March 22, 2023

Sprint Narrows Loss but Loses Subscribers

Sprint, the No. 3 U.S. mobile service provider, on Wednesday recorded higher-than-expected revenue as customers spent more on wireless services.

Its first-quarter loss narrowed to $643 million, or 21 cents per share, from $863 million, or 29 cents per share, in the year-ago quarter.

Analysts expected a loss of 33 cents per share, according to Thomson Reuters I/B/E/S.

Macquarie analyst Kevin Smithen said Sprint was reducing costs faster than expected from their wind-down of the Nextel network, based on iDen technology.

“They’re beginning to reap the benefits of the iDen decommissioning,” Smithen said.

But subscriber growth in the Sprint-brand network was weaker than Smithen expected due to tough competition from bigger rivals and a new marketing push at smaller rival T-Mobile USA, a Deutsche Telekom unit.

Sprint added 12,000 customers to its network, compared with expectations for additions between 110,000 and 275,000 from four analysts contacted by Reuters.

Including the Nextel network, Sprint lost 560,000 subscribers compared with expectations for a loss of almost 525,000 from five analysts contacted by Reuters.

In comparison, biggest rival Verizon Wireless, a unit of Verizon Communications and Vodafone Group Plc added 677,000 subscribers in the quarter, and No. 2 U.S. mobile provider ATT Inc added 296,000.

“The ATT and Sprint results confirm that T-Mobile USA has been taking share in the last few months,” Smithen said.

Sprint’s revenue rose to $8.79 billion from $8.73 billion. Analysts had expected $8.71 billion.

The company now expects 2013 adjusted operating income before depreciation and amortization at the high end of its previously announced target of between $5.2 billion and $5.5 billion, excluding costs of closing strategic transactions.

Sprint’s board is evaluating a $25.5 billion acquisition offer from No. 2 U.S. satellite TV service Dish, which challenged Sprint’s October agreement to sell 70 percent of itself to SoftBank for $20.1 billion.

Sprint shares were unchanged in premarket trade after closing at $7.10 on the New York Stock Exchange. The stock has risen 14 percent since Dish announced its unsolicited bid on April 12 as investors bet that SoftBank could sweeten its offer.

(Reporting by Sinead Carew; Editing by Jeffrey Benkoe and Gerald E. McCormick)

Article source:

DealBook: After 4th-Quarter Loss, Societe Generale Plans Overhaul

The headquarters of Société Générale in Paris.Jacky Naegelen/ReutersThe headquarters of Société Générale in Paris.

5:05 a.m. | Updated

PARIS — Société Générale posted a larger-than-expected fourth-quarter loss on Wednesday and said it would move to cut costs and simplify operations.

The bank reported a net loss of 476 million euros, or $640 million, compared with a profit of 100 million euros in the period a year earlier. Analysts surveyed by Reuters had expected a net loss of about 237 million euros.

Profit was hurt by a charge of 686 million euros as the bank revalued its debt, an accounting obligation because the market for those securities has improved. The company also took 380 million euro write-down of good will in its investment banking business, mostly on its Newedge Group joint venture with Crédit Agricole.

Société Générale also set aside 300 million euros as a provision against unexplained “litigation costs.” Like many of its global peers, the bank is under investigation from the authorities in a number of countries on suspicion that it conspired to manipulate the London interbank offered rate, or Libor. But bank officials declined to say whether that provision was specifically related to the investigation.

The bank said fourth-quarter net income would have been about 537 million euros excluding the one-time items. The bank’s shares fell 3.6 percent Wednesday in Paris trading.

Under Frédéric Oudéa, its chairman and chief executive, Société Générale has been working to emerge from the financial crisis as a leaner institution. It said that from mid-2011 to the end of 2012, it disposed of 16 billion euros of loan portfolio assets from the corporate and investment banking unit and an additional 19 billion euros of other assets.

The bank’s revamping, and an improvement in sentiment in the euro zone economy, has helped to restore its market standing. After a difficult 2011 that was marred by questions about Société Générale’s exposure to Greece, the bank’s shares have rallied, gaining 49 percent in the last year.

“We have achieved all our objectives” for 2012, Mr. Oudéa said in a conference call on Wednesday with analysts. He noted that the bank had sold TCW, an American asset-management unit; Geniki Bank in Greece; and National Société Générale Bank, an Egyptian lender.

