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AOL to Cut Up to 500 Jobs at Local News Service

August 16, 2013 by

The cuts were an effort to reach profitability in a division that has failed to gain traction with consumers and has suffered huge losses financially. Patch’s troubles have been a source of frustration for AOL’s chief executive, Tim Armstrong, who helped found the service in 2007 when he was an executive at Google. Shortly after arriving at AOL in 2009, Mr. Armstrong had the company acquire Patch.

Patch’s idea is to provide an online network of local news sites, filling the gap in coverage left by newspapers that have either closed or greatly scaled back their investment in reporting in response to declines in advertising revenue.

The company said it had analyzed the performance of the approximately 900 Patch sites and identified about 60 percent as high-performing ones that should remain intact. AOL said it would look for partners to operate 20 percent of the sites that are considered viable, and it would close or consolidate the rest. At its current staffing, Patch has more than 1,000 employees.

“Patch’s strategy will be to focus resources against core sites and partner in sites that need additional resources,” AOL said in a statement. “Additionally, there are sites that we will be consolidating or closing.”

The statement added: “Patch has become an important brand across many towns in America. The Patch team across the country has served and will continue to serve communities with journalism and technology platforms. Unfortunately, with these changes we are announcing today, we will be reducing a substantial number of Patch positions.”

Some investors, skeptical that Patch can succeed, have urged AOL to dump the service altogether. The company has told analysts that it expects Patch to be profitable by the fourth quarter of this year.

Mr. Armstrong has said he is confident in Patch’s potential. The company says that the service has 3.5 million newsletter subscribers and 4.7 million registered users, increases of 138 percent and 181 percent in a year-over-year comparison. It says that between April and June, Patch had a 10 percent increase in traffic compared with the same period in 2012.

Patch’s troubles were the backdrop for an embarrassing episode for Mr. Armstrong last week. During a conference call with Patch employees, he became angry with an executive who was videotaping the proceedings and fired him on the spot, as employees listened. He apologized on Tuesday for the manner of the firing.

Article source: http://www.nytimes.com/2013/08/17/business/media/aol-to-cut-up-to-500-jobs-at-local-news-service.html?partner=rss&emc=rss

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Euro Zone Economy Shrinks; Recession Returns in France

May 15, 2013 by Leave a Comment

The latest figures, released Wednesday, marked the longest recession for the euro countries since the currency was introduced in 1999.

The 17-nation euro zone contracted by 0.2 percent in the first quarter from the last three months of 2012, Eurostat, the statistical agency of the European Union, reported from Luxembourg, less than the 0.6 percent decline recorded in the fourth quarter, but more than economists’ expectations of a 0.1 percent fall.

The economy of the overall European Union, made up of 27 nations, shrank by 0.1 percent.

Germany, with the largest economy in Europe, was almost stagnant in the first quarter, managing growth of just 0.1 percent from the prior three months, when it shrank by 0.7 percent, the Federal Statistics Office reported in Wiesbaden.

France, the second-largest economy in Europe, contracted for a second consecutive quarter, meeting the common definition of a recession. The economy shrank by 0.2 percent, the same decline as in the fourth quarter of 2012.

Britain, the third-largest E.U. economy, but not a member of the euro, last month posted 0.3 percent first-quarter growth.

Among the “peripheral” euro nations, Spain’s economy shrank by 0.5 percent, the same as Italy’s. Portugal shrank by 0.3 percent, and Cyprus’s economy, the victim of a financial sector meltdown and bailout, shrank 1.3 percent. Data on Greece were not immediately available.

More than five years after the meltdown of the U.S. housing market set off the global financial crisis, the 27-nation European Union remains in turmoil, buffeted by a lack of confidence in member states’ public finances and demands for budgetary rigor to address those concerns. Unemployment in the euro zone reached a record 12.1 percent in March, and economists do not expect the labor market to turn around before next year, at the earliest.

Despite its troubles, the E.U. market remains the world’s largest, and its weakness is doubly worrying at a time when the rest of the world is not growing strongly enough to take up the slack. Moody’s Investors Service warned Wednesday that the weakness in the euro zone, combined with the mandatory “sequestration” budget cuts in the United States, would weigh on the world economy, with growth in the Group of 20 nations this year of just 1.2 percent, picking up to 1.9 percent in 2014.

In annualized terms, the euro zone economy contracted by about 0.8 percent in the first quarter, lagging far behind the 2.5 percent growth in the United States.

