percent to a more than eight-month high. James Hardie Industries NV, the biggest seller of home siding in the U.S., added 2.2 percent in Sydney after new-home purchases in America surged the most in eight years.
Taiwan’s Taiex Index rose 1.6 percent, led by Compal Electronics Inc., which climbed 3.2 percent after the Commercial Times said the company will supply laptops to Acer Inc.
Fluctuating Stocks
China’s Shanghai Composite Index fell 0.4 percent, its first drop in a week. Sichuan Expressway Co. slumped 10 percent after tripling in value in its trading debut yesterday. Japan’s Nikkei 225 Stock Average closed little changed.
Futures on the Standard & Poor’s 500 Index slipped 0.3 percent today. The gauge climbed 0.3 percent yesterday as a government report showed sales of new homes jumped 11 percent last month from May, the most in eight years and higher than every economist forecast in a Bloomberg survey.
Sumitomo Mitsui, Japan’s No. 3 listed bank, climbed 3.9 percent to 3,990 yen. The company had its investment rating lifted to “buy” from “neutral” at Nomura with a price estimate of 4,500 yen. Improved capital ratios boost the bank’s growth prospects, Nomura analyst Keisuke Moriyama wrote in a Japanese-language report yesterday.
Mitsubishi UFJ Financial Group Inc., the country’s biggest lender by value, rose 0.4 percent to 555 yen, while smaller rival Mizuho Financial Group Inc. added 0.5 percent to 212 yen. The three banks all report first-quarter earnings this week.
Stimulus Policies
Analysts have boosted estimates since the beginning of April for companies in Asia outside Japan, according to data compiled by Bloomberg. Profit forecasts have actually declined within Japan, the data show.
“Earnings season is kicking into high gear this week, so investors are focusing on the individual winners and losers,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo.
JFE climbed 7.3 percent to 3,550 yen, while Sanyo Special Steel Co. surged 13 percent to 395 yen after Goldman lifted shares of both companies to “buy.” JFE reported a first- quarter net loss of 41.6 billion yen ($437 million) an hour before the close of trading.
“We believe that the outlook for 2010-11 is beginning to improve markedly from our previous assumptions, based on the coordinated policy response from governments around the globe,” analysts led by Rajeev Das wrote in a report. “We also believe the end of the June quarter marks a trough for the current cycle.”
U.S. Economy
Tata Motors climbed 11 percent to 414.35 rupees. The company posted a 58 percent increase in net income for the quarter ended in June as a change in accounting rules and lower commodity prices helped mask a fall in demand.
James Hardie climbed 2.2 percent to A$5.12 following the U.S. home sales report. Nissan Motor Co., which gets 34 percent of its sales in North America, gained 1.6 percent to 626 yen.
The MSCI Asia Pacific Index has climbed 57 percent from a more than five-year low on March 9 on speculation stimulus policies worldwide will revive the global economy. Stocks on the gauge are valued at an average 24.5 times estimated net income, the most expensive level since March 31.
U.S. companies including Intel Corp. and Apple Inc. this month reported better-then-expected results. Government figures due July 31 may show that the contraction in the U.S. economy narrowed to a 1.5 percent pace in the second quarter, following a 5.5 percent drop in the first three months of 2009, economists surveyed by Bloomberg News predicted.
Beating Estimates
Compal, which gets 31 percent of its sales in America, rose 3.2 percent to NT$33.50. Acer will contract out the production of 20 million laptops in the first phase of contracts, and Compal, the world’s No.2 maker of notebook computers, will be the largest supplier, the Commercial Times reported today.
Sapporo Holdings Ltd. rose 5.5 percent to 600 yen in Tokyo after the brewer said it will post a smaller-than-expected net loss for the six months ended in June.
In Shanghai, Sichuan Expressway, which operates toll roads, sank 10 percent to 9.81 yuan. The stock soared 203 percent in its first day of trading yesterday.
China’s Shanghai Composite Index has climbed 89 percent this year, as government stimulus, record bank lending and an economic rebound spurs demand for equities. Companies in the benchmark are valued at 26 times estimated earnings, up from 13 times on Nov. 4, when the gauge fell to a two-year low.
“While it’s obvious that the market is in a bubble, the rally could still go on as the government hasn’t stopped the liquidity,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which manages about $285 million. “If a correction starts, that will be powerful.”
By Adam Haigh
July 28 (Bloomberg) — European stocks were little changed after better-than-estimated earnings offset a forecast by BP Plc Chief Executive Officer Tony Hayward that any recovery from the first global recession since World War II will be “long and drawn out.”
Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest lender, gained 3.8 percent after quarterly profit climbed. Sage Group Plc added 4.6 percent as the largest U.K. software maker said results were “consistent” with its forecasts. BP, Europe’s second-biggest oil producer, slid 1.5 percent even after earnings topped estimates.
Europe’s Dow Jones Stoxx 600 Index slipped 0.1 percent to 220.35 as of 11:13 a.m. in London, having earlier risen as much as 0.7 percent. The gauge has surged 12 percent since July 10 after companies from Goldman Sachs Group Inc. to Roche Holding AG and Apple Inc. posted better-than-estimated results and U.S. Federal Reserve Chairman Ben S. Bernanke said the world’s largest economy is showing “tentative signs of stabilization.”
“To start to talk about a sustainable economic recovery is a bit premature,” Hans Goetti, who oversees about $10 billion as chief investment officer at LGT Bank in Liechtenstein (Singapore) Ltd., said in a Bloomberg Television interview. “These earnings come based on pretty low expectations and of course they surprise on the upside.”
Valuation
The rally has pushed the Stoxx 600’s valuation to 27.4 times the earnings of its companies, according to Bloomberg data, the highest level since January 2004.