In a research note to investors, Andrew Lim, a banking analyst at Espírito Santo in London, said that while “management has dealt convincingly with concerns about weak capital adequacy and liquidity in 2012, Société Générale is still struggling to convince investors that it can achieve improved returns.”

Société Générale said its Tier 1 capital ratio, a measure of the bank’s ability to withstand financial shocks, stood at 10.7 percent at the end of December, up 1.65 percentage points from a year earlier. The French firm said it expected to attain a Core Tier 1 capital target under the accounting rules known as the Basel III standard of 9 percent to 9.5 percent by the end of 2013.

The measures announced on Wednesday aim to focus the bank on three core businesses: French retail banking, international retail banking and financial services and corporate and investment banking and private banking.

The Société Générale group employs about 160,000 around the world, and it was not immediately clear whether the announcement of a reorganization, which officials said was likely to be accompanied by some branch closings, meant the bank would follow the lead of other large global institutions with a round of layoffs.

Mr. Oudéa did not provide much detail on his plans, saying in the conference call that he was committed to working with unions and employees to ensure that the reorganization went smoothly.

The French bank published its latest results a little more than five years after Jérôme Kerviel, a trader in the bank’s equity derivatives business, built unauthorized positions that led to a 4.9 billion euro loss for Société Générale.

Mr. Kerviel’s conviction on charges of breach of trust and forgery was upheld in October by the Paris Court of Appeals. He also was ordered to serve a three-year prison term, pending appeal, and to repay the bank for the full amount of the loss.

On Tuesday, Mr. Kerviel told the French radio station RTL that he was challenging the repayment order in a labor court, saying he had been ordered to pay without a third-party expert being allowed to study the damages. He added that he was suing Société Générale for an amount equivalent to the 4.9 billion euro trading loss.

Article source:

DealBook: Manchester United’s 4th-Quarter Loss Widens

Manchester United team members celebrated a victory against Wigan on Saturday.Peter Powell/European Pressphoto AgencyManchester United team members celebrated a victory against Wigan on Saturday.

Manchester United‘s net loss for its fourth quarter widened significantly from the year-ago period, the soccer club said on Tuesday in its first earnings report as a publicly traded company.

The club’s loss grew to £14.9 million, or $25.2 million, from £400,000, or $649,000. Its revenue tumbled 25 percent, to £74.5 million.

For the 2012 fiscal year, the company said that it earned £23.3 million, or $37.9 million, as commercial revenue rose. But overall revenue dipped 3 percent, to £320.3 million.

Related Links

With its initial public offering last month, Manchester United has become one of the few sports teams to brave the public markets in years, and certainly one of the biggest. And along the way, it has had to combat the perception that athletic enterprises generally don’t perform well in the public markets.

The team has argued that it is more than just an assemblage of soccer players dependent on ticket sales, but a full-fledged media empire with plenty of revenue sources. The club said that its commercial revenue, which draws in money from sponsorships and merchandising, grew nearly 14 percent last year, to £117.6 million, thanks to a high number of renewals and growth in the new media and mobile business.

And the club’s $559 million sponsorship deal with General Motors is significantly higher than its previous partnership with the insurer Aon.

“We are delighted to announce our first results as a NYSE listed company; fiscal 2012 was the best year ever for Manchester United’s commercial business,” Ed Woodward, the company’s executive vice chairman, said in a statement.

But other parts of Manchester United’s business haven’t performed as well. Broadcasting revenue for the year fell more than 11 percent, to £104 million, though the club promises a forthcoming increase in TV rights in Britain to Premier League games beginning in the 2013 season. And game-day revenue also slid 11 percent, to £98.7 million, as the team failed to progress beyond the group stage of the Champions League this past season.

Investors appeared little moved by the earnings news, with shares in Manchester United rising less than 1 percent in early morning trading, to $13.05. They have fallen 7 percent since the I.P.O. last month.

Article source:

DealBook: Lloyds Chief Turns Down Bonus

António Horta-Osório, chief of Lloyds Banking GroupCarl Court/Agence France-Presse — Getty ImagesAntónio Horta-Osório, chief of Lloyds Banking Group, returned to work on Monday at the company’s London headquarters.

LONDON – The chief executive of Lloyds Banking Group, António Horta-Osório, decided Friday to give up his bonus for last year after taking a leave of absence from the struggling financial firm.