Japan, which reports its first-quarter G.D.P. figure on Thursday, is expected to post an annualized figure of about 2.8 percent. China in April reported 7.7 percent first-quarter growth.

That Germany grew at all was a result of increased household consumption, Germany’s statistics agency said, as exports and investment declined. Jörg Krämer, chief economist at Commerzbank in Frankfurt, estimated in a research note that the unusually cold weather had subtracted as much as 0.2 percentage point from German growth.

Even though Germany eked out a positive figure, it was “really in contractionary territory” in the quarter, Philippe d’Arvisenet, global head of economic research at BNP Paribas, said. He said more recent data showed clear evidence of a German rebound in the second quarter.

Mr. d’Arvisenet estimated that the euro zone economy would shrink this year by about 0.5 percent, following a 0.6 percent contraction in 2012. Growth is likely to return in 2014, he said, “but probably below 1.0 percent.”

Article source: http://www.nytimes.com/2013/05/16/business/global/germany-france-economic-data.html?partner=rss&emc=rss

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U.S. Economy Speeds Up, but Less Than Forecast

April 26, 2013 by Leave a Comment

The American economy sped up in the first quarter of this year, with output expanding at an annual pace of 2.5 percent, according to a Commerce Department report released Friday. The number was lower than the 3 percent forecasters had been expecting.

While faster growth of any kind is welcome, much of the acceleration in gross domestic product was probably a result of unusually slow growth at the end of 2012, when the economy grew at an annual pace of just 0.4 percent. Growth in the fourth quarter had been dragged down by reduced restocking of businesses’ inventories, for example, and in the first quarter businesses made up for this by adding much more to their shelves.

Consumer spending was up too, despite fears that the lapse of the temporary payroll tax holiday at the start of the year would hold back how much consumers were willing to spend. It’s unclear whether consumers will continue to spend as freely in the months ahead, once they start to feel the pinch of this effective tax hike, particularly if wages continue to stagnate.

Exports, residential investment (housing, essentially) and business spending on equipment and software also rose.

Economists have expressed concern that the pace of growth may have started out strong in 2013 but slowed by the end of the first quarter, given recent disappointing reports about economic indicators in March. Employment slowed dramatically in March, for example, and orders for durable goods like aircrafts fell more than analysts had expected.

Additionally, across-the-board federal spending cuts, enacted as part of Congress’s so-called sequester, are likely to weigh on growth going forward. In the first quarter of this year, government spending fell at an annual rate of 8.4 percent, after a decrease of 14.8 percent in the fourth quarter of 2012.

“With fiscal tightening weighing on the spring and summer quarters, we expect weaker growth ahead,” Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisers, said in a note to clients said before the report. “We have seen good quarters before, but what counts is sustainability, and on that score we are deeply unconvinced.”

Article source: http://www.nytimes.com/2013/04/27/business/economy/us-economy-grew-at-2-5-rate-in-first-quarter.html?partner=rss&emc=rss

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Manufacturing Growth Slows in China

April 24, 2013 by Leave a Comment

The index, which was based on a survey of purchasing managers in the manufacturing sector and was released by HSBC, was 50.5 points for April. That exceeded 50, the level that separates expansion from contraction, but fell below the 51.6 points recorded for March.

The release is one of the earliest measures of business activity available for April and appears to indicate that an unexpected growth slowdown in the first quarter may be continuing into the second.

China’s first-quarter growth data, released by the authorities in Beijing last week, surprised analysts who said they had thought that the economy picked up speed in January, February and March. Instead, expansion slowed to 7.7 percent, down from 7.9 percent the previous quarter.

The manufacturing survey released Tuesday reinforced the view that the pace of growth was unlikely to pick up again in the current quarter.

“The overall message” from the release “is that there was some improvement in the manufacturing sector” around the start of the fourth quarter of 2012, but that “the momentum then stalled” in the first quarter of this year, wrote Yao Wei, China economist at Société Générale in Hong Kong.

Investors, unnerved by the disappointing reading, sent the mainland China stock market down 2.6 percent on Tuesday. In Hong Kong, the Hang Seng Index fell 1.1 percent.

Weakening demand for exports bears part of the blame. Orders for new exports contracted in April after rebounding in March, suggesting that external demand for China’s exporters remained weak, Qu Hongbin, an HSBC economist who specializes in China, said.

