first quarter

RIM Profit Falls Below Estimates

June 17, 2011 by NewsMaker Leave a Comment

Adding to its problems, the company also reduced its outlook for the second time this year, sending its stock sharply lower in after-hours trading.

The company that effectively invented the smartphone market has been battered in its home turf by the Apple iPhone and handsets using Google’s Android operating system.

In addition, its answer to Apple’s enormously popular iPad tablet, the BlackBerry PlayBook, was introduced this spring with software flaws and without several features. And RIM has still not set a release date for BlackBerrys using a new operating system.

Though the company’s co-chief executive, James L. Balsillie, continued to promote the company’s longer-term outlook on Thursday, RIM cut its fiscal year estimates on Thursday. It predicted that it would earn $5.25 to $6 a share, down from its previous forecast of $7.50 a share during the current fiscal year. It also reduced its revenue forecast to $4.2 billion, from $4.8 billion.

RIM also said its profit during the first quarter, which ended May 28, fell 9.6 percent to $695 million, or $1.33 a share, on revenue of $4.9 billion. During the same period last year, it reported a profit of $769 million, or $1.38 a share, on revenue of $4.24 billion.

The disappointing news failed to meet analysts’ estimates and sent RIM’s shares tumbling 14 percent in after-hours trading on Thursday. Its shares closed at $35.33, up 0.45 percent, before the earnings were released.

RIM shipped 13.2 million BlackBerrys during the period, an amount below its own forecast.

It also said earnings per share for the second quarter ending Aug. 27 were expected to be 75 cents to $1.05, lower than analysts’ estimates of $1.40 polled by Bloomberg.

About the only figure that exceeded expectations was the PlayBook. RIM said that it shipped about 500,000 of the tablet computers to retailers and wholesalers during the quarter, compared with an average analysts’ forecast of 366,000.

Nevertheless, the number pales when compared with the 3.27 million iPads Apple sold during the first quarter of that product’s availability. RIM declined to specify how many PlayBooks were actually purchased by retail customers.

RIM, which at one point had been going through such a rapid expansion that it was having difficulty finding space for employees, said that it planned to cut jobs as part of a reorganization but it offered no specifics.

Mr. Balsillie predicted during a conference call with analysts that the company’s fortunes were about to take a turn for the better.

“We have a strong business,” Mr. Balsillie said. “We have made major platform upgrade. We are almost through this transition.”

Some analysts were not as optimistic that the new phones would arrive quickly enough to help.

“People are not waiting. They’re going to other platforms,” Peter Misek, an analyst at Jefferies Company, told Reuters. “I would expect there’s going to be significant layoffs. This is not good.”

Some investors have been calling for Mr. Balsillie and Mike Lazaridis, the co-chief executive, to step down to allow new management to take over.

Both men rejected that idea. Mr. Lazaridis said that under the current circumstances “strong, consistent leadership is essential.”

Earlier this year, Mr. Balsillie and Mr. Lazaridis had promoted the PlayBook as the beginning of RIM’s conversion. The tablet computer uses a new operating system and a touch-screen interface that will eventually migrate onto BlackBerry phones.

While reviewers found several merits in the device — unlike the iPad, the PlayBook can play Adobe Flash video — many said the first version contained numerous small software flaws, suggesting that it was rushed to market.

Mr. Balsillie acknowledged on Thursday that “the PlayBook launch did not go as smoothly as we planned.”

To support its stock price, RIM also announced on Thursday that it planned to buy back up to 5 percent of its shares.

Though RIM continues to lose market share in North America, it is experiencing robust overseas growth. The company said that overseas revenue rose 67 percent in the first quarter over the same period a year earlier. Much of its foreign business is based on lower-cost BlackBerry handsets, which produce lower margins for RIM.

Article source: http://feeds.nytimes.com/click.phdo?i=6b423fdfdea3c7f2328a292f33d749c3

Big Banks Penalized for Performance In Mortgage Modification Program

June 10, 2011 by NewsMaker Leave a Comment

As part of a new assessment of mortgage servicers, Treasury officials said they would withhold incentive payments for the three banks — Bank of America, JPMorgan Chase and Wells Fargo — until the problems are resolved. At that point, those payments would be made, a Treasury spokeswoman said.

