June 24, 2024

Rupee Suffers Another Record Low

HONG KONG — The beleaguered Indian rupee continued its steep descent on Wednesday, hitting a record low of 64.54 to the dollar amid global nervousness about the timing and scale of the Federal Reserve’s likely scaling back of its bond-buying program.

The 2 percent drop took the Indian currency’s decline since early May to 20 percent, raising worries about the impact it will have on the country’s substantial import bills and on an already large current account deficit.

Indian stocks also dropped. The Sensex index closed down 1.9 percent and the Nifty ended 1.8 percent lower. Both indexes have dropped more than 10 percent since late July.

Signs that the American central bank will reduce its bond purchases soon set off big outflows of cash from emerging markets around the world in May, and the reverberations continued Wednesday. A drop in the Indonesian currency sent the rupiah to 10,755 per dollar, its lowest level since April 2009. The South African rand and Brazilian real likewise are now at their weakest level since early 2009. Indonesia also has a large current account deficit.

In India, however, the rupee’s latest decline comes on top of a slide that began in 2011, when mounting signs of reform gridlock began to cast a serious pall over the once-rosy India story. In total, the rupee has now sagged more than 40 percent since mid-2011, and many analysts warn that it could fall even further.

The Indian government, scrambling to halt the slide, have in recent weeks rushed out measures like higher import duties on gold and silver and restrictions on the amount that local companies can invest overseas without seeking approval. The Reserve Bank of India also appeared to have intervened in the currency markets on Wednesday to stem the rupee’s fall, Reuters reported, citing traders.

So far, however, these efforts have not succeeded in restoring investor confidence, which had already been undermined by slowing growth and by the prospect that elections next year may handicap efforts to push through much-needed structural reforms.

“Rupee sentiment is very fragile,” Brian Jackson, global currency strategist at Coutts, wrote in a research note. It is hard to see the central bank “being able to control the rupee’s fall without further impeding growth, either by pushing up bond yields or making it more difficult to access bank financing,” he added.

Kim Eng Tan, senior director of Asia-Pacific sovereign ratings at Standard Poor’s, said in an e-mailed statement that recent government measures to restrict capital outflows had increased uncertainty among foreign and domestic investors.

If this continues, he said, “business financing conditions could deteriorate further and investment growth could slow further. India’s long-term growth prospects could weaken on a sustained basis, with negative implications for the sovereign credit fundamentals. It is, however, too early now to tell if this scenario will come to pass. This will be largely dependent on policy makers’ reactions to these latest developments. We maintain a negative outlook on India’s BBB- sovereign credit ratings.”

Article source: http://www.nytimes.com/2013/08/22/business/global/rupee-suffers-another-record-low.html?partner=rss&emc=rss

Strategies: Rosy Earnings Forecasts, at Least at First

IS the glass half full or half empty? For several thousand analysts who make a living assessing the value of publicly traded stocks, the answer depends on which week it happens to be.

That’s what a study of the Standard Poor’s 500 earnings cycle by Thomson Reuters/I/B/E/S shows.

The distant future sometimes looks better than the mundane day-to-day of the moment. For stock analysts who crunch numbers to come up with earnings estimates for individual companies, the far horizon is often just one year down the road. And the numbers show that when analysts estimate quarterly earnings a year in advance, they tend to be unrealistically optimistic about the prospects of companies they cover, according to Greg Harrison, the senior research analyst at Thomson Reuters who did the study.

Mr. Harrison’s day job involves compiling consensus earnings estimates for the overall stock market, figures he derives from the collective appraisals published by thousands of individual analysts. Does the market expect earnings for the S. P. 500-stock index to rise or fall, and by how much? Have companies met expectations for the quarter, or will they disappoint the market? Some of the answers come from the data he gathers each week.

But while doing his work, he noticed a consistent pattern in the numbers, which he describes in a fascinating study of earnings since 2008, titled “Estimates Too High, Low? Check the Calendar.”