Weaker overall demand has also started to weigh on employment in the manufacturing sector and is likely to prompt Beijing to respond with efforts to increase domestic investment and consumption, Mr. Qu added in a statement accompanying the index.

Article source: http://www.nytimes.com/2013/04/24/business/global/manufacturing-growth-in-china-slows.html?partner=rss&emc=rss

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Fundamentally: A Muted Recovery May Mean a Longer Bull Market

March 30, 2013 by Leave a Comment

Yet the qualities that have kept the animal spirits from returning to Wall Street may explain why today’s bull market, which turned four years old this month, has outlasted the average rally. On Thursday, the end of a trading week truncated by the Good Friday holiday, the Standard Poor’s 500-stock index closed at a new record high.

“Like a marathoner who didn’t start out at a full sprint, will this bull have more stamina?” asks Sam Stovall, chief equity strategist at SP Capital IQ. “My belief is this rally could end up lasting longer.”

Bull markets do not typically die of old age, but rather from the side effects of a lengthy rebound, market analysts say. Those include an economy that begins to overheat and a sense of overconfidence that develops among companies, consumers and investors, leading to risky behavior.

At the peak of the average bull market since World War II, gross domestic product was accelerating at an annual rate of 4.2 percent, according to a recent analysis by Mr. Stovall. By contrast, the most recent G.D.P. report found that the domestic economy grew by a mere 0.4 percent annual rate in the fourth quarter of 2012.

Market peaks also tend to show other characteristics: unemployment tends to fall below 5 percent, as companies race to hire; around 60 percent of investors say they are “bullish,” according to sentiment surveys; and the price-to-earnings ratio for the Standard Poor’s 500-stock index jumps above 18.

Yet today, unemployment — though it has been drifting lower — is still at an uncomfortably high 7.7 percent. Only 38 percent of investors recently surveyed described themselves as bullish, according to the latest poll by the American Association of Individual Investors. And the stock market’s P/E ratio, based on the last 12 months of profits, stands below 16, which is close to the historical average.

“No doubt, circumstances have improved from a year or two ago, but I don’t get a sense that there’s much excess yet,” said James W. Paulsen, chief investment strategist at Wells Capital Management.

There are other signs that “we’re far from the levels of overconfidence that produce the types of excesses that beget a downturn,” Mr. Paulsen added. He noted, for instance, that investors were not overextending themselves by betting on the riskiest segments of the stock market. Household finances are improving. And the ratio of debt payments to disposable personal income is about as low as it has been since the early 1980s.

With regard to the private sector, Mr. Paulsen asked: “Are companies overstaffed, are they overbuilding plants, overstocking inventory, or overleveraging their balance sheets?” For that matter, he added, “is the Fed over-tightening?” Mr. Paulsen was referring to the fact that many bull markets die only after the Federal Reserve, sensing that the economy is overheating, raises interest rates to slow rampant growth.

To be sure, there are some signs that Wall Street firms and Main Street investors are starting to embrace risk-taking again.

For example, although merger-and-acquisition activity among domestic companies is still far off its 2006 highs in dollar terms, the actual number of deals hit a record number last year. And leveraged buyouts, transactions involving large amounts of borrowed money, are also starting to rise again after peaking in 2007, just before the financial crisis.

“Yes, you saw some big, splashy deals in M. A., but I still think we’re in the nascent stages of all of that,” said Mark D. Luschini, chief investment strategist at Janney Montgomery Scott.

As for individual investors, they have started to return to equity funds. Although they yanked a net $281 billion from stock mutual funds in 2011 and 2012, fund investors have poured a net $64 billion into stock portfolios this year through March 20.

Still, market analysts point out that even with these impressive inflows, bond mutual funds continue to pull in more money. “The fact that bond funds still enjoy higher flows than equities is not indicative of a love affair with stocks,” said Duncan W. Richardson, chief equity investment officer at Eaton Vance. “This is far from euphoria — this is just puppy love.”

MR. LUSCHINI said that while the market could yet experience a correction of 4 to 7 percent this year, a lack of market excesses leads him to believe that such a pullback would not kill the bull.

What would?

Historically, interest rate increases by the Fed have been a bull-slayer. But Ben S. Bernanke, the Fed chairman, is on record promising to keep short-term rates low until at least mid-2015. The central bank would need to see a rapidly improving job market or evidence that inflation is spiking before raising rates, market watchers say.

