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Ericsson to Take $1.2 Billion Charge on Write-Down of Cellphone Venture

December 20, 2012 by Leave a Comment

In announcing the charge of 8 billion Swedish kronor, or $1.2 billion, Ericsson told investors Thursday that the charge would reduce its earnings in the fourth quarter by a corresponding 8 billion kronor. Shares of Ericsson fell 1.8 percent to 65.15 kronor in Stockholm trading.

ST-Ericsson, created in February 2009 with STMicroelectronics, a French semiconductor maker, has generated $2.7 billion in losses since its start. On Dec. 10, STMicroelectronics said it intended to “exit” the venture after an unspecified transition period.

Ericsson said it did not plan to buy its French partner’s 50 percent stake in ST-Ericsson, a decision that could cast further doubt on the future of the business, which is based in Geneva and employs 5,090 workers.

Bengt Nordstrom, the chief executive of Northstream, a Stockholm-based industry consultant to mobile operators, said that Ericsson, which is also based in Stockholm, could eventually shut down ST-Ericsson after trying to sell it off wholly or in parts. “That is certainly a possibility,” Mr. Nordstrom said.

At the time the venture was announced in August 2008, the two partners predicted that the new company, which combined Ericsson’s mobile platforms business and STMicroelectronic’s ST-NXP wireless businesses, would become a world leader in supplying chips and components to Samsung, Nokia, Sony Ericsson, LG and Sharp.

But ST-Ericsson, which attempted to exploit the value of both partners’ intellectual property and patents on components for 2G and 3G handsets and modems using Long Term Evolution, or LTE, technology, has never made a profit as it attempted to attract business from industry leaders in Asia and the U.S. component maker Qualcomm.

“We don’t have the kind of silicon industry in Europe that exists in the United States and Asia, so this was always a difficult attempt,” Mr. Nordstrom said.

ST-Ericsson’s prospects also deteriorated, Mr. Nordstrom added, after the chief executive of Nokia, Stephen Elop, announced in February 2011 that Nokia would abandon its Symbian smartphone operating system for Microsoft’s Windows system.

ST-Ericsson had supplied components for Nokia’s Symbian handsets and had been one of the venture’s biggest customers, Mr. Nordstrom said.

One of the early pioneers in the mobile industry, Ericsson, whose researchers contributed essential patents to the GSM and 3G wireless standards, retreated from the handset business to focus on network gear. It remains the global leader but faces a challenge from Huawei, its fast-growing Chinese rival.

Ericsson completed its departure from the handset business last January, when it sold its 50 percent stake in the cellphone maker Sony Ericsson to its venture partner, Sony.

For the third quarter, Ericsson said its profit plunged 42 percent, to 2.2 billion kronor, with a 600 million kronor loss attributable to ST-Ericsson.

Ericsson said Thursday that about 5 billion kronor of the earnings charge reflected the new lower valuation of ST-Ericsson, while the remaining 3 billion kronor would be applied in 2013 to cover continued commitments to ST-Ericsson.

“During the process of exploring options,” the company said, “Ericsson will not speculate on the possible outcomes, timelines and future strategic alternatives for ST-Ericsson assets.”

Article source: http://www.nytimes.com/2012/12/21/business/global/ericsson-to-take-1-2-billion-charge-on-writedown-of-cellphone-venture.html?partner=rss&emc=rss

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Retailers Post Sales Gains, but Discounts Hurt

January 5, 2012 by Leave a Comment

Sales at stores open at least a year at major retail chains rose 3.4 percent compared with December 2010, according to Thomson Reuters data, just slightly above the 3.3 percent that analysts had expected.

But those sales were largely gained by big markdowns that will probably lead to lower profits at retailers, and chains including Target, Kohl’s and J. C. Penney lowered their fourth-quarter profit expectations.

Shoppers seemed inclined to buy only when they saw huge discounts, and that suggested American consumers are still not back on their feet.

“Retailers came in with pretty conservative assumptions and they were hoping to blow them out of the water — they really didn’t,” said David L. Bassuk, managing director and head of the retail practice at AlixPartners, a consulting firm. His store visits over the holidays indicated that many of the promotions were “unplanned,” he said, a tactic retailers resort to in response to slow spending.