Except for several quarters in the Great Recession, he found, early earnings estimates are generally rosy, and become predictably and progressively gloomier as time goes on. As analysts revise estimates downward, it becomes easier for companies to beat the market consensus, creating what Wall Street calls a “positive earnings surprise” roughly two-thirds of the time.

Positive surprises, of course, are good for share prices. Negative surprises are not. And by being optimistic about the long-term future, and relatively pessimistic about immediate results, the quarterly cycle of stock market earnings estimates has the effect of bolstering the market.

Analysts, of course, are encouraged in this practice by corporate executives who routinely issue warnings — “guidance,” in Wall Street parlance — that their companies won’t really meet the analysts’ lofty targets. The analysts respond by lowering their targets.

Typically, Mr. Harrison finds, analysts are most accurate — neither too optimistic nor too pessimistic — about seven weeks before companies actually release earnings.

“That’s when analysts’ estimates and the eventual, real numbers meet,” Mr. Harrison said. But the analysts don’t leave well enough alone. Instead, they keep cutting their forecasts and end up being gloomier than reality warrants. “By the time earnings season actually ends,” he says, “it turns out that the analysts have been too pessimistic — and we end up with a lot of ‘earnings surprises.’ ”

We’re now near the end of the earnings season for the second quarter. Most big companies have already issued their final numbers for the period, and the current pattern fits the overall picture fairly well, Mr. Harrison says.

On July 2, 2012, for example, when he compiled the first market consensus for the second quarter of this year, analysts as a group were projecting great things for stocks one year ahead. They said earnings would grow at the blistering pace of 14.4 percent in the second quarter of 2013.

Reality hasn’t come close to matching that early optimism — but because analysts repeatedly ratcheted their projections downward, earnings reports have been surpassing the relatively pessimistic estimates of recent weeks.

On Friday, with 462 members of the S. P. 500 reporting, Mr. Harrison found that the actual growth rate so far has been only 4.9 percent. Yet 67 percent of those companies beat the analysts’ estimates, producing positive surprises. How was that possible? Analysts collectively dropped their estimates for the quarter to only 2.9 percent on July 1, when earnings season began. The actual results were much better than that.

The rough pattern held for many major companies. Consider General Motors. On July 2, 2012, analysts covering G.M. estimated that it would have earnings per share of $1.25 in the second quarter of 2013. That July, the estimate of Ryan Brinkman, an analyst at J.P. Morgan, was $1.12. G.M. has “best-in-class leverage to global growth markets, ongoing operational turnaround, and improving product cadence,” he wrote.

G.M. has had problems, however. The company acknowledged that it was doing poorly in Europe. By mid-April, after a report that industrywide sales there had plummeted to a 30-year low, and that G.M.’s Opel brand was lagging, analysts’ estimates fell to 73 cents a share. Mr. Brinkman’s was 72 cents. For all analysts, they stood at 74 cents at the beginning of July and edged up to 75 cents the week of July 12.

But that was still way off the mark. G.M.’s actual earnings, released on July 25, were 84 cents a share. Although earnings declined compared with a year earlier, news coverage generally treated the announcement as a positive surprise.

Mark Bradshaw, an accounting professor at Boston College, says what we are seeing is probably overconfidence by analysts and deft maneuvering by corporate executives, who have leeway in adjusting accounting to improve reported profits and in choosing what information to reveal. “For companies, issuing ‘guidance’ has become an art form,” he said. “The analysts seem to try to do what they can, but they’re often at a loss.”

Aswath Damodaran, a finance professor at New York University, called the earnings season “a Kabuki dance” in which “analysts are trying to forecast; companies are trying on the other side, with accounting choices, to affect those earnings and to lower the forecasts; the companies watch the analysts; the analysts watch the earnings; and it’s all a big game. And it’s a game that the companies generally win.”

Frequent traders scrutinize these rituals, he said, seeking nuance. For them, he said, “it’s not enough now just to beat the earnings forecast. That’s too common. Now, you’ve got to beat the forecast enough — by a big-enough number that it really is a surprise — if you want to stir up the market.”

In his view, most of us would be better off ignoring short-term earnings reports. “None of this matters much to long-term investors,” he said. “It’s the long-term picture that’s important, and that is revealed eventually, even if it isn’t clear now.”