In May, the three banks received $24 million in incentives as part of the modification program.

The Treasury Department has previously withheld payments from mortgage servicers, but Thursday’s action focused on some of the biggest players in the program. Called the Home Affordable Modification Program, or HAMP, it is voluntary for mortgage servicers. Nearly all of the nation’s largest banks have signed contracts to participate.

The Obama administration has long been criticized as being too easy on the mortgage servicers, and Thursday’s announcement did little to quiet that criticism.

Neil M. Barofsky, who resigned in March as special inspector general for the bank bailout, described the assessments and penalties as a “lost opportunity” to hold lenders more accountable.

“It further reaffirms Treasury’s long-running toothless response to the servicers’ disregard of their contract with Treasury, and by extension, the American taxpayer,” Mr. Barofsky said in an e-mail.

Timothy G. Massad, assistant Treasury secretary, defended the approach. He said the assessments of banks and other mortgage servicers “will serve to keep the pressure on servicers to more effectively assist struggling families.”

“We need servicers to step up their performance to meet the needs of those still struggling,” he said in a statement.

The mortgage servicers were evaluated on a scale of one to three stars during the first quarter on whether they had identified and searched for eligible homeowners; assessed homeowners’ eligibility correctly; and maintained effective program management, governance and reporting. Bank of America received the lowest grade, one star, on four of seven areas that were evaluated; Wells received one star in three areas; and Chase, in one.

A fourth mortgage servicer, Ocwen Loan Service, was also assessed as needing substantial improvement, but Treasury said it would not withhold payments to Ocwen because it was negatively affected by a large acquisition of mortgages to service.

Six other mortgage servicers were graded as needing moderate improvement. There were no servicers deemed as needing only minor improvement.

Wells Fargo issued a statement saying it was “formally disputing” the Treasury’s findings.

“It paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury,” said spokeswoman Vickee J. Adams, who said the criticisms were dated and did not reflect recent improvements.

Chase said it too had made significant improvements. “The bank respectfully disagrees with the assessment,” the company said in a statement.

Dan B. Frahm, a spokesman for Bank of America, said that the bank was “committed to continually improving our processes to assist distressed homeowners” through the federal modification program and its own internal program. But he added, “We acknowledge improvements must be made in key areas, particularly those affecting the customer experience.”

The modification program was created using $50 billion that was set aside from the bank bailout to help distressed homeowners. The idea was that the Treasury Department would provide incentives to mortgage servicers and investors to modify mortgages for struggling homeowners, rather than foreclose on them.

The administration predicted that three million to four million Americans would benefit, but so far, only 699,053 permanent modifications have been started.

To date, Treasury has spent about $1.34 billion on HAMP. One problem was that the mortgage servicers, at least initially, were not prepared to handle the onslaught of modifications, and homeowners complained that paperwork had been routinely lost and trial modifications had dragged on for months.

Article source: http://feeds.nytimes.com/click.phdo?i=c65c3a578a64bfc29284cfa8d9b41069

Filed Under: Business News Tagged With: bank bailout, first quarter, mortgage servicers

Profit Rises At Penney’s, But Slides At Lowe’s

May 17, 2011 by NewsMaker Leave a Comment

Lowe’s, the home improvement chain, said its profit fell 6 percent, held down by economic conditions, while the department store chain J. C. Penney said its profit rose 6 percent, helped by cost cuts and a strong reception to its exclusive merchandise.

Lowe’s said its results were also hurt by bad weather, and it cut its full-year forecast. The company’s results also fell short of Wall Street forecasts.

Lowe’s reported net income of $461 million, or 34 cents a share, down from $489 million, or 34 cents a share, a year earlier. Revenue in the period, which ended April 29 and was the first quarter of Lowe’s fiscal year, dipped 2 percent to $12.19 billion, with revenue at stores open at least a year down 3.3 percent. Analysts surveyed by FactSet had expected earnings of 36 cents a share on revenue of $12.54 billion.

Lowe’s cautioned in February that consumers were still holding back and its earnings were at the low end of its forecast of 34 to 38 cents a share for the quarter.