The MSCI Asia Pacific Index increased 1.4 percent today, while futures on the Standard & Poor’s 500 Index slid 0.3 percent.
BBVA rose 3.8 percent to 10.63 euros after second-quarter net income increased 34 percent to 1.56 billion euros ($2.23 billion), beating analyst estimates of 1.3 billion euros.
More than half of per-share earnings at European companies that have reported results since July 8 beat analyst forecasts, according to Bloomberg data. Profits in the Stoxx 600 fell 20 percent on average in the period, while 46 out of 86 companies have reported better-than-estimated results, the data show.
Sage Group climbed 4.6 percent to 193.9 pence after it said results for the nine months to June 30 were “consistent with management expectations.”
BP lost 1.5 percent to 511.2 pence. Hayward said in a statement that there is “little evidence of any growth in demand” for fuel and he expects “the recovery to be long and drawn out.”
BP’s earnings excluding one-time items and inventory changes were $2.94 billion in the second quarter, beating the $2.82 billion median estimate of 17 analysts compiled by Bloomberg.
Sanofi, PPR Upgrades
Sanofi-Aventis SA added 2.4 percent to 47.18 euros after Morgan Stanley raised France’s largest drugmaker to “overweight” from “equal weight,” saying that its concern about lost sales of the diabetes drug Lantus was unfounded.
PPR SA, the owner of the Gucci brand, added 2.7 percent to 67.18 euros. Morgan Stanley increased its recommendation to “overweight” from “equal weight,” saying the group has been “overlooked” by the market.
Deutsche Bank AG dropped 8.1 percent to 47.82 euros after Germany’s largest lender reported a surge in loss provisions. Second-quarter net income rose to 1.09 billion euros from 649 million euros a year earlier, exceeding the 944 million-euro median estimate of 13 analysts surveyed by Bloomberg. UBS AG downgraded the shares to “neutral” from “buy.”
Home prices in 20 major U.S. metropolitan areas probably fell at a slower pace in May, another sign the market is stabilizing, economists said ahead of the S&P/Case-Shiller index report due 9 a.m. New York time.
U.S. Steel Corp. and McGraw-Hill Cos. are among companies expected to report earnings before the open of U.S. equity markets today.
— With assistance from Linzie Janis in London. Editors: Andrew Rummer, Christiane Lenzner.
Oil Hangs On To Marginal Gains
By GEORGE JAHN p {margin:12px 0px 0px 0px;}
VIENNA (AP) – Oil prices inched higher Tuesday on anticipation that further positive economic news would extend a three-week rally.
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Vienna’s JBC Energy attributed the buoyancy of oil markets to “enthusiastically absorbed earning figures of selected companies.
“In the U.S., the release of second-quarter GDP estimates on Friday will be a first test to market optimism,” said JBC’s newsletter Tuesday.
Benchmark crude for September delivery was up 15 cents, fetching $68.53 a barrel by noon in European electronic trading on the New York Mercantile Exchange. On Monday, the contract rose 33 cents to settle at $68.38.
Oil has surged from $58.78 a barrel earlier this month as solid second-quarter company earnings bolstered investor optimism that the global economy is recovering.
The Commerce Department said Monday that new U.S. home sales rose 11 percent in June as buyers jumped on reduced prices, low interest rates and a federal tax credit for first-time homeowners. However, disappointing earnings from Verizon Communications Inc., Aetna Inc. and Corning Inc. undermined investor confidence.
The Dow Jones industrial average rose 0.2 percent Monday, cooling off after jumping 11 percent in two weeks.
“The speed and magnitude of the recent rebound has taken us a bit by surprise,” Societe Generale said in a report. “There’s a high level of uncertainty about near-term price direction for oil.”
In other Nymex trading, gasoline and heating oil for August delivery were up slightly at $1.93 and $1.80 a gallon. Natural gas for August delivery jumped by nearly 6 cents to $3.66 per 1,000 cubic feet.
In London, Brent crude prices rose 20 cents to $71.01 a barrel on the ICE Futures exchange.
—
Associated Press writer Alex Kennedy contributed to this report from Singapore.
By Cherian ThomasJuly 28 (Bloomberg) — India’s central bank kept borrowing costs unchanged, signaling an end to its deepest round of interest-rate cuts on concern that inflation will “creep up” from October.
The Reserve Bank of India held its reverse repurchase rate at 3.25 percent, according to a statement in Mumbai today. The central bank raised its inflation forecast for the year to March 31 to around 5 percent from an April estimate of 4 percent and said it may soon need to “reverse” the loose monetary policy of the past ten months.
Inflation risks increased after Finance Minister Pranab Mukherjee this month unveiled plans to raise spending and widen the budget deficit to a 16-year high to bolster growth. Policy makers from Tokyo to London, who in some cases cut interest rates to close to zero, have started to discuss when they will exit from the emergency measures employed to ease a global credit freeze.
“Central banks need to put in place now a timely, smooth and systematic exit from the monetary easing,” said Siddhartha Sanyal, an economist at Edelweiss Capital Ltd. in Mumbai. “For India, it would be difficult to continue pursuing the current low-rate regime beyond six to nine months.”
Governor Duvvuri Subbarao said the central bank will maintain an “accommodative monetary stance” until there are “definite and robust” signs of recovery.
Policy Reversal
“This accommodative monetary stance is, however, not the steady state stance,” he said in today’s statement. “On the way forward, the Reserve Bank will have to reverse the expansionary measures to subdue inflationary pressures while preserving the growth momentum.”…..
By Matthew Brown and Yasuhiko Seki
July 28 (Bloomberg) — The dollar fell as stocks extended their longest rally since 2003 and investors sought higher- yielding assets on speculation the global economy is emerging from the recession.