Yet “there’s very little inflation pressure today,” said G. David MacEwen, chief investment officer for fixed income at American Century Investments.

For inflation pressures to start building, wage pressures would have to intensify and factory capacity would have to be stretched. That typically happens only after manufacturing capacity utilization hits 80 percent and the unemployment rate falls below 7 percent, said James T. Swanson, chief investment strategist at MFS.

Right now, capacity utilization is at 78 percent and unemployment is at 7.7 percent. Still, Mr. Swanson said, it’s not inconceivable that at today’s pace of economic growth, the levels he described will be reached by year-end. That would usher in a much different market climate, perhaps one not so hospitable to an aging bull.

Paul J. Lim is a senior editor at Money magazine. E-mail: fund@nytimes.com.

Article source: http://www.nytimes.com/2013/03/31/your-money/a-muted-recovery-may-mean-a-longer-bull-market.html?partner=rss&emc=rss

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DealBook: BNP Paribas Earnings Fall on Write-Downs

February 15, 2013 by Leave a Comment

A branch of BNP Paribas in Paris.Jacky Naegelen/ReutersA branch of BNP Paribas in Paris.

PARIS – BNP Paribas, France’s largest bank, posted a fourth-quarter profit far below estimates on Thursday as it wrote down the value of its Italian unit and booked an accounting charge on its own debt.

The bank said net income fell to 514 million euros ($688 million) in the three months ended Dec. 31, a 33 percent decline from the period a year earlier. The quarterly earnings were well below the figure of about 1 billion euros anticipated by analysts surveyed by Reuters, while revenue fell 3 percent, to 9.4 billion euros.

BNP Paribas, based in Paris, said it had recorded a good will impairment of 298 million euros on the value of its Banca Nazionale del Lavoro division because of expectations that the Italian central bank would raise capital requirements. It also booked a 286 million euro charge to revalue its own debt, an accounting requirement, as the market value of the debt had improved.

Still, BNP Paribas noted, its 2012 net income of 6.5 billion euros, up 8.3 percent from 2011, was third among the world’s biggest lenders, behind only JPMorgan Chase and Wells Fargo.

The bank’s results were the second disappointment for French investors this week, after Société Générale – the country’s second-largest listed bank – posted a fourth-quarter net loss of 476 million euros on Wednesday, roughly double what analysts had been expecting.

Jean-Laurent Bonnafé, the BNP Paribas chief executive, said in a statement that despite a weak economy, the bank had achieved “solid results.” Under Mr. Bonnafé, the bank’s share price has risen by a third in the last year, as BNP Paribas, like other euro zone banks, has sought to reduce its reliance on dollar investors, raised its reliance on deposits and restructured in response to the sovereign debt crisis.

With Europe moribund, the bank said it planned to focus on providing services in higher-growth markets, including Turkey and the Asia-Pacific region, while strengthening its investment banking offerings in the United States. Next year, it said it would begin restructuring to “simplify the way the group functions and improve operating efficiency,” with 1.5 billion euros “in transformation costs spread out over three years.”

The bank said the plans would allow it to save 2 billion euros a year beginning in 2015, without closing any businesses. Shares in BNP Paribas rose 2.8 percent in morning trading in Paris on Thursday.

BNP Paribas said its investment banking business had cut its dollar funding needs by $65 billion. And it noted that it was ahead of most global peers in adapting to new capital regulations, attaining a common equity Tier 1 ratio, a measure of an institution’s ability to withstand financial shocks, of 9.9 percent by the end of 2012 under the accounting rules known as the Basel III regime. The bank said it had cut its risk-weighted assets by 62 billion euros during 2012.

Despite the weaker-than-expected profit, analysts generally welcomed the results.

Credit Suisse analysts said the “results showed significant progress in terms of group strategy.” Jon Peace, an analyst at Nomura in London, said in a research note that the bank’s efforts to improve its capital position had left it with “a superior balance sheet.”

Pretax profit earned by the bank’s investment banking business rose nearly sixfold to 266 million euros, from 46 million euros. The bank said the unit’s bad loan provisions rose to 206 million euros, compared with 72 million euros in the third quarter of 2012. The increase, it said, was the result of “a provision set aside for one specific loan.” It did not provide further details.

This post has been revised to reflect the following correction:

Correction: February 14, 2013

An earlier version of this article misstated the magnitude of the increase of the fourth-quarter pretax profit at the bank’s investment banking business. The unit’s profit rose nearly sixfold, to 266 million euros, from 46 million euros; it did not rise 29 percent from a year earlier.