“Retailers hope that as they plan some promotions on key items, that will entice the consumer to spend money,” he said. “That didn’t happen — the planned promotions were not as exciting as the consumer today expects, so the retailer has to revert back to things that were unplanned, like ‘50 percent off our whole store,’ ‘60 percent off our whole store,’ which is when you can see times are tough.”

The top five performers all beat analyst estimates by at least 3 percentage points. Those were the teen stores Zumiez and the Buckle; the large discounters Ross and TJX; and Nordstrom.

Apparel stores, which were heavily promotional as the month went on, fared the best as a sector, with sales at stores open at least a year increasing 7.2 percent.

Those figures exclude the Gap Inc. chains, which include Old Navy and Banana Republic, where same-store sales declined 4 percent. The Gap, Wet Seal, Cato, Bon-Ton and Freds reported the worst same-store sales.

Target and Kohl’s, which both do huge promotions around the holidays, came in below analyst estimates, and both reduced their fourth-quarter profit expectations on Thursday.

Target’s same-store sales were up 1.6 percent, versus expectations of a 3.1 percent increase. Target said in a statement that electronics, movies, music and books were particularly weak performers. It reduced its fourth-quarter profit expectations to $1.35 to $1.43 a share; it had earlier estimated $1.43 to $1.53 a share.

Kohl’s same-store sales declined 0.1 percent, while analysts had expected a gain of 2.2 percent. Kohl’s said in a release that low sales of cold-weather gear were partly to blame. It lowered its fourth-quarter profit expectations to $1.70 to $1.73 per share, down from $1.93 to $2.04 a share.

J.C. Penney also lowered its fourth-quarter estimate, saying it now expected to earn 65 to 70 cents a share instead the of $1.05 to $1.15 it had previously expected.

Many stores seemed to be using promotions to get items out the door at the expense of profits. John D. Morris, an analyst at BMO Capital Markets, said in a note to clients that promotional activity at apparel stores was running above last year’s December level. “Promotions were aggressive throughout the month, and particularly in the 10 days before Christmas,” he said.

American Eagle Outfitters said in a release that in the last two weeks of December, “the company made a strategic decision to take a more aggressive promotional stance. While impacting margins, the decision enabled the company to generate strong unit sales.” Same-store sales for November and December together increased 12 percent, it said, although same-store sales slowed significantly in December. (Because it does not regularly report monthly sales, American Eagle is not included in the Thomson Reuters tally.)

J. C. Penney said its average price of an item fell for the month, though transactions were up. There was a “higher level of markdown activity caused by overall softer sales trends,” said Angelika Torres, a Penney spokeswoman, in prepared remarks.

Mr. Bassuk, the retail consultant, said that with consumers still unwilling to buy at full price, 2012 would probably bring “closing of stores and, I think, closing of retailers . It’s a more dire situation than many had anticipated.”

Article source: http://feeds.nytimes.com/click.phdo?i=1f77ff214bd52ba2fb8e1a740589c6a3

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Economix Blog: Inflation Out of Sight

October 22, 2011 by Leave a Comment

Since the Great Recession began in December 2007, the overall consumer price index is up 7.5 percent, or 1.9 percent a year. But there are plenty of people who insist that the figure must understate actual inflation, citing their own impressions from visits to stores.

In researching my Off the Charts column for this week, which looks at trends in apparel prices, I came across two categories that have been moving in opposite directions, for no reason I could discern. In one, inflation appears to be out of control. In the other there is deflation.

The government puts out a little-noted series on department store inventory prices. It covers goods sold in department stores, but includes prices from other stores. So prices charged at Wal-Mart and the Gap presumably count. It is not just a measure of what Macy’s and Nordstrom are charging.

Such prices can be volatile (SALE! SALE!), so the chart following uses three-month moving averages of seasonally adjusted prices, and shows changes from the level in the three months ended in December 2007.

Bureau of Labor Statistics, via Haver Analytics

Prices of a category called Women’s Outerwear and Girls’ Wear are down 4.8 percent, although that index has begun to rise recently. Other than shoes, that category includes most everything women wear that is supposed to be visible, including coats, dresses, skirts, pants and blouses.