The Dollar Index dropped to its lowest level this year as the MSCI World Index rose for a 12th day. The Australian dollar gained for a third day against the U.S. currency after the Reserve Bank of Australia said the economy may rebound faster than forecast six months ago. The euro climbed to a seven-week high against the dollar after Deutsche Bank AG said second- quarter profit rose 68 percent, beating analysts’ estimates.
“Riskier currencies are trying to break higher as stocks rally,” said Ian Stannard, a foreign-exchange strategist in London at BNP Paribas SA, France’s largest bank. “Upside potential is limited as euro-dollar has been quite disappointing in recent weeks, given that we’ve had near-perfect conditions for a rally to develop.”
The Dollar Index, which the ICE uses to track the dollar against currencies including the yen, pound and Swedish krona, fell to 78.315 today, the lowest level since Dec. 18. It was at 78.467 as of 10:03 a.m. in London, from 78.626 yesterday. The dollar weakened to $1.4271 per euro, from $1.4232, and traded at $1.4304 earlier, the lowest level since June 3. The U.S. currency fell 0.5 percent to 94.75 yen.
The MSCI World Index of global shares rose 0.4 percent, capping its the longest winning streak since June 2003. The Dow Jones Stoxx 600 Index of European shares climbed 0.2 percent.
Housing Report
U.S. home prices probably fell at a slower pace in May, indicating that the American economy is recovering. The S&P/Case Shiller index of 20 major metropolitan areas, due for release today, will show property values fell 17.9 percent in May from a year earlier, according to a Bloomberg News survey of economists. The measure was down 18.1 percent in the 12 months ended April.
The Australian dollar climbed after RBA Governor Glenn Stevens said it appears “that the downturn we are having may turn out not to be one of the more serious ones of the postwar era, in contrast to the experiences of so many other countries.”
“We can much more easily imagine upside risks to the outlook, to balance out the downside ones, than was the case six month ago,” the Reserve Bank chief said in Sydney today.
The Australian dollar added 1.1 percent to 83.17 U.S. cents, while the New Zealand dollar gained 0.9 percent to 66.28 U.S. cents. The Canadian dollar rose for an eighth day to 92.98 U.S. cents, from 92.49 cents.
‘Jammed on’
Stevens left the benchmark lending rate at 3 percent on July 7 for a third month amid signs the lowest borrowing costs in half a century and government spending helped the nation skirt a recession.
The benchmark interest rate is 8.75 percent in Brazil and 0.25 percent in Sweden. Japan’s is 0.1 percent. The U.S. key rate is as low as zero.
A pick-up in the 25-day rolling correlation between Aussie- dollar and the two-year swap rate differential “suggests further Australian dollar gains,” Steven Pearson, head of Group of 10 foreign-exchange strategy in London, wrote in a research report today.
“With the risk appetite switch jammed on pressure on the dollar and the yen continues to mount,” Pearson wrote.
BOA Closes Down 10% of its Branches Down; Just In Time For Recovery
By DAN FITZPATRICK
Bank of America Corp. Chief Executive Kenneth Lewis told investors last week he is planning to shrink the company’s 6,100-branch network by about 10%, a pullback from the two-decade expansion that took the bank from coast to coast.
Mr. Lewis discussed the plans during a meeting Thursday in the bank’s hometown of Charlotte, N.C., according to people familiar with the conversation. Liam McGee, president of Bank of America’s consumer and small-business bank, also said branch closures are in the works but added it would be premature to specify how many locations could be closed, these people said.
Bloomberg News
Bank of America’s plans would mean closing many of the lending giant’s branches. Above, a Bank of America location in New York.
The driving force for the closings is changing customer preferences, Mr. McGee said, according to these people, as online and mobile banking take transactions away from traditional branches. Messrs. Lewis and McGee didn’t say when the shutterings would occur, these people said. Neither executive was available for comment Monday, and a Bank of America spokesman wouldn’t discuss the matter.
At the end of 2008, Bank of America’s retail-banking operations covered about 82% of the U.S. population, with its red-and-blue flag logo in 13 of the 15 fastest-growing U.S. states and 32 states overall. The company holds 12.2% of all U.S. deposits, according to SNL Financial, followed by Wells Fargo & Co. and J.P. Morgan Chase & Co.
In the 1990s, Bank of America pushed ahead with a branch-building strategy as rivals scaled back, believing that the corner branch was crucial to the bank’s overall strategy. Acquisitions since 1998 also added to its heft in California, Florida, the Northeast and the Midwest.
Bank of America is facing a growing challenge from Wells Fargo, which has 6,668 branches in 39 states following its takeover of Wachovia Corp. The San Francisco bank has no plans to retreat, a spokeswoman said Monday. J.P. Morgan has about 5,100 U.S. branches. It has closed about 390 former Washington Mutual branches since buying the banking operations of that failed thrift last September. A spokesman said the bank typically builds 100-125 new branches a year and said that will continue “for the foreseeable future.”
The retrenchment at Bank of America comes as it continues its integrations of Merrill Lynch & Co. and Countrywide Financial Corp., reshuffles leadership at the behest of regulators and fends off rising credit losses. Mr. Lewis said July 17 that it would be “much tougher” to make money in the second half of 2009.
Grantham Calling For China To Fall
China is bailing out the world economy, growing at 8% a year while the rest of the globe struggles.
Unfortunately, if China bears are right, those days will soon be over.
Jeremy Grantham of GMO is nervous about emerging markets, especially China.
