Sony Corp posted a smaller-than-expected quarterly loss, helped by an improvement in its struggling flat TV business, and said it was aiming to beat its official forecast and at least break even for the full year.
Sony has fallen behind Apple Inc’s iPod in portable music, Nintendo Co in videogames, and is struggling to compete with Samsung Electronics Co Ltd in LCD TVs.
But the company, which vies with Panasonic Corp for the position of the world’s largest consumer electronics maker, said that losses on flat TVs had narrowed in the latest quarter, bringing the business close to the break even level.
The maker of Bravia flat TVs and Vaio PCs kept its operating loss forecast of 110 billion yen ($1.2 billion) for the year to March 31, 2010.
That is about half the 227.8 billion yen loss it racked up a year ago, and compares with the consensus of 117.7 billion yen loss according to a Reuters poll of 19 analysts.
But Sony said it was aiming to beat that.
“We are keeping our official forecast but internally we are aiming to at least break even,” Sony Chief Financial Officer Nobuyuki Oneda told a news conference.
With three quarters of its revenues earned overseas, Sony is vulnerable to the yen’s appreciation, which makes Japanese exports less price competitive overseas at a time South Korean rivals are benefiting from a softer won.
Sony’s operating loss came in at 25 business cards online.7 billion yen in April-June, down from a profit of 73.44 billion yen a year earlier, and smaller than the average 103.1 billion yen loss forecast by five analysts.
It reported a net loss of 37.1 billion yen, a reversal from a 34.98 billion yen profit a year ago.
In contrast, South Korea’s LG Electronics Inc posted a record quarterly profit on strong TV and mobile phone sales, while Samsung beat market expectations with a 5 percent rise in quarterly net profit.
Sony has been restructuring its sprawling operations. It has announced plans to close eight manufacturing sites, cut 16,000 jobs and halve its 2,500 suppliers.
“Sony is making changes to adapt to the environment but it still seems to be having trouble keeping up and perhaps should have been a bit more aggressive about cost-cutting,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
Ahead of the results, Sony’s shares closed up 6.8 percent at 2,505 yen, outperforming a 1.9 percent rise in the Tokyo stock market’s electrical machinery index. The stock has gained 17 percent since April through Wednesday, while the subindex put on 29 percent.
(Reporting by Kiyoshi Takenaka; Editing by Anshuman Daga and Edwina Gibbs)
Bernard Madoff, the financier convicted for Wall Street’s biggest investment fraud, was surprised his $65 billion Ponzi scheme was not uncovered sooner, he said in his first interview since entering prison.
Madoff, the disgraced 71-year-old Wall Streeter who drew 150 years’ prison time for the fraud, expressed remorse and talked candidly to a pair of lawyers suing him on behalf of investors, according to news reports of their jailhouse meeting on Tuesday.
San Francisco attorneys Joseph Cotchett and Nancy Fineman met with Madoff at the North Carolina prison where he was taken two weeks ago after pleading guilty, the Associated Press and ABC News reported on Tuesday.
“There were several times that I met with the SEC and thought ‘they got me,’” Madoff told Cotchett and Fineman, according to abc news.com.
The Securities and Exchange Commission is now conducting an in-depth review of how they missed the fraud, drawing intense criticism. The results of their investigation are expected to be released in weeks.
Cotchett and Fineman represent about a dozen investors who lost money in Madoff’s decades-long scheme, an unprecedented global scam for which Madoff eventually pleaded guilty to laundering, securities fraud and perjury.
“It was an extraordinary visit. He was very candid, very open, and answered every one of our questions,” Cotchett said of the 4-1/2-hour meeting easy payday loans.
He was “very remorseful” but looked healthy and appeared to be working out, Cotchett told the news outlets.
“I think he’s not too happy to be where he is but he’s certainly not complaining,” said Cotchett, who set up the interview through Madoff’s attorneys.
The visiting attorneys said they planned to use what they learned at the meeting in a lawsuit to be filed this week in Manhattan against Madoff and his brother, Peter Madoff, who acted as chief compliance officer, and potentially officers at some of the feeder funds that worked with Madoff, according to the reports.
Madoff said he believed securities investigators had found all the money that could have been recovered, Cotchett said in the news reports.
“But it might be in many different venues, and by that I mean I don’t think that Bernie knows where all the money is” because some was paid out to feeder funds, Cotchett said.
Madoff agreed to speak with Cotchett after the lawyer threatened to sue his wife, Ruth, abc news.com reported.