Is the glass half full or half empty? Don’t even try to figure that out during earnings season.

Article source: http://www.nytimes.com/2013/08/18/your-money/rosy-earnings-forecasts-at-least-at-first.html?partner=rss&emc=rss

U.S. Housing Starts and Permits Rise Less Than Expected

The Commerce Department said on Friday that housing starts increased 5.9 percent to a seasonally adjusted annual rate of 896,000 units. June’s starts were revised up to show a 846,000-unit pace instead of the previously reported 836,000 units.

Economists polled by Reuters had expected groundbreaking to rise to a 900,000-unit rate last month.

Permits to build homes rose 2.7 percent in July to a 943,000-unit pace. Economists had expected permits to rise to a 945,000-unit pace.

“It’s not a surprise given the recent rise in mortgage rates. I think we are looking at a situation that some air is coming out of the housing recovery given the higher mortgage rates,” said Michael Hanson, senior economist with Bank of America Merrill Lynch in New York.

“At this point, affordability has not changed that much on a historical basis. Housing affordability remains high, but fundamentals are less favorable for new buyers than they were a couple of months ago.”

Mortgage rates have spiked in anticipation of the Federal Reserve tapering the $85 billion in bond purchases it is making monthly to keep interest rates low and stimulate the economy.

Economists expect the U.S. central bank to make an announcement on tapering at its policy meeting next month.

U.S. stocks were poised to open slightly higher after the data. The dollar pared gains against the yen and fell to a session low against the euro.

The residential construction figures last month could also be a reflection of supply constraints. Builders have been complaining about a shortage of labor and materials.

Still, residential construction remains on a firmer footing and should again contribute to economic growth this year.

A report on Thursday showed confidence among single-family homebuilders neared an eight-year high in August, with builders fairly upbeat about sales prospects over the next six months.

Though residential construction only accounts for about 3.1 percent of gross domestic product, housing has a wider reach in the economy. Analysts estimate that for every single-family home built, at least three jobs lasting for a year are created.

Economists expect average monthly housing starts for the whole of 2013 to top 1 million.

Last month, groundbreaking for single-family homes, the largest segment of the market, fell 2.2 percent to a 591,000-unit pace, the lowest level since November last year.

Starts for multi-family homes jumped 26 percent to a 305,000-unit rate, reversing the prior month’s decline.

Permits for multi-family homes rose 12.6 percent to a 330,000-unit rate. Permits for single-family homes fell 1.9 percent to a 613,000-unit pace.

A separate report from the Labor Department showed nonfarm productivity increased at an annual rate of 0.9 percent in the second quarter.

Productivity dropped at a rate of 1.7 percent in the first quarter. Unit labor costs – a gauge of labor-related costs for any given unit of output – rose at a rate of 1.4 percent in the second quarter after dropping in the first quarter at a rate of 4.2 percent.

(Reporting by Lucia Mutikani, additional reporting by Richard Leong in New York; Editing by Paul Simao)

Article source: http://www.nytimes.com/reuters/2013/08/16/business/16reuters-usa-economy.html?partner=rss&emc=rss

Amazon Reports Small Loss as It Focuses on Investments

But with revenue up 22 percent, Amazon showed that it could still deliver the sales growth demanded by investors, who have lifted the company’s stock 21 percent this year. So far, those demands do not include an insistence on big profits.

Until it does, Amazon seems content to pour money into initiatives aimed at gobbling up an increasing share of spending by consumers.

For the quarter that ended June 30, Amazon said it had a net loss of $7 million, or 2 cents a share, compared with net income of $7 million, or a penny a share, in the same period a year earlier. Amazon’s revenue was $15.7 billion, up from $12.83 billion the year before.

The results were slightly below the estimates of analysts surveyed by Thomson Reuters, who expected Amazon to report earnings of 5 cents a share and revenue of $15.73 billion.

The miss did not seem to trouble investors too much. The company’s stock dropped less than 2 percent in after-hours trading after the release of its earnings report.