Then there is the category Women’s Underwear, which by the way does not include stockings. It is up 32.5 percent, an annual rate of 7.8 percent.

What is going on? Cotton prices went up, as Stephanie Clifford reported a year ago. But cotton prices are lower now than they were then, and the underwear index is higher.

Would anyone care to explain why, as the economy went down, the prices of undergarments went up?

There is, alas, no separate category for men’s underwear.

Article source: http://feeds.nytimes.com/click.phdo?i=cfb86315e2bd15e3634c38c85771bb7f

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Sales Rose in Back-to-School Month, and Upscale Retailers Led the Way

October 7, 2011 by Leave a Comment

September is considered a critical month for retailers because back-to-school shopping can indicate how consumers feel about the future.

Some of the sales increases, though, seemed to be the result of heavy promotions.

“One of the questions as we go into holidays, frankly, is where margins end up,” said Chris Donnelly, an executive in the retail practice at Accenture, a consulting company. “I think you’re going to see more aggressive discounting to make sure they capture as much of the holiday sales as they can. And you’ve seen it in some of the folks that reported today, where they said sales have gone up but margin and average selling prices have gone down a little bit.”

Generally, stores that go after higher-end shoppers fared better than those focusing on middle- and low-end customers.

The top performers among department stores was Nordstrom, where same-store sales rose 10.7 percent, beating estimates by more than 5 percentage points. Shoppers seemed drawn to luxury purchases; Nordstrom said its top categories for the month were designer clothing, dresses and handbags.

Saks Fifth Avenue’s sales increased 9.3 percent, and there, too, people were drawn to nonessential items. Shoes, purses, jewelry and cosmetics were among its top sellers.

Macy’s, Kohl’s and Dillard’s came in a bit lower than the more plush department stores, at 4.9 percent, 4.1 percent and 3 percent respectively.

J. C. Penney had one of the few negative September results, with same-store sales down 0.6 percent. Analysts had expected growth of 0.6 percent. The company said Internet sales also dropped for the month because people were buying fewer expensive home-furnishing items.

J. C. Penney revised its profit outlook for the third quarter on Wednesday because of lower-than-expected sales. It said it now expected profit to be 10 to 15 cents a share, excluding one-time charges, versus the 15 to 20 cents a share it had previously projected.

The best performance over all was turned in by Costco which, despite being a club store, caters to a well-off shopper. Costco’s same-store sales rose 12 percent, and its American sales, excluding gasoline, rose 7 percent.

Other than Costco and Nordstrom, the rest of the top five performers included Limited Brands, up 11 percent, and the Buckle and Zumiez, stores for teenagers, which were up 10.3 and 10.1 percent, respectively.

At the bottom of the 23 stores surveyed by Thomson Reuters, Gap’s chains — Banana Republic, Gap and Old Navy — had a combined 4 percent drop in same-store sales, though analysts had expected about that. The smaller retailers Bon-Ton, Cato, Stein Mart and Stage Stores also reported among the worst results.

Over all, according to MasterCard Advisors SpendingPulse, which tracks all forms of consumer spending, 2011 was the best back-to-school spending season since 2006. SpendingPulse compared spending in July, August and September in school-related categories, like children’s apparel and office supply stores, with earlier years,

“It’s a positive surprise that the American consumer is maintaining some degree of resilience here,” said Michael McNamara, vice president for research and analysis for SpendingPulse.

But Mr. Donnelly of Accenture warned that could soon change.

“There is a limit to how much consumers are going to be able to spend, because folks aren’t making any more — we just saw a couple of weeks ago wages are very low, real wages aren’t growing, employment’s not moving anywhere, the stock market’s got a lot of volatility — so it’s unclear how sustained this uptick in spending will last,” Mr. Donnelly said.

“As much as the consumer can surprise you on the positive side, like they did the last couple of months, they can also catch you on the negative side,” Mr. Donnelly said.

Article source: http://feeds.nytimes.com/click.phdo?i=c653b72650b2ae75c96b42d6ac2b73fb

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With Some Optimism, Retailers to Increase Holiday Hiring

October 5, 2011 by Leave a Comment

While the numbers are not eye-popping — Kohl’s, for example, said Tuesday it would hire 40,000 people, up 5 percent from last year — the upbeat plans come against a backdrop of poor growth in permanent jobs, including in the retail sector.

The main reason for the holiday optimism is that people keep shopping. Forecasts issued so far are predicting seasonal sales increases in the range of 2 percent to 3 percent.

“We expect additional hiring this year given the continued sales growth in our business — both in-store and online,” Terry Lundgren, Macy’s chairman and chief executive, said in a statement last week. Macy’s said it would hire around 78,000 temporary workers, a 4 percent increase from last year.

J. C. Penney said it would hire 35,000 people, up from 30,000, while Target, which hired 92,000 holiday workers last year, expects that number to be slightly higher this year. Saks Fifth Avenue says it would hire about the same number as last year, and a Nordstrom spokesman, Colin Johnson, while declining to discuss specifics, said in an e-mail, “If we’re able to continue to build on our momentum we could have more holiday help this year.”

Wal-Mart, the nation’s largest retailer, declined to discuss its holiday hires, as did Sears.

Stores usually begin adding holiday staff in October, though the main growth is in November and December when shopper traffic really picks up. Macy’s already is listing dozens of holiday jobs on its careers Web site, from cosmetics sales to restocking.

Target has signs in about 170 of its stores encouraging customers to send a text message to get information about holiday employment. Early response has been encouraging, said Eddie Baeb, a Target spokesman.

But for some jobless people, the lure of holiday employment is a distraction. Harold Jacobs, 54, of Tuckahoe, N.Y., who lost his job at a store nine months ago, said he had no intention of applying for a temporary position.

“I don’t want to work for two months and then have to start looking all over again,” Mr. Jacobs said. “I want something permanent.”

Still many are applying, and Heidi Shierholz, an economist at the Economic Policy Institute, said there will be real, if short-term, benefits.

“If that’s money in their pockets they didn’t otherwise have, that’s going to be headed right back into the economy on bills and necessities, so that’s a positive thing,” she said. “The problem is we have persistent high unemployment, and the fact that these particular jobs we’re talking about are temporary doesn’t make any sort of long-term solution.”

In 2010, about 496,000 temporary workers were hired in the retail sector in November and December, according to the National Retail Federation. That was a 49 percent increase from the prior year, though well below the four years before the recession, when hiring was above 600,000 each year.

Holiday sales in 2010 rose 5.2 percent to $453 billion, according to the trade group, well above the group’s prediction of 3.3 percent. The season is the biggest of the year for almost all retailers.

Some specialty stores are hiring fewer employees than last year. Best Buy, which in 2010 hired 29,000 part-time workers, this year will hire just 15,000. The company said in September that consumers were buying less than it had expected, and cut its profit outlook for the year.

Toys “R” Us is hiring 40,000 employees, which is 5,000 fewer than in 2010. Those notes of caution are worrisome, Ms. Shierholz said.

“I would hope we would be seeing substantial increases, so the fact that we have to ponder whether or not we’re stronger than the extremely weak fourth quarter of 2010 speaks to the weakness of this recovery,” she said.

The number of full-time workers in retail has improved a tiny bit since last year. The National Retail Federation’s economist says retailers have added about 100,000 full-time positions so far this year, and the Bureau of Labor Statistics reports that about 14.57 million people were employed in retailing in August 2011, up about 1 percent from August 2010. But from July to August of this year, there was a 7.8 percent slide in the seasonally adjusted retail employment figures.

Hourly retailing jobs do not tend to be very lucrative. Cashiers have a median wage of $8.89 an hour, and retail sales staff earn a median wage of $9.94, according to the Bureau of Labor Statistics’ 2010 figures. Those both fall below the $11.72 median hourly wage for all sales jobs, and the $16.27 median wage for jobs over all.

And holiday jobs only rarely turn into full-time work, a prospect that has Mr. Jacobs, the unemployed New York retail worker, feeling glum.

Mr. Jacobs was dismissed from his job managing a Manhattan pharmacy about nine months ago.

“I’ve never had this much trouble finding a job as I have now,” he said. He has applied at Macy’s, Modell’s, CVS, Duane Reade, Kmart and Target, and says he posts his résumé eight to 10 times a day on Craigslist but has had no luck.

“I get my hopes up a lot of times. I apply places, I think things are going well, and then, nothing,” said Mr. Jacobs.

Article source: http://feeds.nytimes.com/click.phdo?i=613255b89c4deab39e5062e23f719785

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Strong Sales Help Extend Apple Streak

July 20, 2011 by Leave a Comment

Even without introducing any major new products, the company attracted legions of consumers in the fiscal third quarter. Profits doubled, and revenue increased 82 percent as shoppers continued to buy iPhones and iPads in record numbers.

As one example of its success, Apple turned its tablet into a $6 billion business in the quarter. That is twice as big as Dell’s entire consumer PC business.

Mac computers also showed solid gains, even as competitors struggle to sell PCs.

The results helped to lift Apple’s shares 4.5 percent in after-hours trading, to $393.81. Apple’s shares had already reached a record high in regular trading, and they are almost certain to do so again on Wednesday.

Consumers in emerging markets like China, Brazil and the Middle East played a major role in propelling iPhone sales, Apple said. So did the adoption of the iPhone and iPad by businesses.

Apple did not offer precise figures on how many companies used its phone and tablet, but it gave examples of several — Nestlé, Comcast and Crédit Agricole among them — that used the iPhone in their workplaces, and others — Alaska Airlines, Nordstrom — that used the iPad. Apple also said 86 percent of Fortune 500 companies were either testing or deploying the iPad for use in their offices.

In China, Hong Kong and Taiwan, Apple said, sales of all its products grew nearly six times from a year ago.

The iPhone continued to be in high demand, with 20.34 million sold worldwide, more than double the number from the same quarter a year earlier.

The gain came even though an update to the phone is expected later this year, presumably causing some potential customers to postpone buying until the new model, the iPhone 5, becomes available.

Sales of iPads nearly tripled to 9.25 million worldwide as Apple increased production and started clearing a backlog of orders dating from the March introduction of the new version, the iPad 2.

Apple executives had blamed limited manufacturing capacity for the initial shortage.

“Sales of iPad 2 have absolutely been a frenzy,” Tim Cook, Apple’s chief operating officer, said in a conference call with analysts. He added: “We sold every iPad 2 in the quarter that we could make. Certainly there was no shortage of demand.”

Colin Gillis, an analyst with BGC Partners, praised Apple’s overall growth and its ability to sell so many iPhones ahead of a product update. By far, it is the best performing of large technology companies, he said.

“At some point, the music ends,” Mr. Gillis said. “But when you look out at least for the next couple of quarters, I don’t see much of a slowdown.”

Steven P. Jobs, Apple’s chief executive, who is on medical leave, did not participate in the conference call.

A number of companies like Hewlett-Packard and Samsung are trying to get a piece of the tablet market, an important part of the consumer electronics industry. But Apple is expected to remain dominant with a 78 percent share of the global market in 2011, according to eMarketer.

Apple, based in Cupertino, Calif., reported that net income in the fiscal third quarter that ended June 25 more than doubled to $7.31 billion, or $7.79 a share, from $3.25 billion, or $3.51 a share, in the year-ago quarter.

The company said revenue climbed 82 percent, to $28.57 billion, from $15.7 billion.

The net income was above the expectations of Wall Street analysts. They had expected $5.80 a share and revenue of $24.92 billion, according to a survey of analysts by Thomson Reuters.

Sales of Apple computers did well in the quarter, with a 14 percent gain worldwide to 3.95 million.

The increase far outpaced the modest 2.3 percent industrywide growth during the quarter, as estimated by Gartner, the market research company.

The slow growth in overall computer sales is attributed to a shift by consumers to tablets and cautious spending by corporations. Also, strong growth in the same quarter last year made comparisons difficult.

IPod sales continued their decline, falling 20 percent, to 7.54 million.

Apple’s string of growth over the years has made it a darling of investors. The company is now the most valuable in the technology industry, with a market capitalization of nearly $350 billion, dwarfing many of its rivals.

Apple’s market value is more than 10 times Dell’s, for example, and nearly five times Hewlett-Packard’s. In keeping with its usual practice, Apple issued a conservative forecast for the fourth quarter. Revenue will be around $25 billion, the company said, while net profit will be close to $5.50 a share, both well below analyst expectations of $27.7 billion in revenue and $6.42 a share in profit.

In the conference call, analysts pointed out the discrepancy. Peter Oppenheimer, Apple’s chief financial officer, said the company’s forecast took into account the disruption caused by the introduction of a new product, which he would not disclose. That product is widely believed to be the next-generation iPhone.

“We are incredibly confident about our business, our product pipeline and what we are doing,” Mr. Oppenheimer said.

Article source: http://feeds.nytimes.com/click.phdo?i=b11a2207a8017d50fc60dabc9fb4024c

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A Club for the Women Atop the Ladder

April 3, 2011 by Leave a Comment

Drawn from government, banking, technology and beyond, its members form a rare  — and global — power elite. Each has been tapped, in Skull and Bones fashion, by an existing member. Each searches out and grooms new talent —  people who can add to this group’s considerable wealth, knowledge and power. 

But men need not apply: this exclusive club is women-only.

It is called Belizean Grove, and if you haven’t heard of it, you’re not alone. Founded 12 years ago, it operates mostly under the radar. The first time it received any real public attention was in 2009, when it became known that Sonia Sotomayor, now a Supreme Court justice, was among its 125 or so members. (She has since quit.)

Despite its low profile, Belizean Grove is fast becoming what could be considered the world’s ultimate old girls’ club. Perhaps that’s no surprise, as it is modeled on one of the nation’s most exclusive old boys’ clubs, Bohemian Grove. That hush-hush group, an extension of the 139-year-old Bohemian Club in San Francisco, has counted so many rich and powerful men among its ranks — including the presidents Eisenhower, Carter, Nixon and both Bushes — that it sounds like something out of a Dan Brown novel. Indeed, in 1942, the men of Bohemian Grove, who meet each summer under a canopy of redwoods in Monte Rio, Calif., dreamed up the Manhattan Project.

Some members of Belizean Grove are working on a mission of their own: the White House Project. Its goal is to have a woman elected president.

“Grovers,” as the members are known, tend to be in their 50s and 60s, and though most are not household names, they represent a rare confluence of wealth and influence. They serve as directors of companies including Xerox, Procter Gamble, NYSE Euronext, Nasdaq, Nordstrom, DSW, PetSmart and REI. Some previously held high-level positions at blue-chip companies but then left to form their own businesses.

Members also include a Canadian senator and the chief operating officer of the Episcopal Church. Many are Americans, but others are from countries including Colombia, Ecuador, Iceland and New Zealand.

Grovers have capitalized on their network by cutting deals, making multimillion-dollar investments and hiring and mentoring up-and-coming businesswomen. Along the way, the group has become a model for a growing number of women’s business networks.

Members say they have worked and invested together and helped one another join corporate boards, but they are hesitant to reveal details of specific deals. Above all, Grovers protect one another’s privacy. 

 

FOR four days, members convene at a site, generally somewhere in Central or South America, and stretch out on a beach, drink some wine and talk. Conversation flows freely, from topics like leveraged buyouts and international diplomacy to the problems of simultaneously managing the care of children and elderly parents.

Catherine Allen, a Grove member who is C.E.O. of the Santa Fe Group, a strategic consulting firm, puts it this way: “We leave our egos and business cards at the door. It’s about: ‘I have this problem. I’m a C.E.O. of a corporation, what should I do?’ and this becomes a sounding board because there are other women who have been in similar situations.” She adds: “It’s about learning from each other, enriching our minds, developing true friendships. There’s a real generosity of spirit.”

The group emerged informally and without an agenda. The Grovers originally gathered because they otherwise had few outlets for their concerns as they climbed the corporate ladder. But their meetings have led to a continuing dialogue about business, with members gaining access to capital and connections outside their established circles.

Belizean Grove has connected the top women in technology to the top women in finance, to the top women in media, to the top women in law, to the top women in retail, and so on. By reaching horizontally across industries, veteran businesswomen are building critical mass and wielding more influence.

“Women in tech, media and finance have invested together,” says Ms. Allen, who has embarked on a secondary consulting business with three other Grovers. “Many sit on the same venture boards. Many got there because of other women who also sit on those boards.”

Article source: http://feeds.nytimes.com/click.phdo?i=76ac9a30dd95365f043da6c690d5c144

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