Article source: http://dealbook.nytimes.com/2013/02/14/bnp-paribas-profit-falls-on-write-down-costs/?partner=rss&emc=rss

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G.M.’s Profit Rises Despite Weakness in Europe

February 15, 2013 by Leave a Comment

G.M., the nation’s biggest carmaker, said it had net income of $900 million in the quarter, compared with $500 million in the same period a year earlier. Revenue increased to $39.3 billion, up from $38 billion.

The company said strong sales in the surging United States market helped it post a $1.4 billion pretax profit in North America.

But in Europe, General Motors, like many other automakers, is continuing to absorb big losses from the worst sales environment in nearly 20 years. The company said it lost $700 million in the quarter.

The company had modest success in its other international operations, reporting a $500 million profit in Asia and a net income of $100 million in South America.

The fourth quarter capped a transitional 2012 for G.M., its third full year of operations since its bankruptcy and $49.5 billion government bailout in 2009.

While it is struggling to restructure in Europe, the company is in the process of introducing several new models in the United States, including revamped versions of its highly profitable pickup trucks.

G.M. also negotiated a sale of the Treasury Department’s ownership stake in the company.

For the full year, G.M. said it had net income of $4.9 billion compared with $7.6 billion in 2011. Executives said the 2011 profit included $1.2 billion in one-time gains on asset sales.

For the year, revenue grew to $152.3 billion, up from $150.3 billion in 2011.

G.M.’s chief executive, Daniel F. Akerson, said the company had a solid year in 2012, and said its future performance would depend on growing sales with new models.

“This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value,” Mr. Akerson said in a statement.

G.M.’s big profits in North America will directly benefit its 49,000 hourly workers in the United States, each of whom will receive profit-sharing checks of up to $6,750 for their work in 2012.

G.M. made several accounting changes in the fourth quarter, the largest of which was a one-time, noncash gain of $34.9 billion to restore valuation allowances for deferred tax assets in the United States and Canada. The gain was balanced by a $26.2 million charge to erase good will tied to its North American operations, a $5.2 billion charge for impairment of European assets and a $2.2 billion charge related to its salaried pension plans.

The write-down of European assets reflected the troubled state of the company’s business on the Continent.

For 2012, G.M. had a pretax loss of $1.8 billion in Europe, which was more than double the $700 million lost the previous year. By comparison, the North American division earned a pretax profit of $7 billion in 2012, down from $7.2 billion the year before.

G.M. executives were cautious about predicting better overall results this year, particularly in Europe.

Daniel Ammann, G.M.’s chief financial officer, said the European market would continue to deteriorate this year. However, the company is sticking with its prediction that it will break even there by mid-decade.

“We feel better and better about the things we can control,” Mr. Ammann said.

Mr. Akerson said that cost cuts would continue in Europe. He said G.M. eliminated about 2,500 jobs there last year and expected the same number of cuts in 2013. He declined to say whether the company might close any more plants beyond the announced shutdown of a factory in Germany by 2016.

“We’re going to be smart about how we cut costs, and not just close plants,” Mr. Akerson said.

G.M.’s profit in the beginning of the year may be thinner than last year because of the marketing and manufacturing costs associated with selling older truck inventory and introducing the new models.

Article source: http://www.nytimes.com/2013/02/15/business/gm-hurt-by-europe-still-increases-profit.html?partner=rss&emc=rss

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Euro Watch: Euro Zone Slump Expands to Germany and France

February 15, 2013 by Leave a Comment

Germany and France are now caught up in a slump that was already well under way in other big euro zone economies like Spain and Italy.

The figures were a reminder of how hard it has become for many of the world’s most economically developed countries to overcome their debt problems and return to growth. Even the United States, which had appeared to be rebounding, surprised economists late last month by reporting contraction for the fourth quarter.

In the euro zone, economic output shrank 0.6 percent from October through December, compared with the previous quarter, according to official figures published on Thursday. That came after a decline of 0.1 percent in the third quarter.

While economists had expected a decline in the fourth quarter, they did not expect it to be quite so big. The disappointing data called into question the timing of a recovery that was supposed to begin later this year. And the figures put pressure on government budgets that are already stretched because tax revenue automatically falls when companies and workers are earning less.

Almost every one of the euro zone’s 17 members suffered a drop in gross domestic product. In the three biggest euro economies, G.D.P. fell 0.6 percent in Germany, 0.3 percent in France and 0.9 percent in Italy.

For France, especially, Thursday’s data was a deep embarrassment to the government. The Socialist president, François Hollande, was elected last May after pledging to reduce the budget deficit this year to 3 percent of G.D.P., as required under euro zone rules. And his finance minister, Pierre Moscovici, had promised numerous times since then that the government would meet the 3 percent limit this year. But the lack of growth will make it all but impossible to meet that goal.

The gloomy economic data could also influence the outcome of elections later this month in Italy, in which the country’s international credibility is at stake. The prolonged slump provides ammunition to populist forces led by former Prime Minister Silvio Berlusconi, perhaps giving his party enough seats in Parliament to block unpopular measures intended to improve the country’s economic performance.

The economic report by Eurostat, the European Union’s statistics agency, was not bad enough to kill all hope that the euro zone was on the mend and that it could see weak growth later in the year.

Industrial production for the bloc rose in December, and surveys have suggested that businesses and consumers were becoming more willing to spend because they were less afraid that the euro zone would break up under the stress of debt and banking crises.

“I think the euro zone looks a lot more stable,” said Marie Diron, an economist in London who advises the consulting firm Ernst Young. “There are surely companies in Germany and Finland which couldn’t really take the investment and equipment decisions they wanted to,” because of fears of a breakup. “Now that has disappeared.”

But Ms. Diron noted that unemployment remained high in many countries, creating political instability that was amplified by governments’ need to cut spending. “That’s really where the risk remains,” she said.

The deepest misery is still in Greece, even if fewer people are predicting that the country will have to leave the euro zone. Unemployment rose to a record 27 percent in November, the Greek Statistics Agency said on Thursday. Nearly two-thirds of young people are jobless.

The French economy has been suffering from a drop in industrial production, as large employers like the carmaker PSA Peugeot Citroën struggle to cope with plunging demand in their most important markets, including Spain, where growth last quarter fell 0.7 percent.

This week, the French government auditors, the Cour des Comptes, announced that French growth would be significantly below the 0.8 percent previously estimated by the Hollande government, making it practically impossible to keep the deficit below the goal of 3 percent of G.D.P. despite significant tax increases. The Thursday figures, showing a contraction of 0.3 percent in the fourth quarter and no growth at all in 2012, were even worse than expected.

The auditors recommended balancing the tax increases with more cuts in public spending, but the Hollande government has said that it wants to impose taxes up front and deal with more significant spending cuts in coming years. Some economists contend that France is taxing itself into a recession.

Mr. Hollande, who has argued for measures to promote economic growth as unemployment rises, acknowledged failure, telling reporters earlier this week, “There is no point sticking to objectives if they are not going to be achieved.”

Mr. Moscovici said after a cabinet meeting on Wednesday that the government did not want “to add austerity on top of austerity, either for France or for Europe.”

Among all 27 members of the European Union, including countries like Britain and the Czech Republic that are not part of the euro currency union, economic output fell 0.5 percent.

In Germany, the unexpectedly large decline in output was caused by lower exports and fewer purchases of equipment by companies.

During the first nine months of last year, Germany continued to defy the recession in the euro zone as a whole, benefiting from sales to countries outside the euro zone, especially the United States and China. But the decline in the fourth quarter illustrated Germany’s vulnerability to the fortunes of its neighbors.

In coming weeks, economists will be watching for evidence that the German economy has already begun growing again, as many predict. If so, that could help pull the rest of Europe out of recession.

“While we expect a stabilization in the first quarter and a weak recovery from the second quarter onwards,” Peter Vanden Houte, an economist at ING Bank, said in a note to clients, “one has to acknowledge that a lot of things still can go wrong.”

Steven Erlanger contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/02/15/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

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G.M., Hurt by Europe, Still Increases Profit

February 14, 2013 by Leave a Comment

G.M., the nation’s biggest carmaker, said it had net income of $900 million in the quarter, compared to $500 million in the same period a year earlier. Revenue increased to $39.3 billion, up from $38 billion.

The company said strong sales in the surging United States market helped it post a $1.4 billion pretax profit in North America.

But in Europe, General Motors, like many other automakers, is continuing to absorb big losses from the worst sales environment in nearly 20 years. The company said it lost $700 million in the quarter.