A good illustration of Amazon’s long-term bets is online video. The company is spending hundreds of millions of dollars on licensing rights to build a large library of video that its customers can watch through their Kindle tablets and other devices. These agreements are critical as movies, music and other media — which account for 28 percent of Amazon’s total sales — shift from physical to digital form.

The company recently cut its biggest such deal ever, with a multiyear agreement to license television shows from Viacom, including children’s shows like “Dora the Explorer” and “SpongeBob SquarePants.”

As a result, Amazon spent almost 47 percent more on technology and content in the quarter, for a total of $1.59 billion — roughly 10 percent of its total revenue. Included in that spending is the company’s investment in Amazon Web Services, a lucrative business through which Amazon rents capacity in its data centers to independent companies.

“We’re investing for the large opportunities we have in front of us,” Tom Szkutak, the company’s chief financial officer, said in a conference call.

While Amazon is feared as a seller of physical goods, it faces several formidable rivals in the digital content business, including Netflix, Apple, Hulu, Microsoft and Google.

Still, Amazon is also spending aggressively on the warehouses it needs to deliver physical goods, building them in locations that have been inching ever closer to big cities with the goal of offering next-day, or even same-day, deliveries to shoppers. This year, Amazon began selling groceries in the Los Angeles area, using its own trucks to shuttle fruit, meat and boxes of cereal from a new warehouse in the city to customers’ doorsteps.

The effort is expensive and risky, though Amazon would not say whether or how much money it was losing on it. The grocery business has killed Internet retailers before — Webvan was the most notable casualty — so Amazon chose not to expand the service beyond a test in Seattle until recently.

“The challenge we’ve had over the past several years is how to make it economically viable,” Mr. Szkutak said.

All the spending on warehouses and other projects has led to a surge in hiring at the company. Its head count swelled to 97,000, up more than 40 percent from 69,000 a year ago. The hiring earned the company a plum position as the backdrop for a speech on middle-class jobs that President Obama is expected to deliver on Tuesday at an Amazon warehouse in Chattanooga, Tenn.

A big part of Amazon’s allure for investors remains its pre-eminent position in e-commerce, which is expected to rise 14.8 percent to $248 billion in American sales this year, according to eMarketer. That is far better growth than the single-digit growth expected for retail sales over all in the United States this year.

Kerry Rice, an analyst at Needham Company, said investors believed that Amazon could keep stealing market share from Walmart and other physical retailers, and that eventually its profits would improve.

“On some level, I think some people are buying the stock because they’re hoping for that investment cycle to begin to reduce,” Mr. Rice said. “If they pull back on spending, you’re going to see that operating margin tick up.”

Mr. Rice added: “I don’t think that’s going to happen for a long time.”

Article source: http://www.nytimes.com/2013/07/26/technology/amazon-reports-a-small-loss.html?partner=rss&emc=rss

PepsiCo Profit Climbs Despite Weakness in Soft Drinks

In addition, the company, which makes Pepsi-Cola, Frito-Lay snacks and Tropicana juices, cited a lower tax rate and a $137 million gain related to refranchising its bottling operations in Vietnam.

A J. P. Morgan analyst, John Faucher, said those issues made the results look better than they were.

“The headline is much better than the net result,” Mr. Faucher said.

The smaller soft-drink company Dr Pepper Snapple Group also released results on Wednesday, saying profit fell on weak sales volume.

A week ago, Coca-Cola reported disappointing sales, blaming poor weather. Nelson Peltz, an activist shareholder, said that PepsiCo should buy Mondelez International, maker of Oreo cookies, and split off its soft-drink business.

Despite the numbers, PepsiCo stood by its outlook for 2013, which calls for earnings growth of 7 percent.

Net income was $2.01 billion, or $1.28 a share in PepsiCo’s second quarter, up from $1.49 billion, or 94 cents a share a year earlier.

Excluding items like restructuring and integration charges, earnings were $1.31 a share. On that basis, analysts on average were expecting $1.19 a share, according to Thomson Reuters.

Net revenue rose 2 percent, to $16.81 billion, topping analysts’ estimate of $16.79 billion.