The chief executive, Robert A. Niblock, said in a statement that the company was also dealing with difficult comparison to a year ago, when federal rebates raised demand for appliances.

For the full year, Lowe’s expects earnings of $1.56 to $1.64 a share and an approximately 4 percent revenue increase. The chain previously forecast earnings of $1.60 to $1.72 a share on a 5 percent revenue rise.

Analysts predict full-year earnings of $1.70 a share on revenue of $50.9 billion.

Stock in Lowe’s, which is based in Mooresville, N.C., fell 2.8 percent in early trading Monday.

J. C. Penney said it earned $64 million, or 28 cents a share, up from $60 million, or 25 cents a share, a year earlier. Revenue in the period, which ended April 30 and was the first quarter of Penney’s fiscal year, edged up to $3.94 billion from $3.93 billion. Penney’s revenue at stores open at least a year rose 3.8 percent.

Analysts predicted earnings of 26 cents on revenue of $3.94 billion, according to FactSet.

“We are successfully implementing our merchandising initiatives, with strong gains in both our men’s and women’s apparel businesses,” the chief executive, Myron E. Ullman III, said in a statement. “Additionally, the steps we have taken to manage our expenses position us to increase the flow-through of sales to the bottom line.”

Under pressure from shareholders, Penney has cut costs, including closing some stores, outlets and call centers. It is also finishing up closing its catalog business after announcing in November 2009 that it would stop publishing its twice-a-year “big book.”

Mr. Ullman promised more cost-saving initiatives, including trimming marketing expenses and streamlining sourcing operations. The company expects to save about $25 million to $30 million by 2013, with about half of that in 2012.

He expects the company to achieve an earnings target of $5 a share for 2014.

Shares in Penney, which is based in Plano, Tex., fell 3.2 percent, to $37.21.

Article source: http://feeds.nytimes.com/click.phdo?i=ae64881b74396ff9c23f234acea56ea4

Filed Under: Business News Tagged With: first quarter, fiscal year, home improvement chain

Amazon Earnings Hurt by Spending as Revenue Increases 38%

April 27, 2011 by NewsMaker Leave a Comment

The building binge of warehouses and data centers sacrificed Amazon’s short-term profits to lift business over the long term, the company said on Tuesday when it released its first-quarter earnings statement.

It also said that it had no intention of slowing the spending.

The effect of the expansion, along with an uncertain economy, could be seen in Amazon’s second-quarter financial forecast. The company gave a profit outlook that was far from specific but below analysts’ expectations.

It said its second-quarter profit, excluding certain costs, would fall as much as 65 percent or as little as 9 percent.

Meanwhile, Amazon said revenue would rise 35 percent to 47 percent, or $8.85 billion to $9.65 billion.

Thomas J. Szkutak, Amazon’s chief financial officer, explained the wide range by saying during a conference call that “there is uncertainty, so we are making sure to give an appropriate conservative range.”

In after-hours trading, Amazon’s shares fell about 1 percent. They had dropped 1.7 percent, to $182.30, in regular trading before the earnings announcement.

Amazon reported that first-quarter net income fell 33 percent, to $201 million, or 44 cents a share, from $299 million, or 66 cents in the period a year ago.

Revenue climbed 38 percent, to $9.86 billion, from $7.13 billion.

Net income was below the expectations of Wall Street analysts. They had expected 61 cents a share and revenue of $9.52 billion, according to a survey of analysts by Thomson Reuters.

Amazon is undergoing a major expansion this year that calls for adding at least nine warehouses after adding 13 warehouses last year. If growth in customer orders continues, however, it will add even more fulfillment centers, Mr. Szkutak said.

Jeff Bezos, Amazon’s chief executive, was not on the call.

The company, based in Seattle, said that sales of books and music during the quarter rose 15 percent, to $3.96 billion.

Sales of electronics and other merchandise grew 59 percent, to $5.59 billion.

As usual, Amazon boasted about its Kindle digital book reader but did not provide any specific sales numbers.

Data centers are crucial to its digital music storage service, introduced late last month. Consumers can use the service to back up files from their computers and then gain access to them from a computer, laptop or smartphone.