Our other perennial favorite – emerging market equities
– has had an amazing recovery, all things considered, and is no doubt also vulnerable to a reassessment of how quickly the global economy is recovering. Deciphering the strength of the Chinese economy will also play a major role in formulating our view of any future relative strength of emerging. My colleague, Edward Chancellor, strongly suspects that the Chinese economy is dangerously
unbalanced and very likely to come unhinged in the next
few quarters, surprising the pants off investors.
Meanwhile, Jeremy’s prediction earlier this year that S&P would soar to 1000-1100 and then collapse for 7 years seems right on track.
See Also: Ex-Bear Jeremy Grantham Now A Snorting Bull, Says Stocks Going To Moon
Obama Strikes Out @ Mitigating Home Foreclosure
At one point does this stop being story?
WSJ: An Obama administration effort to reduce home foreclosures by lowering the mortgage payments of struggling borrowers before they fall behind is failing to help as many people as expected.
Among the problems: Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.
To help get the modifications in high gear, officials from 25 mortgage-servicing companies will meet with the administration to discuss what’s holding back the program.
Will this chit-chat help? Maybe.
What needs to happen is the mortgage-servicers need to level with the administration about why their operations are so dysfunctional. If it’s just a matter of the difficulty in ramping-up and building the mortgage-mod infrastructure then that’s fine, and the program should be given more time before we render a judgment.
But, if it really comes down to economic incentive, namely that the holders of mortgages don’t want to modify for fear that if they do they’ll modify themselves straight into insolvency then that needs to get out so we stop with the charade, and all the confusion and extra cost that falls upon desperate homeowners.
Officially all the banks support the administration’s plan and that’s great. But if secretely they have to drag their feet, then let’s kill it now and think of something else.
Kirby Daley Commentary On The Next Financial Collapse
See link For podcast
Rebel Traders Digs A China Bubble Story From A French Paper
More evidence appears today of the bubble affecting the Chinese stock market after part of the Chinese stimulus was diverted into the markets.
The French economic daily Les Echos reports today that the Shanghai stock exchange is today the world’s fourth largest market with a capitalization of about 2.3 trillion USD. The Shanghai SSE index moved up by 89 % since the beginning of the year.
What is more, irrational exuberance continues on any IPO taking place. The introduction yesterday of Sichuan Expressway, a highway company saw the share jump by 203 % in a single day.
And another similar meteoric rise may take place tomorrow with the IPO of China State Construction Engineering, a company that will have a capital of 50.2 Bn Yuan.
Other typical factor: in May, the capitalization of the oil giant, Petrochina went beyond that of its US rival, ExxonMobil, making it the largest traded company in the world.
I’ll only recall my earlier posts in that respect and forewarn you for the bubble burst when it will come.
As for the efficiency of the Chinese in manipulating the markets, I believe the short article published today in the China Economics Review gives you all the story.
China’s state-owned enterprises (SOEs) have lost billions of dollars in losses related to commodity price or foreign exchange trading over the past year, Reuters reported. Although a few of the most recent cases appear to have been simply bad luck on hedging markets at the peak, other instances have been blamed on a “rogue” element – a risk manager, a lone trader – who was operating beyond his mandate. The mounting losses have caused Beijing to crack down on all forms of overseas derivatives trading. In response, the State-owned Assets Supervision and Administration Commission (SASAC) launched legislation that requires all SOEs engaged in trading derivatives to make quarterly reports about their investment situations. Kuang Yongsheng, an official from SASAC said, “We don’t want to see them diverge their core businesses to speculate in the financial market.” One recent example happened in January of 2009 when three of China’s largest airlines, Air China, Shanghai Airlines and China Eastern, collectively lost a reported US$1.94 billion on aviation fuel hedging contracts, according to state media.
Retailers Report Woes on High Street
High street sales fell more than expected in July but the decline has slowed down according to new figures from the Confederation of British Industry (CBI).
In its monthly survey of Distributive Trades, some 32 per cent of retailers said sales volumes were higher than in July last year, but 47 per cent said they had fallen.
The resulting balance of -15 per cent was higher than the -12 per cent analysts had expected, but more modest than the balance of -17 per cent recorded in June.
It is also well down on the falls recorded in the earlier months of the year.
Official data showed that retail sales rose by 2.8 per cent in June, but Fitch, the ratings agency, yesterday warned that better than expected results from the high street were due to the heatwave and early sales.
The outlook for August was also downbeat, with 23 per cent more retailers saying that sales were likely to be lower rather than higher than in August last year.
There are fears that increases in unemployment could further impact consumer spending, taking a heavy toll on the high street.
Andy Clarke, chief operating officer of Asda and chairman of the survey panel, said: “Many retailers are having a difficult summer and no pick-up is expected for August.
“But the overall sales falls are not as heavy as we saw at the start of the year, and some retail sectors are reporting growth.”
Supermarkets performed the best on the high street, with grocers continuing to see strong growth on a year ago. The only other sector to report a rise in sales were shoe shops. Some 64 per cent more footwear and leather retailers reported higher, rather than lower, sales, the highest margin since August 2007.
Falling sales were reported by shops selling hardware, china & DIY, and furniture & carpets.
Sales of cars slumped to a six-month low however, undermining hopes that the car scrappage scheme would provide a shot in the arm of the ailing car market.
Earnings Highlights: ADVS, AGCO, ARLP*, AMB*, BDN, CAJ, CHKP*, COH*, CVH, DB*, HIT*, IDCC, JEC*, LUX, MCK, NOV*, NSC, RNR, SKM, STM, TEVA*, VLO*, WDC, X
Scrolling Headlines From Yahoo in Play
REDWOOD CITY, CA–(Marketwire – 07/28/09) – Check Point� Software Technologies Ltd. (NASDAQ:CHKP – News), the worldwide leader in securing the Internet, today announced record financial results for the second quarter ended June 30, 2009.