The company had modest success in its other international operations, reporting a $500 million profit in Asia and a net income of $100 million in South America.

The fourth quarter capped a transitional 2012 for G.M., its third full year of operations since its bankruptcy and $49.5 billion government bailout in 2009.

While it is struggling to restructure in Europe, the company is in the process of introducing several new models in the United States, including revamped versions of its highly profitable pickup trucks.

G.M. also negotiated a sale of the Treasury Department’s ownership stake in the company.

For the full year, G.M. said it had net income of $4.9 billion compared with $7.6 billion in 2011. Executives said the 2011 profit included $1.2 billion in one-time gains on asset sales.

For the year, revenue grew to $152.3 billion, up from $150.3 billion in 2011.

G.M.’s chief executive, Daniel Akerson, said the company had a solid year in 2012, and said its future performance would depend on growing sales with new models.

“This year our priorities will be executing flawless new vehicle launches, controlling costs and delivering more vehicles to our customers at outstanding value,” Mr. Akerson said in a statement.

G.M.’s big profits in North America will directly benefit its 49,000 hourly workers in the United States, each of whom will receive profit-sharing checks of up to $6,750 for their work in 2012.

Article source: http://www.nytimes.com/2013/02/15/business/gm-hurt-by-europe-still-increases-profit.html?partner=rss&emc=rss

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North American Results Bolster Ford Earnings

January 29, 2013 by Leave a Comment

Ford said it earned $1.59 billion in the fourth quarter of 2012, compared with $1.03 billion in the same period a year earlier, excluding the impact of tax-valuation allowances in 2011. Those allowances inflated last year’s fourth-quarter net income to $13.6 billion.

For the full year, Ford said it earned $5.66 billion, a 5 percent drop from $5.97 billion in 2011, not including the tax-valuation changes that had increased the 2011 earnings to $20.2 billion.

Ford’s overall revenue in the fourth quarter was $36.5 billion, a 5 percent increase from $34.6 billion in the same period a year earlier. For all of 2012, revenue was $134.3 billion, a 1 percent decrease from $136.3 billion in 2011.

Despite the domestic results, the stock market appeared to focus on the European weakness, sending Ford’s stock down 4.2 percent.

The fourth-quarter results were a microcosm of Ford’s recent overall performance.

Healthy sales of new models in North America resulted in good profit margins in the region. The company introduced several new products, like the Ford Fusion midsize sedan, in the United States, where the overall industry grew by 13 percent last year.

Ford said it had $1.87 billion in pretax earnings in North America during the quarter, a 110 percent increase from $889 million in the fourth quarter of 2011. For all of 2012, Ford had pretax profit of $8.34 billion in North America, compared with $6.19 billion in 2011.

The company’s European operations continued to struggle, as demand for new vehicles on the Continent plunged to its lowest level in more than a decade.

Ford reported a $732 million pretax loss in Europe for the fourth quarter, compared with a $190 million loss in the same period in 2011.

For all of 2012, Ford said it had a pretax loss of $1.75 billion in the region. By comparison, the company reported a loss of $27 million in Europe for all of 2011.

The automaker had mixed results in its two other major divisions, South America and Asia.

In South America, Ford reported a pretax profit of $145 million in the fourth quarter, compared with a $108 million pretax profit in the fourth quarter of 2011.

The company had pretax income of $213 million in South America for all of 2012. The previous year it reported an $861 million profit.

In Asia, where Ford is making substantial investments in new factories, the company had pretax income of $39 million in the fourth quarter, compared with a loss of $83 million in the same period a year earlier.

For all of 2012, Ford said it had pretax losses of $77 million in the region, versus a $92 million loss in Asia in 2011.

Ford’s chief executive, Alan R. Mulally, said the company’s efforts to globalize its products has helped it weather the downturn in Europe while it expands in Asia and delivers new models in its core North American market.

“We are well positioned for another strong year in 2013, as we continue our plan to serve customers in all markets around the world with a full family of vehicles,” Mr. Mulally said in a statement.

The company’s strong performance in North America translated into hefty profit-sharing checks for its unionized workers in the United States.

As part of its contract with the United Auto Workers union, Ford said it would pay an average of $8,300 to each of its 45,800 hourly workers in March, with individual payments based on the number of hours worked in 2011.

Article source: http://www.nytimes.com/2013/01/30/business/north-american-results-bolster-ford-earnings.html?partner=rss&emc=rss

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