“He cares about Ruth,” Cotchett said.
(Reporting by Gina Keating; Editing by Gary Hill)
Chesterfield-based Insituform Technologies Inc. saw its second-quarter profit spurred by revenue from newly acquired companies and strength in its North American sewer rehabilitation operations, the company reported Thursday. The company repairs water, sewer and other underground piping systems. Insituform had income of about $7 million, or 17 cents per share, for the quarter ended June 30. That was up 95 percent from $3.6 million, or 12 cents per share, during the period a year ago. It reported $183.2 million in revenue, a 35 percent increase from $135.6 million in the quarter a year ago. The company said results were helped by improved project execution and lower material costs. However, revenue excluding results from recently acquired companies fell due to lower revenue in its European sewer business and energy and mining segments.
Black & Decker Corp. posted better-than-expected second-quarter profit on the back of an insurance settlement and cost cuts — even as it faced currency headwinds and an across-the-board decline in demand. Black & Decker earned $38 million, or 63 cents a share, down sharply from $97 million, or $1.56 a share, in the same quarter of 2008. Sales fell 27 percent to $1.2 billion. The average analyst estimate had been 37 cents a share on sales of $1.2 billion.
Exelon Corp. said second-quarter net income dropped 12 percent as the power producer scaled back output at two of its key utility companies. Earnings fell to $657 million, or 99 cents a share, from $748 million, or $1.13 a year ago. Revenue dropped to $4.14 billion from $4.62 billion in the year-ago three months.
Fortune Brands Inc., seller of consumer goods ranging from faucets to bourbon, said second-quarter profit fell 27 percent as sales slid by percentages in the double digits in its golf and household products businesses payday loan. The seller of Jim Beam liquor and Titleist golf gear earned $99.8 million, or 66 cents per share, compared with $136 million, or 88 cents, from a year earlier. Revenue fell 17 percent to $1.74 billion.
Casino operator Pinnacle Entertainment Inc. said Friday that it moved to a second-quarter profit, helped by a hefty gain from an equity securities sale. The company earned $4.7 million, or 8 cents per share, compared with a loss of $18.1 million, or 30 cents, a year earlier. Revenue was essentially flat at $266.3 million. Locally, Pinnacle owns the President casino on the Admiral riverboat, Lumiere Place downtown and the River City Casino, under construction in Lemay.
Schlumberger Ltd. exemplified the ongoing troubles for the oil and gas industry, reporting Friday that its second-quarter earnings tumbled 57 percent. Income fell to $613 million, or 51 cents per share, from $1.42 billion, or $1.16, a year earlier. Revenue fell 18 percent to $5.53 billion.
Investment Manager T. Rowe Price Group Inc. said Friday that second-quarter earnings fell as revenue from managing investments declined 27 percent from a year ago. The company reported net income of $100 million, or 38 cents per share, compared with $162.2 million, or 59 cents per share. Revenue fell to $442.2 million from $586.5 million a year earlier.
From wire reports
U.S. criminal authorities are probing whether Corey Ribotsky, Managing Member of NIR Group, a Roslyn, New York hedge-fund, defrauded investors about their returns and the holdings of his various funds, the Wall Street Journal reported, citing people familiar with the matter.
The people told the paper that prosecutors from the U.S. Securities and Exchange Commission, Federal Bureau of Investigation and the U.S. attorney’s office in Brooklyn are looking at whether Ribotsky lied to investors as stock prices fell during the credit crisis.
The paper said the authorities have not accused Ribotsky of wrongdoing.
Ribiotsky has said he has $770 million under management, according to the paper life insurance rates.
Ribotsky’s lawyer declined to comment to the paper, saying the hedge fund manager and NIR “have no knowledge of any criminal investigation and have not been contacted by any authorities.”
Spokesmen for the SEC, FBI and U.S. attorney’s office declined to comment to the paper.
U.S. authorities could not be reached for comment by Reuters outside normal business hours, while a spokesman for NIR in Singapore was not immediately available for comment.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga)
Legal “safety valves,” allowing countries to suspend or waive trade commitments, can damage the global economy if abused for protectionist purposes, the World Trade Organization said on Wednesday.
In its annual World Trade Report, the WTO examined the use of “contingency measures,” a topic it said was particularly timely given fears of protectionism in the global crisis.
The global trade watchdog has been monitoring restrictive measures taken by countries — both those that violate trade agreements and those that are allowed under existing deals.
In the latest assessment, issued this month, WTO Director-General Pascal Lamy said governments were unfairly blocking trade in response to the downturn.
“Contingency measures are more likely to be used in difficult economic circumstances. However, the evidence cannot preclude the possibility that such measures are sometimes used as a protectionist device,” the WTO said.
“At a time of global crisis, a proliferation of such measures among trading partners would have adverse economic effects with few of the positive offsetting advantages that might otherwise by invoked to justify such measures.”
An analysis of the measures concluded that their design should aim to limit circumstances in which they can be used for protectionism and that their design should not undermine trade agreements.
The WTO noted it was easier to track the contingency measures analyzed in the report than to identify trade-restrictive measures or subsidies embedded in financial rescue and fiscal stimulus packages favored by rich nations and some emerging ones such as China and Brazil 500 fast cash.
TAXES AND TARIFFS
Protectionism can deepen and prolong an economic crisis even if it does not cause a downturn, Lamy said in an introduction to the report, noting that restrictive trade policies did not actually trigger the 1930s Great Depression.
“A seemingly attractive short-term solution of keeping production and consumption at home soon becomes a millstone around a nation’s neck, the more so when trading partners retaliate in kind,” he said.
The WTO examined the use of contingency measures such as safeguards, antidumping and countervailing duties, as well as measures such as renegotiating tariff commitments, export taxes and increases in tariffs to the maximum agreed ceiling.
Economic research showed that the use of such measures — especially antidumping — increases during downturns, it noted.
Antidumping is when a government imposes a compensatory duty on imports it says are being sold for less than they cost at home — and is a frequent cause of trade disputes.
In the latest such case, China plans to challenge antidumping duties imposed by the European Union on Chinese screws and bolts.
U.S. small businesses say they feel slighted by the Obama administration and efforts to shore up the economy, with large companies taking much of the government’s attention and stimulus cash.
The government decision last week against bailing out small business lender CIT Group raised fears of thousands of companies left without funding for day-to-day operations, and the lack of support showed big corporations can get bailout cash but small business interests are less pressing, some say.
With only some potential relief buried in the healthcare reform proposals in Congress, small businesses feel pushed aside in the stimulus and recovery efforts, they say.
“There has been nothing really in all the stimulus package that has really helped small business in general,” said Kelli Glasser, president of Exhibit Concepts in Dayton, Ohio, whose 87 employees build trade show and museum exhibits.
“Most of the help has been in the form of supporting loans, but we’re not looking for loans right now,” she said. “We’re not looking to heavily invest in equipment. We’re just trying to keep our doors open.”
Small business is not that small, representing 99.7 percent of all U.S. employer firms.
The U.S. Small Business Administration got $730 million this year to recharge the small business lending market, nearly doubling its budget. However, some say the package was not well structured and dwarfed by the $180 billion the government committed to save insurer American International Group compare car insurance.
‘HAVING A TOUGH TIME’
“Only $730 million going to the SBA didn’t really help the small business owners,” said James Tracy, president of America’s Best Companies in Illinois, which represents small businesses nationwide.
“Small business owners are having a tough time financing themselves today because I believe that the stimulus plan should have allowed for more loans to small business owners,” he said.
A $15 billion administration plan to buy small business loans for resale on the secondary lending market has not taken effect, in part because market activity picked up after the plan was announced in March, the administration says.
The Obama administration wants small businesses to come out ahead in the reform effort, said Melody Barnes, a domestic policy advisor at the White House.
“We absolutely want to make sure that small business owners and small business can continue to thrive,” she said in an interview with Reuters Television.
But applying for a small business loan can be more trouble than it’s worth, said Joe Olivo, owner of Perfect Printing in Moorestown, New Jersey, who said his bank advised against it.
“The paperwork was so onerous that my bank told me it was not worth my effort to try and get that money,” Olivo said.
Charter Communications is heading into a pivotal week in its effort to escape bankruptcy without some of the debt shackles that have crippled it for years.
Monday marks the start of its confirmation hearings in the U.S. Bankruptcy Court for the Southern District of New York, where a judge will decide whether the company’s reorganization plan is workable. Success is not expected to come without a fight.
The Town and Country-based company’s plan has drawn objections from several groups, including lenders, stockholders, the Justice Department and the Securities and Exchange Commission. And if the company hopes to meet its goal of leaving bankruptcy by summer’s end, there’s not much room for delays.
"Monday is absolutely critical for that," said Shelly Lombard, an analyst with corporate bond research firm Gimme Credit.
Charter’s reorganization plan — through a deal reached earlier this year with a large group of bondholders — seeks to trim $8 billion of its $21.7 billion in debt. Some bondholders will be given new debt and stock in the company when it leaves bankruptcy, while all current shares will be eliminated.
Charter, which filed for bankruptcy protection on March 27, would not discuss the specifics of the case, but spokeswoman Anita Lamont issued a statement: "We are pleased with the progress we are making with our financial restructuring and believe our plan should be confirmed. We have been working constructively with our bondholders and look forward to emerging from this process as soon as practicable."
Charter is the nation’s fourth-largest cable provider. It has 2,450 employees in the St. Louis area.
The company amended its reorganization plan on Thursday, increasing by $66 million the amount of preferred stock that will be issued to some note holders, and changing the mandatory redemption date to five years from seven. The amendment, however, did not address some of the objections that have been filed in court.
Among them are complaints filed by the U payday loans guaranteed no fax.S. Trustee, an arm of the Justice Department, and the SEC targeting provisions that release Paul Allen, the company’s chairman, and other officers from shareholder lawsuits.
The biggest issue, however, revolves around nearly $12 billion in debt that may or may not be affected by bankruptcy.
Charter wants the judge to reinstate that chunk of debt — a move that would keep the current terms in place. The company is arguing that it has done nothing to violate those loan agreements and has continued to make its required payments. That’s also why the reorganization calls for Microsoft co-founder Allen to retain control of the company, despite seeing his personal stake fall to 3 percent from 51 percent. Allen would be granted 35 percent voting control to avoid violating change-of-control covenants on those loans.
But several banks, including Wells Fargo and a consortium represented by JPMorgan Chase & Co., have argued that Charter has already violated its loan terms. If the judge rules in the banks’ favor, Charter could be forced to renegotiate its loans. Charter has said that could cost the company more than $500 million a year in new interest payments, erasing much of the $800 million expected to be saved annually through the restructuring. "If they can’t reinstate that bank debt, the whole plan unravels," Lombard said.
It’s unclear how long the hearing will last, though some reports suggest it could take up most of the week. And it would not be unusual for the process to drag on longer if critics are able to convince the judge the plan doesn’t do enough for creditors. Gaining support from creditors will be key for Charter, said Jacen Dinoff, chief executive officer of KCP Advisory Group, a corporate restructuring firm in Boston.
"You need someone on your side," Dinoff said. "The more supporters the better."
General Electric Co said profit fell by almost half, on a deeper drop in revenue than Wall Street expected, as the slump that has gripped its finance and media businesses took hold of its heavy industrial units.
The largest U.S. conglomerate, whose shares fell 3.2 percent in premarket trading, reported earnings that topped Wall Street’s expectations, but posted a 17-percent drop in revenue that was far deeper than the 10-percent decline analysts expected.
Earnings tumbled at all its businesses except for the energy infrastructure unit, which makes equipment including electricity-producing turbines and gear used in oil and gas production.
GE’s second quarter net income came to $2.67 billion, or 24 cents per share, compared with profit of $5.07 billion, or 51 cents per share, a year earlier.
Profit from continuing operations came to 26 cents per share. On that basis, analysts on average had looked for 24 cents.
Revenue fell 17 percent to $39.08 billion. Factoring out fluctuating exchange rates, revenue would have fallen 12 percent.
“Hitting the bottom line number was pretty good news, but that top line revenue, that’s a big miss,” said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which owns GE shares. “For them to come in at the $39 (billion revenue) range, that was definitely disconcerting.”
GE’s size and the scope of its operations — which range from commercial lending to building railroad locomotives to running the NBC television network — make it a bellwether of the world economy, which is facing a brutal recession quick payday loan.
“The numbers are far from inspiring, but in this environment that could be seen as a positive,” said Owen Ireland, analyst at ODL Securities in London.
The world’s largest maker of jet engines has been dragged down by deteriorating profit at its GE Capital arm, which has been hurt by heavy investments in commercial real estate and a weaker credit environment.
The company generated $7.1 billion in cash from operations and that its backlog of orders held steady at $169 billion.
Shares declined 40 cents to $12.00 in premarket trading.
GE shares have fallen about 24 percent so far this year, a much sharper decline than the 1 percent slide of the Dow Jones industrial average.
The Fairfield, Connecticut-based company competes with a lineup of some of the world’s largest companies, including German conglomerate Siemens AG, Swiss engineering group ABB Ltd and French industrial group Alstom SA.
(Additional reporting by Nick Zieminski and Ellis Mynandu in New York, Simon Falush, Harpreet Bhal, Atul Prakash and Joanne Frearson in London; Editing by Derek Caney)
CIT Group Inc, a lender to hundreds of thousands of small and mid-sized U.S. businesses, said bailout talks with the government had ended, a development that could ultimately drive the company into bankruptcy.
Wednesday’s announcement followed last-ditch talks in which Treasury officials had expressed concern about a worsening liquidity crunch at the 101-year old lender and indications that government aid would not put it on a path to recovery.
It also showed the possible limits of Washington’s ability and willingness to rescue companies, after multiple bailouts engineered by Treasury, the Federal Reserve and the Federal Deposit Insurance Corp for larger companies such as American International Group Inc and Citigroup Inc.
“At least in the eyes of the Fed and the eyes of the Treasury, we’ve turned the corner, such that the systemic kinds of risks facing the economy may be well past,” said Mike Knebel, a portfolio manager at Ferguson Wellman Capital Management in Portland, Oregon, which recently sold CIT bonds.
In a brief statement, New York-based CIT said “discussions with government agencies had ceased” and that “there is no appreciable likelihood of additional government support being provided over the near term,” CIT said its management, directors and advisers were evaluating alternatives.
CNBC, citing a source close to the company, said CIT is now pursuing a plan that is likely to include a Chapter 11 filing on Friday.
On Wednesday night, CIT’s representatives were trying to line up at least $2 billion in rescue financing from existing debtholders, the Wall Street Journal reported, citing people familiar with the matter health insurance quote.
CIT could not be immediately reached for comment on the reports.
A Treasury official said the talks ended after it became clear that CIT’s liquidity had deteriorated too much, and the company had failed to show that it could raise private capital to stay solvent. A CIT bankruptcy, nonetheless, is not a foregone conclusion, the official told Reuters.
The Treasury Department also said there were limits to its ability to help troubled companies.
“Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies,” it said in a statement.
CIT’s travails were also a vexing problem for the Obama administration, which had to assess the risk of failing to bail out a large company whose collapse would, by itself, likely not pose a “systemic” risk to the financial system.
TARP MONEY NOT ENOUGH
If CIT were to go bankrupt, it would join Lehman Brothers Holdings Inc and Washington Mutual Inc among large financial companies to collapse since the credit crisis accelerated last September.
Standard & Poor’s said on Monday that a CIT bankruptcy was possible if no federal aid emerged.
Higher costs for oil and gasoline likely pushed U.S. consumer prices up in June by the most for any single month since oil prices peaked last summer, according to a poll of economists.
The Consumer Price Index, the most broadly used gauge of U.S. inflation, will likely help further dissipate fears over the potential for deflation, a broad-based pattern of declining prices, and could spur inflation jitters.
The CPI for June is expected to surge 0.6 percent after a 0.1 percent rise in May, based on the median forecast of 71 economists surveyed by Reuters. If the forecasts are on target, it would be the biggest jump in the CPI since July 2008.
Stripping out erratic food and energy costs, economists expect the core CPI, considered a more reliable indicator of underlying price trends, to post a tame 0.1 percent gain following a 0.1 percent increase in May.
“The Fearsome Five drivers of disinflation in late 2008 (apparel, hotel rates, airfares, and new and used motor vehicle prices) are no longer exerting downward pressure on the core,” RBS wrote in a research note.
“Barring another shock to the economy, it is difficult to imagine that cyclical downward pressures on inflation are going to intensify from here,” RBS wrote fast cash online.
The average cost of gasoline for June was $2.63 a gallon compared with $2.27 in May, according to the Energy Information Administration.
U.S. crude prices averaged $69.64 per barrel in June compared with $59.03 in May. Oil prices hit a record $147 per barrel last summer.
The Bureau of Labor Statistics will release the CPI at 8:30 a.m. (1230 GMT) on Wednesday.
The following is a selection of comments from economists:
WELLS FARGO
Forecast: CPI: +0.6 percent
Core CPI: +0.2 percent
“The third consecutive increase in headline CPI is sure to fuel the inflation debate, but the gain in consumer prices will likely be driven by the spike in prices at the pump. Looking back further in the production pipeline, wholesale prices excluding food and energy were likely flat in June giving even less reason to be concerned about inflation in the near term.”
BARCLAYS CAPITAL
Forecast: CPI: +0.7 percent
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