“I’m pleased to report record quarterly results. Our quarterly results came in at the high-end of our projections with 12 percent year over year growth in revenues and non-GAAP earnings per share. Revenue growth came from all regions and represented our highest quarterly revenues to date,” said Gil Shwed, Chairman and Chief Executive Officer at Check Point. “The synergies associated with the successful acquisition of Nokia’s Security Appliance business contributed to these record results and enabled us to achieve non-GAAP operating margin of 52 percent.”
Financial Highlights for the Second Quarter of 2009
- Total Revenues: $223.6 million, an increase of 12 percent, compared to $199.6 million in the second quarter of 2008, and sequential quarterly growth of 15 percent.
- GAAP Operating Income: $86.7 million, up from $83.6 million a year ago. The GAAP operating income in the second quarter of 2009 included amortization of intangible assets in the amount of $4.6 million and restructuring charges of $9.0 million related to the Nokia security business acquisition.
- Non-GAAP(1) operating income: $116.4 million, an increase of 15 percent compared to $100.9 million a year ago. Non-GAAP operating margin was 52 percent, compared to 51 percent a year ago.
- GAAP Net Income and Earnings per Diluted Share: GAAP net income was $75.6 million compared to $79.2 million in the second quarter of 2008. Earnings per share were $0.36 for both periods. The GAAP net income in the second quarter of 2009 included amortization of intangible assets in the amount of $4.6 million ($0.02 per diluted share) and restructuring charges of $9.0 million ($0.04 per diluted share) related to the Nokia security business acquisition. Net of taxes these charges totaled $11.9 million ($0.06 per diluted share).
- Non-GAAP(1) Net Income and Earnings per Diluted Share: Non-GAAP net income was $100.9 million, compared to $92.7 million in the second quarter of 2008 and EPS was $0.48, an increase of 12 percent, compared to $0.43 in the second quarter of 2008.
- Deferred Revenues: As of June 30, 2009, we had deferred revenue of $362.1 million, which represented an increase of $82.9 million, or 30 percent compared to deferred revenues as of June 30, 2008.
- Cash Flow: Cash flow from operations was $112.7 million, an increase of 37 percent, compared to $82.6 million in the second quarter of 2008. We had $1.63 billion in cash and investments as of June 30, 2009.
- Share Repurchase Program: During the second quarter of 2009, we repurchased 2.2 million shares at a total cost of $50.0 million.
(1) For information regarding the non-GAAP financial measures discussed in this release, please see “Use of Non-GAAP Financial Information” and “Reconciliation of Non-GAAP to GAAP Financial Information.”
Business Highlights
Mr. Shwed continued, “During the quarter we expanded our product portfolio with the introduction of our Power-1 11000 high end appliance series, the SMART-1 management appliances and the acquisition of the IP series appliance business from Nokia. We also added over 300 people as part of the acquisition, primarily in sales and marketing, R&D and technical services. As a result, we have increased our investment in future product development and have provided further resources to support our customers and partners even given today’s economy.”
During the second quarter of 2009 we expanded its security hardware appliance portfolio, giving customers more options to deploy our leading security software. In April, we completed the acquisition of the Nokia Security Appliance Business and delivered the new Check Point IP appliance line that utilizes our revolutionary new software blade architecture. This allows prior Nokia appliance customers the ability to take advantage of integrated Intrusion Prevention System (IPS) for the first time, and was followed by the introduction of the Power-1 11000 series appliances designed for high performance environments, based on our revolutionary Software Blade architecture.
Also in the second quarter, we introduced the SMART-1 appliances, representing the next step in our efforts to simplify security management for enterprises while providing the highest level of security. SMART-1 utilizes the benefits of Check Point’s Software Blade architecture and provides flexibility and extensibility to the network administrator by unifying network, IPS and endpoint security policy management.
Additionally, in July during our Check Point Experience in the Asia Pacific region we introduced our latest management blade, SmartWorkFlow, which enables customers to streamline security operations and achieve higher levels of compliance. We also announced our latest endpoint security solution, Endpoint Security R72, our latest version of the industry’s only single agent for endpoint security that utilizes our patent-pending WebCheck(TM) browser virtualization security technology to protect enterprise PCs against Web-based threats. Furthermore, to ease the end-user experience, Endpoint Security R72 OneCheck single authentication unlocks all endpoint security subsystems and VPN Auto-Connect simplifies remote access.
Mr. Shwed concluded: “I am proud of the record results we achieved this quarter. During my meetings with customers I encountered a great deal of enthusiasm for our strategy that was primarily focused on our software blade architecture and expanded appliance portfolio. I’d like to thank our partners and customers for their continued support of Check Point’s business.”
Conference Call and Webcast Information
Check Point will host a conference call with the investment community on July 28, 2009 at 8:30 AM ET/5:30 AM PT. To listen to the live webcast, please visit Check Point’s website at http://www.checkpoint.com/ir. A replay of the conference call will be available through August 12, 2009 at the company’s website http://www.checkpoint.com/ir or by telephone at +1 201.612.7415, passcode # 327789, account # 215.
- Net earnings for the quarter of $94.9 million;
- Diluted EPS for the quarter of $0.76;
- Net earnings for the nine months ended June 30, 2009 of $320.5 million;
- Diluted EPS for the nine months ended June 30, 2009 of $2.58, and
- Backlog of $15.8 billion
Jacobs reported today net earnings of $94.9 million, or $0.76 per diluted share, on revenues of $2.7 billion for its third quarter of fiscal 2009 ended June 30, 2009. This compares to net earnings of $108.7 million, or $0.87 per diluted share, on revenues of $2.9 billion for the corresponding period last year.