Lloyds, which is partly owned by the government, said Mr. Horta-Osório told the bank’s board that he did not wish to be considered for an annual bonus for 2011. Mr. Horta-Osório was in line for a bonus of as much as £2.4 million, or $3.7 million. The board accepted the request, Lloyds said in a statement.

“As chief executive, I believe my bonus entitlement should reflect the performance of the group but also the tough financial circumstances that many people are facing,” Mr. Horta-Osório said. “I also acknowledge that my leave of absence has had an impact both inside and outside the bank including for shareholders. On that basis, I have decided to request that the board does not consider me for a 2011 bonus.”

Mr. Horta-Osório resumed running Lloyds this month after taking a two-month medical leave for exhaustion at the end of last year. Lloyd’s board had consulted doctors, investors and the British government — which remains a shareholder in the bank — before allowing Mr. Horta-Osório to return to his post.

Mr. Horta-Osório said he was so consumed by turning around the ailing British bank that he had trouble sleeping. Since joining Lloyds in March last year, Mr. Horta-Osório cut some middle management and worked on improving customer service at branches.

Lloyds reported a third-quarter loss in November and said that it might miss some financial targets because of the difficult economic environment.

Article source:

DealBook: MF Global Bankruptcy Rattles Wall St. Firms

The markets were haunted this Halloween by the ghosts of the past financial crisis.

With MF Global filing for bankruptcy on Monday, investors pummeled many financial stocks, fearful that problems were lurking on the books of other Wall Street firms. It was a crisis of confidence, not unlike in 2008 when the markets punished stocks on mere speculation of trouble.

On Monday, companies with perceived exposure to MF Global bore the brunt of the pain. The Jefferies Group, which issued a statement saying it had a minimal stake in the brokerage, fell by nearly 10 percent. The Fortress Investment Group, which proactively disclosed that it had “literally zero” exposure, dropped by more than 11 percent.

“Investors across the financial sector are definitely on high alert trying to avoid or minimize these sovereign debt exposures,” said Ed Ditmire, an analyst at Macquarie Capital.

MF Global made a risky bet in a tumultuous market. Recently, the firm revealed that it had $6.3 billion of sovereign debt in troubled countries like Italy and Spain. The position was nearly five times the firm’s equity of more than a billion dollars. As the sovereign debt crisis reached a peak in October, two rating agencies cut the grades on the company’s debt, saying they questioned the firm’s risk controls given the size of the position.

The downgrades sent the company into a tailspin. Trading partners asked the firm to post more money against their portfolio. Adding to the jitters, MF Global reported a third-quarter loss, which further eroded its stock and made its capital position even more tenuous. The firm drew down a $1.3 billion credit line as it fought to stay afloat. But it proved insufficient, and MF Global was forced to file for bankruptcy.

After Moody’s downgrade last week, MF Global sent a letter to clients trying to reassure them of the firm’s strength. On Monday, as some clients called to ask questions and liquidate their accounts, MF Global was not picking up the phone.

Some financial exchanges prevented MF Global employees from entering Monday, while others, including the Chicago Mercantile Exchange and the IntercontinentalExchange, halted the firm’s trading in the morning. That forced clients of MF Global to sit tight or liquidate their holdings.

“I’m disappointed in the way the Chicago Mercantile Exchange, MF Global and the regulators have handled this bankruptcy,” said James L. Koutoulas, chief executive of Typhon Capital Management, a hedge fund client of MF Global. “They had no contingency plan in place and just cut off our trading screens, and we’re forced to liquidate clients’ accounts unfavorably.”

It is difficult to know what other firms could face the same pressure. Most of the small brokerages that clear futures trades like MF Global are private companies, so their capital positions are not as vulnerable to the whims of the public markets. The rest of the industry is dominated by large banks, which analysts say have sufficient capital.

The irony is that MF Global’s sovereign debt may turn out to be right — eventually. The firm was ostensibly making the wager that Europe would come to the rescue of its troubled economies and the countries would not default on their debt.

In such a event, MF Global’s holdings would most likely have paid off. But investors and others just did not have the patience to wait and see.

“The positions still have not caused any losses to the best of my knowledge,” said Richard Repetto, an analyst at Sandler O’Neill. “But this risk-taking is just excessive compared to the size of the balance sheet.”

Michael J. de la Merced contributed reporting.

Article source: