$SNE Posts Profits From One Time Gains, Company Guides Below Estimates

“Sony Corp. (6758) forecast annual profit that missed analyst estimates as Chief Executive Officer Kazuo Hirai tries to win back customers from Samsung Electronics Co. with new Xperia smartphones and Bravia TVs.

Net income may rise 16 percent to 50 billion yen ($507 million) in the year started April 1, the Tokyo-based company said in a statement. That compares with the 66.4 billion-yen average of 18 analyst estimates compiled by Bloomberg.

Hirai used job cuts, asset sales, a weaker yen and blockbuster movies to return the company to profit after four years of losses as the electronics business struggles to recapture ground lost to Samsung. The South Korean company’s smartphones outsold Sony’s 7-to-1 last year, and its flat-panel TVs generated more than triple Sony’s revenue.

“Sony is being bullish,” said Takashi Oba, a senior strategist at Okasan Securities Co. “It’s up to whether it can reduce the losses in its electronics business and produce hit products.”

Sony posted a profit in the year ended March after it generated about $2 billion in one-time gains selling stock holdings and properties including its New York headquarters, a chemicals unit and shares in health-care data provider M3 Inc. (2413) Sony’s movie studio also topped the U.S. box-office last year with hits including “Skyfall” and “The Amazing Spider-Man.”

Operating Profit…”

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“China’s consumer inflation stayed subdued in April while the decline in factory-gate price declines deepened, adding to evidence of softer demand and giving the government room to raise utility fees.

The consumer price index (SHCOMP) rose 2.4 percent in April, the National Bureau of Statistics said today in Beijing, compared with a median forecast of 2.3 percent in a Bloomberg News survey. The producer price index fell 2.6 percent, after March’s 1.9 percent drop.

Inflation running below the government’s annual goal of 3.5 percent gives new Premier Li Keqiang leeway to loosen resource-fee controls that the World Bank says encourage pollution and limit incentives for new technologies. The producer-price deflation may reflect lower commodity prices and factory overcapacity…..”

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“Australian and New Zealand jobs growth surged, sending the currencies soaring and undermining central bank efforts to relieve pressure on manufacturers and exporters.

The number of people employed in Australia rose by 50,100 in April from a month earlier, more than four times economists’ estimates, and the jobless rate unexpectedly fell to 5.5 percent, government data showed today. New Zealand employers added a record 38,000 jobs last quarter and its unemployment plunged to a three-year low of 6.2 percent. Economists expected 6.8 percent.

Both currencies surged to levels that preceded the Reserve Bank of Australia’s decision two days ago to cut the benchmarkinterest rate to a record low and New Zealand Governor Graeme Wheeler’s announcement a day later that he has intervened to weaken the kiwi. South Korea also cut rates today to ease pressure on exporters. The surge in Australian jobs may undermine the case for RBA Governor Glenn Stevens to add to 2 percentage points of reductions in the past 19 months.

“Reserve Bank Board members probably winced when they heard the job numbers,” said Craig James, a senior economist at a unit of Commonwealth Bank of Australia, the nation’s biggest lender. “The Reserve Bank will probably leave a rate cut on the table over the next few months. But more figures like this and it clearly won’t be acting on the easing bias.”

Currency Reaction

The Australian dollar jumped as high as $1.0254 from $1.0165 before the jobs data. The three-year bond yield rose six basis points, or 0.06 percentage point, to 2.57 percent. The move in yields was the biggest since March 25.

The kiwi bought 84.61 U.S. cents at 6.24 p.m. in Wellington from 84.09 cents before the report. The currency had declined to a five-week low yesterday…”

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“The Bank of Korea cut interest rates, following the lead of policy makers in Australia, Europe and India this month, as strength in the won and weakness in the yen dim the outlook for the nation’s exports.

Governor Kim Choong Soo and his board lowered the benchmark seven-day repurchase rate to 2.5 percent from 2.75 percent, the central bank said in a statement in Seoul today. Six of 20 economists surveyed by Bloomberg News predicted the move while the remainder forecast no change. Kim supported a cut after opposing one last month.

As central banks around the world move to counter currency appreciation, the won’s 24 percent jump against the yen in six months is hampering South Korean exporters of autos and electronics and aiding their Japanese rivals. In Seoul, ruling New Frontier Party floor leader Lee Hahn Koo yesterday urged a “more active role” for the BOK, adding to political pressure that the central bank resisted last month.

“Japan’s policies must have played a very big role in today’s decision,” said Huh Kwan, a Seoul-based fixed-income trader at Korea Investment & Securities Co., one of South Korea’s 20 primary dealers. “The cut can be seen as action to ease a worsening impact on exports.”

The won was little changed against the dollar, trading at 1,086.65 as of 11:44 a.m. in Seoul. The Kospi stock index rose 0.8 percent.

China, Australia

Across the Asia Pacific region, data gave a mixed picture. China reported inflation below the government’s 3.5 percent target and the steepest decline in producer prices in six months, highlighting weakness in the world’s second-biggest economy. Australian employers added more than four times as many jobs as analysts estimated, sending the local currency higher…..”