For the nine months ended June 30, 2009, Jacobs reported net earnings of $320.5 million, or $2.58 per diluted share, on revenues of $8.9 billion. This compares to net earnings of $306.4 million, or $2.46 per diluted share, on revenues of $8.1 billion for the same period in fiscal 2008.
Included in the Company’s results of operations for the nine months ended June 30, 2008 is an after-tax gain of $5.4 million, or $0.04 per diluted share, from the sale, in the first quarter of fiscal 2008, of its interest in a company that provides specialized operations and maintenance services.
Jacobs also announced backlog totaling $15.8 billion at June 30, 2009, including a technical professional services component of $8.4 billion. This compares to total backlog and technical professional services backlog of $16.6 billion and $8.1 billion, respectively, at the end of last quarter. During the quarter ended June 30, 2009, approximately $665 million was removed from backlog as a result of project cancellations ($300 million) and a shift of pass-through costs to the owners’ responsibility ($365 million). All but $20 million of the reduction came out of field services backlog.
Commenting on the results for the third quarter, Jacobs President and CEO Craig L. Martin stated, “While our public sector markets – led by national government programs – remain good, our growth there was insufficient to offset declines in our private sector markets. Consequently, our results for the quarter were disappointing. The market remains uncertain, with economic conditions, oil prices, and business confidence reflecting that uncertainty. Our business model positions us well in challenging times, so we expect to capitalize on the opportunities these times create.”
Commenting on the Company’s earnings outlook for the remainder of fiscal 2009, Jacobs Chief Financial Officer John W. Prosser, Jr. stated, “As we approach our year-end we are narrowing our guidance for fiscal 2009 to a range of $3.10 to $3.35 which is within the lower portion of our previously issued guidance of $3.10 to $3.50.”
Jacobs is hosting a conference call at 11:00 a.m. Eastern time on Tuesday, July 28, 2009, which they are webcasting live on the Internet at www.jacobs.com. The taped teleconference is accessible from any touch-tone phone and will be available 24 hours a day through August 5, 2009. The dial-in number for the audio replay is 706.645.9291 (ID 18940259).
Jacobs, with annual revenues exceeding $12 billion, is one of the world’s largest and most diverse providers of technical, professional, and construction services.
LONDON (MarketWatch) — Fixed-income trading helped lift second-quarter profit at Deutsche Bank /quotes/comstock/13*!db/quotes/nls/db (DB 73.88, +0.97, +1.33%) /quotes/comstock/11e!fdbk (DE:DBK 47.45, -4.63, -8.89%) by 67% to 1.1 billion euros ($1.57 billion), with revenue up 46% to 7.9 billion euros in the absence of write-downs. Analysts polled by Thomson Reuters had expected a profit of 989.5 million euros on revenue of 7.21 billion euros. The current-quarter result was affected by the absorption of 1.4 billion euros of specific charges, mainly in noninterest expenses and provision for credit losses, which were in part counterbalanced by 758 million euros of specific positive revenue effects.
Net income down to $521 mln from $533 mln
* Profit ex-items up 25 pct to $742 mln
* Sales up 20 pct at $3.4 bln
(Adds details, CFO quote, share reaction)
By Steven Scheer
TEL AVIV, July 28 (Reuters) – Teva Pharmaceutical Industries (TEVA.O), the world’s largest generic drugmaker, reported a slight decline in quarterly profit and predicted its acquisition of Barr Pharmaceuticals would yield better-than-expected results.
The second-quarter profit beat analysts’ expectations but an appreciation in the dollar cut sales by 9 percent, or $256 million, Israeli-based Teva (TEVA.TA) said on Tuesday.
Teva bought rival Barr in late 2008 and Chief Executive Officer Shlomo Yanai indicated that Teva was interested in more acquisitions.
“Teva has a legacy of doing acquisitions,” he told a news conference, noting that acquisitions have become a trend in the drugs sector.
He declined to say whether another deal was imminent.
“Barr was a great acquisition,” Chief Financial Officer Eyal Desheh said. “It’s ahead of plan in our integration and we believe synergies will come out higher — significantly higher.”
Teva posted net income of $521 million, or 58 cents per diluted share, compared with $533 million, or 65 cents per share, a year earlier.
Excluding one-off items that related mainly to the Barr acquisition, net income rose to $742 million, a 25 percent increase from last year, while earnings per diluted share was 15 percent higher at 83 cents, beating the average forecast from analysts of 81 cents a share.
Sales totalled $3.4 billion, a 20 percent rise from the same period last year, compared with the average forecast of $3.5 billion from analysts polled by Reuters Estimates.
Teva’s branded drug Copaxone remained the number one multiple sclerosis therapy globally, with record sales of $682 million in the quarter, up 21 percent from a year ago.
The company said its global market share for Copaxone was 28 percent, ahead of Biogen’s (BIIB.O) Avonex, which was 24 percent and 21 percent for Merck KGaA’s (MRCG.DE) Rebif. Continued…
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TOKYO (MarketWatch) — Japan’s biggest electronics maker Hitachi Ltd. /quotes/comstock/!6501 (JP:6501 304.00, +10.00, +3.40%) /quotes/comstock/13*!hit/quotes/nls/hit (HIT 31.98, +0.71, +2.27%) said Tuesday it swung to a group net loss of 82.7 billion yen ($870.5 million) in the April-June quarter, compared with a profit of 31.6 billion yen in the year-earlier period. The fiscal first-quarter loss was deeper than the consensus for a 79.9 billion yen loss, according to Dow Jones Newswires. The company maintained its forecast for a net loss of 270 billion yen in the year through March 2010, which would be its third straight fiscal year of losses. The forecast misses the consensus average for a 246 billion yen loss according to a survey of 13 analysts polled by Thomson Reuters.