Adding data center capacity is especially important for Amazon’s Web hosting service, which stores data for a large number of businesses.

Last week, after the first quarter ended, the hosting service suffered an embarrassing failure.

The glitch, which the company said was fixed on Monday, took down a number of Web sites, including Foursquare, Reddit and Quora.

Amazon is still looking into the cause, Mr. Szkutak said.

Youssef H. Squali, an analyst with Jefferies Company, said of Amazon’s spending on infrastructure, “this is the right strategy longer term but it makes for a stressful stock to own.” Given the potential for growth overseas, he said that Amazon’s expansion could go on for several years.

And, Sandeep Aggarwal, an analyst with Caris Company, said that Amazon’s profit shortfall relative to expectations and its disappointing guidance were not particularly worrisome. The company is growing quickly, he pointed out, and it therefore needs to invest in its business by building.

“We see that as a good problem to have,” Mr. Aggarwal said.

Japan’s earthquake and subsequent disasters bit into Amazon’s business in the first quarter, reducing operating income by $20 million.

Japan accounts for up to 15 percent of the company’s business, according to analyst estimates.

Sales in Japan are picking up, Mr. Szkutak said, but they continue to be weak as the country tries to rebuild.

Meanwhile, analysts expect high gasoline prices in the United States and in other countries to increase Amazon’s shipping costs.

Article source: http://feeds.nytimes.com/click.phdo?i=adf7427237d646b981882098ee8d3efe

Filed Under: Business News Tagged With: customer orders, first quarter, profit outlook

Fast Growth and Inflation Threaten to Overheat Chinese Economy

April 15, 2011 by NewsMaker Leave a Comment

“Prices have gone up a lot,” Mr. Wang said at a vegetable market Friday. “It’s a very bad thing to have prices go up and down. Unstable prices make people nervous and make society unstable. In this sense, our generation even has some nostalgia for Mao’s era.”

This is the predicament China finds itself in today: Fast growth has fired up the country’s economic engines, but it has also led to stubbornly high inflation, which threatens to overheat the economy and undermine the long-running boom that the country has experienced.

The latest evidence of this came Friday when China said its economy had grown 9.7 percent in the first quarter of this year, certainly the strongest performance among the world’s biggest economies. But the government also said that in March the consumer price index had risen 5.4 percent from the level of a year earlier, the sharpest increase in 32 months.

Analysts were not surprised by the figures, but some experts say they believe they may understate the real rate of growth and inflationary pressure. Bank lending, for instance, picked up strongly last month, and food, energy and raw material prices have risen sharply this year. In March alone, the government said, food prices rose 11.7 percent.

To prevent overheating, Beijing is trying to moderate growth and rein in inflation. During the past six months, the government has tightened restrictions on bank lending, raised interest rates, increased agricultural subsidies and even prevented Chinese companies from raising consumer prices.

Analysts, however, say the results have been mixed. Growth has begun to moderate from the torrid pace of 10 percent annual growth last year, but inflationary pressure has not abated; in fact, it has strengthened. Some analysts say inflation may not peak until June.

Although the government has promised to tame the property market, housing prices continue to climb, and much of this country’s growth continues to be fueled by real estate projects and government investment in infrastructure.

In the first quarter of this year, fixed asset investment, a broad measure of building activity, jumped 25 percent from the level of a year ago and real estate investment soared 37 percent, the government said Friday.

Gasoline prices have also jumped sharply, in line with global oil prices. Gasoline prices in China have risen from about $3.82 a gallon, or $1 a liter, in 2009 to about $4.50 a gallon today. Fast food chains have raised prices, and during just the past year the price of fruit has jumped more than 31 percent.

Export prices are also rising because of higher commodity, raw material and labor costs. And since China is the world’s biggest exporter, what happens in its coastal factories could eventually have a major effect on prices in other parts of the world.

Indeed, in the country’s biggest export zones, factory bosses regularly complain about worker shortages and higher labor costs.

The government has encouraged higher wages in the hopes of reducing the big income gap between the rich and the poor, and the urban and rural. But that is driving up the costs of production.

Many analysts say the government is going to have to do more to tame inflation.