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“Asian stocks dropped, with the regional benchmark index retreating from a five-year high. Japan’s Topix Index erased gains as the yen strengthened, dimming the outlook for the nation’s exporters.

Canon Inc. (7751), which loses almost $80 million for every 1 yen Japan’s currency gains against the dollar, fell 1 percent. Bridgestone (5108) Corp., the world’s biggest tire maker, sank 6.6 percent in Tokyo after keeping its full-year profit forecast below analyst estimates. GS Engineering & Construction Corp. jumped 6.8 percent after the Bank of Korea cut interest rates….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

“Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young said in a survey Tuesday.

One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.

In addition 42 percent of board directors and top managers questioned in the fraud survey said they were aware of “some type of irregular financial reporting.”

And despite scandals and regulatory failures in the wake of the credit crunch, almost a quarter of top financial services staff surveyed said they were aware of manipulation, and almost 10 percent of all staff said their companies had understated costs, overstated revenues or used unprincipled sales tactics.

Almost half of the sales staff surveyed across all sectors did not consider anti-corruption policies to be relevant and more than a quarter thought it acceptable to offer personal gifts or services to win or retain business.

In India, over a third felt justified in offering cash—triple of that in western Europe.

“Our survey shows that to find growth and improved performance in this environment, an alarming number appear to be comfortable with or aware of unethical conduct,” said David Stulb, head of E&Y’s fraud investigation and dispute services practice.

In Spain, ranked alongside Russia and just below Nigeria and Slovenia, 61 percent of staff believed companies often exaggerated results, compared with only 7 percent in Finland.

And E&Y said the vast majority of managers from Norway to Nigeria and Russia to Greece were feeling the pressure to deliver a good financial performance over the next 12 months, despite little optimism that business conditions would improve….”

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“Microsoft is preparing to reverse course over key elements of its Windows 8 operating system, marking one of the most prominent admissions of failure for a new mass-market consumer product since Coca-Cola‘s New Coke fiasco nearly 30 years ago.

“Key aspects” of how the software is used will be changed when Microsoft releases an updated version of the operating system this year, Tammy Reller, head of marketing and finance for the Windows business, said in an interview with the Financial Times. Referring to difficulties many users have had with mastering the software, she added: “The learning curve is definitely real.”

Analysts warned that changing course would be a significant admission of failure for Steve Ballmer, chief executive, who called the October launch of Windows 8 a “bet-the-company” moment as Microsoft sought to respond to the success of Apple‘s iPad.

(Read More: Microsoft Is ‘Not Dead Yet,’ Say Wall Street Pros)

“It’s a horrible thing for this to happen to your flagship product – he’ll take a hit for that,” said Mark Anderson, an independent tech analyst. “But he’s also responsible for a renaissance inside the company. There’s a level of risk and creativity going on that would never have happened two years ago.”

Richard Doherty, analyst at tech research firm Envisioneering, said: “This is like New Coke, going on for seven months – only Coke listened better.” Coca-Cola dropped its New Coke formula in response to a consumer backlash less than three months after launch.

Windows 8 was an ambitious attempt to update the personal computer for the tablet era by moving to a new touchscreen interface based on colorful tiles, hiding the “desktop” launch screen familiar to white collar workers and consumers around the world….”

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“Nationwide home prices including distressed sales were up 10.5% year-over-year in March, according to CoreLogic’s latest home price report. On a monthly basis home prices were up 1.9%.

This was the thirteenth straight monthly rise, and the fastest pace of increase since March 2006. Ex-distressed sales, home prices were up 10.7% year-over-year and 2.4% on the month.

“For the first time since March 2006, both the overall index and the index that excludes distressed sales are above 10 percent year over year,” said Dr. Mark Fleming, chief economist at CoreLogic in a press release. Home prices are being driven by demand from investors and homebuyers even as supply stays tight.

Here are some details from the report…”

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“Americans’ confidence in the economy has reached a five-year weekly high, according to Gallup’s weekly tracking index.

This week’s reading matched a five-year high set the week ending Feb. 3. It comes just a week after The Conference Board’s April Consumer Confidence survey showed a huge surge to 68.1 from last month’s upwardly-revised 61.9 reading.

The current confidence score in Gallup‘s confidence reading is -8, which was a surge from -13 the previous week. The index has reached as low as -22 this year.

Monthly economic confidence in April also matched a five-year high, coming in at a marked improvement over March’s reading, which was likely low because of the budget sequester….”

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Apparently most of America missed this….

“David Einhorn’s Q1 letter to investors is out, and he says that he got a big boost from the weakening yen, reports Bloomberg.

What’s more, he says Apple took a “step forward” and that he’s adding to his bet.

Einhorn’s hedge fund, Greenlight Capital, owned $1.5 million shares of Apple at the end of Q4 2012 and he was very public about desire to get the company to issue preferred stock (you can check out his presentation about it here).

He even sued Apple over the matter but dropped the lawsuit eventually.…”

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Hats off to the Italian Eatery, Collegno’s Pizzeria, in Brooklyn!!!

“New York Mayor Michael Bloomberg was denied a second slice of pizza today at an Italian eatery in Brooklyn.

The owners of Collegno’s Pizzeria say they refused to serve him more than one piece to protest Bloomberg’s proposed soda ban, which would limit the portions of soda sold in the city.

Bloomberg was having an informal working lunch with city comptroller John Liu at the time and was enraged by the embarrassing prohibition. The owners would not relent, however, and the pair were forced to decamp to another restaurant to finish their meal.

Witnesses say the situation unfolded when as the two were looking over budget documents, they realized they needed more food than originally ordered.

“Hey, could I get another pepperoni over here?” Bloomberg asked owner Antonio Benito.

“I’m sorry sir,” he replied, “we can’t do that. You’ve reached your personal slice limit.”

Stop and Tisk

Mayor Bloomberg, not accustomed to being challenged, assumed that the owner was joking.

“OK, that’s funny,” he remarked, “because of the soda thing … No come on. I’m not kidding. I haven’t eaten all morning, just send over another pepperoni.”

“I’m sorry sir. We’re serious,” Benito insisted. “We’ve decided that eating more than one piece isn’t healthy for you, and so we’re forbidding you from doing it.”

“Look jackass,” Bloomberg retorted, his anger boiling, “I fucking skipped breakfast this morning just so I could eat four slices of your pizza. Don’t be a schmuck, just get back to the kitchen and bring out some fucking pizza, okay.”

“I’m sorry sir, there’s nothing I can do,” the owner repeated. “Maybe you could go to several restaurants and get one slice at each. At least that way you’re walking. You know, burning calories.”….”

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On the Wires 

“The U.S. Senate voted to let states collect taxes on out-of-state Internet and catalog sales, sending the proposal to the House, where the issue is dividing Republicans.

The measure, passed yesterday on a 69-27 bipartisan vote, would end the era of tax-free Internet shopping. It is backed by Wal-Mart Stores Inc. (WMT) and other retailers that say it’s unfair that out-of-state sellers don’t have to collect sales taxes on purchases…”

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“Bonds sold to finance Florida housing developments are being issued at the fastest rate in six years as investors seek extra yield from the municipal debt even as 85 percent of such securities have defaulted since 2008.

Known as dirt bonds, the borrowings are sold by districts set up by builders to finance roads and utility lines on raw land for housing. Jurisdictions in Florida have sold $273 million of the debt this year in 25 issues, on pace for the most since 2007 in terms of dollar amount and number of issues, data compiled by Bloomberg show.

The securities are benefitting from home prices in Florida that rose at the end of 2012 to a 21-month high, data from the Federal Housing Finance Agency show. At the same time, investors are hunting for speculative-grade munis, which have earned 3.1 percent this year, compared with 1.5 percent for the broader local market, Barclays Plc data show.

The jump in issuance shows “that many of those housing markets have stabilized,” said Peter Hayes, head of munis at New York-based BlackRock Inc. He oversees $114 billion of local debt, including land-development obligations.

“That helps dirt bonds, along with the fact that they offer more income and more yield than some other sectors,” he said.

Bubble Burst….”

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“AMSTERDAM (Reuters) – For European banking union to succeed, all EU member countries need to be in agreement, Christine Lagarde, managing director of the International Monetary Fund, said on Tuesday.

“You need to have all the players at the table,” Lagarde, managing director of the IMF, told students at the University of Amsterdam when asked about Germany’s concerns.

The banking union is one of the key projects to improve the economy of the 17 countries sharing the euro….”

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“BMC Software Inc. (BMC) agreed to be taken private in a $6.9 billion deal by Bain Capital LLC and Golden Gate Capital after struggling to compete with newcomers better equipped to handle the shift toward cloud computing.

The buyout group, which includes Singapore’s GIC Special Investments Pte Ltd. and Insight Venture Partners, is taking control of BMC in the third-largest private-equity deal of 2013. The investors said yesterday that they will pay $46.25 a share in cash, a 13 percent premium to the closing price on March 4, before Bloomberg reported that BMC had drawn renewed takeover interest after failing to find an acquirer last year.

BMC, a Houston-based provider of software that keeps corporate computer networks running smoothly, gets about 40 percent of its sales from the lucrative business of managing powerfulmainframe computers from International Business Machines Corp. Yet it has had a harder time keeping up with rivals in the market for server software, which is expanding as companies rely more on programs delivered over the Web, fueling demand for data centers and the technology that runs them.

“They’ve been outpositioned by some of the growth companies out there,” said Joel Fishbein, an analyst at Lazard Capital Markets. “The world’s changed from a technology perspective very dramatically, and they haven’t been able to keep up.”

The emergence of software delivered as a service via the so-called cloud has helped newer competitors such as ServiceNow Inc. and Splunk Inc. grab market share. BMC is also contending with traditional rivals CA, Hewlett-Packard Co. and IBM. About a quarter of new ServiceNow customers are replacing BMC products, ServiceNow Chief Executive Officer Frank Slootman said in a recent interview….”

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