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Coach reported earnings per share of 43 cents for the three months ended June, excluding unusual items, in line with the view of analysts polled by Reuters, but lower than the 50 cents a share the company earned in the year-ago period.
The clothing and accessories maker said sales fell 1 percent in the fourth quarter to $778 million. The revenue fell just short of analysts’ expectations of $783.41 million.
The company said its fiscal full-year earnings came in at $1.91 per share.
Shares in Coach cnbc_comboQuoteMove(‘popup_COH_ID0EOF15839609’);[COH 28.43 
-0.88 (-3%) 
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fell on Monday after an analyst noted the luxury handbag maker’s share price had jumped lately and downgraded the stock, according to Associated Press.
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Q2 lpu $0.72 vs estimate of $1.20
* Q2 rev fell 10 pct to $303.9 mln
* Sees FY rev $1.20-$1.30 bln
July 28 (Reuters) – Coal producer Alliance Resources Partners LP (ARLP.O) reported a second-quarter profit that lagged consensus estimates, hurt by lower sales volume and higher expenses, and cut its full-year revenue and production forecast.
For the quarter, the company’s net income was $41.5 million, or 72 cents per limited partner unit (lpu), compared with $36.7 million, or 68 cents per lpu, a year earlier. Revenue rose 10 percent to $303.9 million.
Analysts on average were expecting earnings of $1.20 on revenue of $316.2 million, according to Reuters Estimates.
Alliance Resources cut its revenue outlook, excluding transportation revenues, to $1.20 billion to $1.30 billion, from $1.29 billion to $1.37 billion. It also cut its 2009 capital spending forecast to $350 million to $400 million from $375 million to $425 million.
“ARLP is currently anticipating coal production for 2009 in a range of 25.9 to 26.4 million tons,” said CEO Joseph Craft in a statement.
Shares of the company closed at $37.66 Monday on Nasdaq. They fell nearly 3 percent to $36.36 before-the-bell.
For the alerts, please double click [ID:nWNBB3801] (Reporting by Arup Roychoudhury in Bangalore; Editing by Jarshad Kakkrakandy) ([email protected]; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: [email protected]))
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NEW YORK, July 28 (Reuters) – AMB Property Corp (AMB.N), which owns, operates and develops warehouse and distribution centers, said quarterly funds from operations halved from a year earlier.
AMB posted second-quarter FFO of $50.9 million, or 34 cents per share, compared with $108.8 million, or $1.05 per share, a year earlier.
Excluding charges, FFO was 37 cents per share. FFO, a performance measure for real estate investment trusts, removes the profit-reducing effect of depreciation, a noncash accounting item.
AMB posted net income of $17.1 million, or 12 cents a share, down from $72.4 million, or 73 cents a share.
The company and its chief competitor, ProLogis (PLD.N), have been hard hit by the credit crisis, which has inhibited sales of commercial properties. Both companies rely on global trade to drive demand for their buildings, which store goods bound for markets around the world. (Reporting by Nick Zieminski; Editing by Lisa Von Ahn)
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National Oilwell Varco /quotes/comstock/13*!nov/quotes/nls/nov (NOV 36.24, -1.20, -3.21%) earned $220 million, or 53 cents a share, compared to $421 million, or $1.05 a share, in the year-ago period.
Revenue was virtually flat at about $1.9 billion.
On an adjusted basis, the Houston maker of drilling-equipment said it earned 90 cents a share compared to $1.04 in the year-earlier period, while analysts polled by FactSet Research were looking for earnings of 88 cents a share, on average.
Its backlog fell to $8.7 billion from $9.6 billion at the end of the first quarter.
Shares of National Oilwell Varco added 1.8% in premarket trading to $59.84
“Our strong book of business and solid balance sheet positions us well to navigate the current challenging marketplace, which witnessed further steep rig count declines and fierce pricing pressure during the second quarter, particularly in North America,” the company said.
“We are using this time to streamline our business and invest for future growth, while continuing to execute on our customer’s requirements.”
The company said timing remains uncertain on a recovery in the business.
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A Dialogue With Uncle Ben Bernanke
Editorial: Will The Greenback Get Dumped ?
What do China, India, Brazil, Russia, France and Germany have in common? These countries most often can’t agree on anything. But they are united in one strange—and ominous—way. They blame the United States for wrecking the global economy. And they think the dollar is the wrecking ball.
One rock-solid, foundational belief underpins almost all economic theory in America: faith in the dollar’s unassailable status as the world’s reserve currency. Foreigners hold so many dollars that they can’t afford to stop buying them, the theory goes. Therefore the dollar’s status as the world’s reserve currency is sound. But the dollar is now coming under a concentrated attack. Are American economists about to get schooled?
Angela Merkel summed up the dollar-skeptic viewpoint last year. “Excessively cheap money in the U.S. was a driver of today’s crisis,” she told the German parliament. And America’s solution—even more cheap money—was just setting the world up for another crisis, she said. It was just a matter of time.
The irony is that America is completely blind to the catastrophe heading its way. As the economic crisis unfolded at the end of last year, investors made a mad rush out of global stock markets and into other assets. The biggest beneficiary of the panic was the one market large enough and liquid enough to handle the trillions of dollars being moved: the U.S. dollar market. This caused the dollar to surge in value.
America grossly misdiagnosed the demand for dollars as a vote of confidence in the U.S. economic system. In fact, it was primarily a case of investors looking for a place they could quickly and easily get their money in—and out.
Now that the initial panic has subsided, the dollar’s international purchasing power has resumed its former downward trajectory. Since the post-crisis high in March, the dollar has fallen by a portfolio-shredding 10 percent.