“Despite the most aggressive period of tightening in years, the government cannot seem to slow the economy down,” Alistair Thornton, an analyst at IHS Global Insight, wrote in a research report Friday. “With inflation expectations still running high and prices at disconcerting levels, the government will need to press on with its tightening schedule.”

China’s current boom got under way in early 2009, during the global financial crisis, when Beijing moved aggressively to increase growth with a $4 trillion government stimulus package and record lending by state-run banks.

A loose monetary policy and big investments in local government projects revived powerful economic growth that analysts say quickly sent land, housing and food prices soaring.

As early as 2009, however, there were already concerns about the health of Chinese growth, largely because of worries about high property prices, heavy bank lending and overly aggressive investing by local governments, many of which had been amassing huge debts.

Article source: http://www.nytimes.com/2011/04/16/business/global/16yuan.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: consumer price index, first quarter, torrid pace

Revenue Rises at Google but Profit Misses Forecasts

April 14, 2011 by NewsMaker Leave a Comment

SAN FRANCISCO— Google got off to a mixed start under its new chief executive, co-founder Larry Page, as first-quarter revenue increased 27 percent while profit fell short of analyst expectations.

Google reported that net income in the quarter rose 17 percent to $2.3 billion, or $7.04 cents a share, from $1.96 billion, or $6.06 a share in the year-ago quarter.

The company said revenue climbed to $8.58 billion from $6.77 billion.

Google’s adjusted income of $8.08 was just below the expectations of Wall Street analysts. They had forecast $8.11 cents a share on that basis, according to a survey of analysts by Thomson Reuters.

Google’s shares barely rose in regular trading to $578.12, and dropped 4.8 percent to $548.79 in after-hours trading.

Revenue excluding payments to partner Web sites, a measure commonly used by analysts following the company, was $6.54 billion, Google said. Analysts had expected $6.32 billion in revenue on that basis.

“We had a great quarter with 27 percent year-over-year revenue growth,” said Patrick Pichette, Google’s chief financial officer, said in a press release. “These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile. It’s clear that our past investments have been crucial to our success today — which is why we continue to invest for the long term.”

Indeed, the company, based in Mountain View, Calif., said that paid clicks, the number of time users clicked on ads on Google and those of its partner sites, increased 18 percent in the first quarter from the same period a year earlier. The price advertisers paid for Google’s ads grew 8 percent.

Revenue from international operations was $4.57 billion, or 53 percent of all the company’s revenue during the quarter.

Mr. Page took over as chief executive last week and immediately started putting his stamp on the company, which he co-founded in 1998 with Sergey Brin. During his brief tenure, he has already reorganized Google’s management and revamped its employee bonus program. Mr. Page had served as chief executive until 2001, when the company hired Eric E. Schmidt as its leader.

Mr. Page’s goal is to increase innovation and speed decision making. Facebook, with its rapid rise in social networking, is posing a serious challenge to Google, which has so far failed to make much progress in social networking despite multiple efforts.

Google’s first-quarter earnings are the first reported with Mr. Page at the helm. However, they reflect the company’s performance for the first three months of the year, when Mr. Schmidt, was still in charge. Mr. Schmidt now serves as the company’s chairman.

Since Google announced in January that Mr. Page would be chief executive, the company’s shares have fallen 8 percent, signaling nervousness among investors about his leadership.

Article source: http://feeds.nytimes.com/click.phdo?i=67ca75c2013f6531cd442269c2223200

Filed Under: Business News Tagged With: first quarter, thomson, wall street analysts

You’re the Boss: How I Finally Turned a Profit

April 11, 2011 by NewsMaker Leave a Comment

Careful readers of my post on whether to buy a building might have noticed that my business reported a profit in 2010. Yup, it was right there on my 1120S: the company reported earnings of $92,155 on sales of $1,516,837. Which is a little bit of an accomplishment, considering all the years of losses and the terrible first quarter we experienced last year. I’ve been asked to provide some more information about this, specifically, what I did to turn things around.

Before I get into that, I want to reassure all of you that I understand that my years of cumulative losses far exceed this one small profit. I still have a large list of challenges that I’ll be addressing sooner and later, and I know that I’m still woefully ignorant in many ways, despite the best efforts of helpful commenters to beat some sense into me. So fear not, those of you who enjoy following my struggles. There are plenty more to come.

Back to the profit. I can think of six main reasons we ended up with more money at the end of the year than we had at the beginning:

1. I cut payroll costs brutally in the fall of 2008 and continued to shed workers as demand plummeted the following year.

This was very difficult. The meeting where I told half my workers they would be laid off, with no severance pay, was horrible. Cutting everyone else’s wages by 20 percent was just as bad. I had to do two more layoffs in 2009 to keep our production in balance with falling sales. The money we saved kept us from closing the doors.

2. I rolled the dice with my kids college fund and invested in marketing.

By early 2009, it was apparent that demand for our product had not entirely disappeared, but that our existing marketing wasn’t efficient enough to keep us going. I grabbed the only cash I could lay my hands on and went for it. Our revamped Web site does a much better job of connecting with prospective clients. We sold just enough to stay alive in 2009, and by spring of 2010 I couldn’t keep up with the incoming calls. Another critical investment was taking one of my best cabinetmakers off the floor and moving him into the office to learn sales. This was expensive in the short term. I lost his production capacity, which was significant, and it took him a while to get the hang of customer interactions. But now he’s a steady producer, and between the two of us, we can keep up with incoming calls.

3. I learned to monitor my cash situation so that I could take appropriate action when I was running out of money.

On the last Saturday in October, 2008, I sat down to figure out exactly when I was going to run out of money. After messing around in QuickBooks for a while, I gave up and wrote an Excel spreadsheet that takes into account future income and expenses in a way that allows me to test different payment scenarios. No accounting package that I know of allows for easy switching of the date associated with payments. My spreadsheet is a little too usear-unfriendly to post here, but it has turned into an extremely useful tool for managing my cash flow.

4. The economy turned around in 2010. I repeat, the economy turned around in 2010. Once more: the economy turned around in 2010.

Items 1-3 were important but nothing beats a steadily increasing stream of paying customers to inject some adrenaline into a sagging business.

5. I got rid of debt and cut costs wherever I could.

By mid 2009, I had finished paying off the vendors we owed money from 2008. This decreased cash demands by more than $10,000 a month. Several equipment leases ended in 2010, freeing up another $3,500 a month. I renewed my lease in 2010 at a 15 percent discount, saving another $2,500 a month. I switched insurance carriers and saved a few more thousand. We turned the heat and air conditioning off in the office and kept the shop floor temperatures further from the comfort zone than we ever had, which saved a few thousand more. And The Partner took a big haircut on money the company owed him when he left, saving another $3,800 a month. The decreased debt payments account for most of the year’s profit and made our cash flow positive for the last three quarters of the year.

6. As demand increased, I invested in efficiency instead of just hiring employees.

By that I mean, I bought better tools first, improved operations second and hired only when absolutely necessary. There are great deals on used machinery out there. And even the most hidebound craftsmen are willing to rethink their ways when the alternative is unemployment. When I did add staff, I was able to get great people at a discount from pre-2008 wages. Our productivity has increased significantly, and our new cost structure allows for a decent profit margin at the level of sales we are seeing this year.

Of course, I know that the smart things I did the last few years should have been done long ago. If I had been running the company in 2005 the way I am now, we would have had a big cash cushion on hand when the downturn started. I’ve learned hard lessons. But there’s no doubt that I have a new set of problems ahead as I try to manage a resurgence.

Would anyone like to predict what my next mistake will be?

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside of Philadelphia.

Article source: http://feeds.nytimes.com/click.phdo?i=13412c0fcdca5f9e1d8874e7f04cab7f

Filed Under: Small Business Tagged With: accomplishment, first quarter, layoffs

Mutual Funds Report: First Quarter

April 10, 2011 by NewsMaker Leave a Comment

Real Estate Funds Defy Housing’s Gravity

By JACK DUFFY 11:59 AM ET

Although home sales continue to slump, real estate funds, which invest in commercial property and multifamily housing, have been on a roll.

Article source: http://feeds.nytimes.com/click.phdo?i=f4086d2ec002a973167852b41bb8248f

Filed Under: Business News Tagged With: first quarter, jack duffy, real estate funds