America’s foreign creditors are again questioning the wisdom of holding so many U.S. dollars. And they’re looking for a way out.
“Leaders from Brazil, Russia, India and China are demanding a greater stake in the management of the global economy and challenging the dollar as the primary denomination for world reserves,” reported Bloomberg about the recent G-8 summit.
But is dumping the dollar just wishful thinking on the part of these nations? Or is there some tangible alternative? Well, how about this: Some think they’ve already minted a dollar-killer.
Russia’s president is pushing to remove the dollar and reinstate some version of a gold standard. Dmitry Medvedev unveiled a newly minted gold bullion coin that he said was a true “symbol of unity,” and “our desire to solve such issues.” It was a test sample of a new supranational currency referred to as the United Future World Currency. Samples were issued to each of the world leaders attending the G-8 summit.
“We are discussing the creation or, to be more correct, the appearance of new reserve currencies,” said Medvedev.
What is even more surprising is that the dollar assaults have come not only from perennial U.S. antagonists but also from its more democratic allies. At the G-8 summit, French President Nicolas Sarkozy called for a complete revamp of the global currency system, saying that the dollar’s supremacy is outdated. “[W]e’ve still got the Bretton Woods system of 1945,” Sarkozy stated on July 9. “Frankly, 60 years afterwards, we’ve got to ask: Shouldn’t a politically multipolar world correspond to an economically multi-currency world?”
Bretton Woods was the historic conference that laid the foundation for a postwar global economy centered on the dollar. “Even if it’s a difficult topic,” Sarkozy said, “There has to be a debate.” “Debate” about Bretton Woods is flowery code for an attack on the dollar.
India too seems to be moving into the anti-dollar camp. Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, is urging the government to diversify its foreign-exchange reserves and hold fewer dollars. India holds over $250 billion worth.
But the next blow to the dollar may come as a complete surprise to Washington policymakers. Since World War ii, Japan has been a stalwart dollar supporter and a close collaborator with Federal Reserve monetary policy. That may be about to end. For only the second time in 54 years, the opposition in Japan is close to taking over the government. Japan’s economy, like those of the rest of the world, is in severe contraction, and disgruntled voters are upsetting the balance of power and pushing for radical reforms.
Back in May, Masaharu Nakagawa, the chief finance spokesman for the opposition, told the bbc that he was worried about the future value of the dollar. He said that if his party were elected in the upcoming national elections, Japan would refuse to purchase any more U.S. treasuries unless they were denominated in Japanese yen instead of dollars.
Such a decision could break the U.S. dollar bond market.
Japan is America’s second-most important creditor nation—lending the U.S. billions of dollars each year. If Japan won’t lend unless America pays it back in yen, then China and other major lenders may quickly follow suit. This would eliminate America’s ability to use inflation to cheat on its debt payments. America’s debt burden would soar, interest rates would jump, and national default—Argentina-style—could be staring America in the face within months instead of years.
“America is making a terrible mistake which will result in the greatest fall in all of mankind’s history!” Tim Thompson wrote for the Trumpet in 2000. “As soon as America is no longer a safe place for foreign money, that money will be gone. And once the foreign money is gone, it will leave us with a mountain of debt that we cannot repay.”
What Japan is proposing could be the first steps of a great Exodus from the U.S. bond market and consequently the end of the dollar as the world’s reserve currency.
America’s leaders seem blind to the looming dollar revolt. Global economies are in crisis. Unemployment rolls are soaring. People want answers and solutions. The jobless will demand action, and culpable politicians will look for scapegoats and distractions. The first step, blaming the U.S. and its currency for the global recession, has already begun.
A new global currency—and leveraging it to knock the U.S. down—will be the solution.
The highly trained economic theorists who keep telling us that foreigners can’t afford to stop supporting the U.S. are about to get reeducated at Reality U. •
Robert Morley’s column appears every Tuesday.
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Attention Small Cap Players: SEC Moves To Rule Out Naked Short Selling
Could this be what has caused so much avtivity in small caps ?
WASHINGTON (AP) — Federal regulators on Monday made permanent an emergency rule aimed at reducing abusive short-selling, put in at the height of last fall’s market turmoil.
The Securities and Exchange Commission announced that it took the action on the rule targeting so-called “naked” short-selling, which was due to expire Friday.
Short-sellers bet against a stock. They generally borrow a company’s shares, sell them, and then buy them when the stock falls and return them to the lender — pocketing the difference in price.
“Naked” short-selling occurs when sellers don’t even borrow the shares before selling them, and then look to cover positions sometime after the sale.
The SEC rule includes a requirement that brokers must promptly buy or borrow securities to deliver on a short sale.
At the same time, the SEC has been considering several new approaches to reining in rushes of regular short-selling that also can cause dramatic plunges in stock prices.
Investors and lawmakers have been clamoring for the SEC to put new brakes on trading moves they say worsened the market’s downturn starting last fall. SEC Chairman Mary Schapiro has said she is making the issue a priority.
The five SEC commissioners voted in April to put forward for public comment five alternative short-selling plans. One option is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves — actions that battered the stocks of banks and other companies over the last year.
Another approach would ban short-selling for the rest of the trading session in a stock that declines by 10 percent or more.
In addition to making the “naked” short-selling rule permanent, the SEC and its staff are working with major stock exchanges to make data on short-sale transactions and volumes publicly available through the exchanges’ Web sites, the SEC announcement said. It will result in “a substantial increase” over the amount of information currently required, the agency said.
“Today’s actions demonstrate the (SEC’s) determination to address short-selling abuses while at the same time increasing public disclosure of short-selling activities that affect our markets,” Schapiro said in a statement.
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