On the food side, volume in the Americas rose 2 percent. In Latin America, it gained 1 percent, while in North America, it rose 3 percent for Frito-Lay and 1 percent for Quaker Foods. Snack volume increased 3 percent in Europe and 6 percent in the Asia, Middle East and Africa segment.

On the more challenged drinks division, volume in the Americas fell 3.5 percent, was flat in Europe and rose 9 percent in Asia, the Middle East and Africa.

Article source: http://www.nytimes.com/2013/07/25/business/pepsico-profit-climbs-despite-weakness-in-soft-drinks.html?partner=rss&emc=rss

Bucks Blog: Mortgage Relief Offered to Oklahoma Tornado Victims

The remains of a home in Oklahoma damaged by a tornado.Reuters The remains of a home in Oklahoma damaged by a tornado.

The federal government has imposed a 90-day moratorium on foreclosures of homes with mortgages owned or backed by the Federal Housing Administration in areas of Oklahoma devastated by this week’s tornado.

On Tuesday, President Obama declared five counties in Oklahoma to be disaster areas, allowing the Department of Housing and Urban Development to offer foreclosure relief and other housing aid to certain families living in those counties.

The moratorium applies to borrowers with mortgages insured by the F.H.A. who live in Cleveland, Lincoln, McClain, Oklahoma and Pottawatomie counties.

The action applies to new foreclosures, as well as those already in progress. In addition, the agency told lenders and loan servicers that it “strongly recommends” additional help for homeowners directly affected by the tornado, including waivers of late charges, mortgage modifications and refinancing.

H.U.D. also offers various programs to help victims refinance and rebuild their homes. In some cases, the agency will assist victims in obtaining 100 percent financing, including closing costs, to buy a new home or repair an existing one, if they use F.H.A.-approved lenders.

If homeowners are uncertain whether their mortgage is F.H.A.-insured, and don’t have access to their loan documents, they can call their loan servicer — the company to which they send their payments — or call 1-800-CALL-FHA. Generally, the agency can use the property’s address to tell if the loan is F.H.A.-insured.

Freddie Mac and Fannie Mae, the two mortgage finance giants, also reminded loan servicers about mortgage relief available to victims of disasters like the Oklahoma storms.

Freddie Mac said servicers can offer forbearances — agreements to suspend or reduce payments — for up to a year. “We strongly encourage borrowers to contact their servicers, who are fully authorized to work with them on a case-by-case basis,” the company said in a statement.

Fannie Mae said that because it may be difficult to reach homeowners after a disaster, servicers can grant payment relief even if they can’t contact the homeowner right away.

In addition to delaying foreclosure actions, H.U.D. reminded lenders that payments made by insurance companies should go to the borrowers to assist in repairing or rebuilding the home, not used to pay down an existing loan balance.

Have you sought mortgage relief following a natural disaster? What happened?

Article source: http://bucks.blogs.nytimes.com/2013/05/22/mortgage-relief-offered-to-oklahoma-tornado-victims/?partner=rss&emc=rss

Bank of Japan Sets Deflation Turnaround Target Date

HONG KONG — Deflation remains firmly entrenched in Japan, figures showed Friday, as the central bank projected that its targeted level for inflation was still some years off, underscoring that there are no quick fixes for one of the world’s largest economies.

Prime Minister Shinzo Abe, who took office last December, has made the fight against deflation — the damaging fall in prices, profits and wages that has dogged Japan for most of the past 15 years — a main part of his economic policy. He pressed the central bank to commit to a target of 2 percent annual inflation, considered by many economists a healthy level.

On Friday, the central bank, the Bank of Japan, under the leadership of its new governor, Haruhiko Kuroda, put a date on that target: 2015 or early 2016.

“Various indicators are showing signs that inflation expectations are heightening as a trend,” Mr. Kuroda said in a news conference Friday, Reuters reported. “Business and household sentiment is improving.”

On Friday, the central bank raised its growth forecasts for this year and next. The bank said the economy would gradually accelerate to 1.6 percent growth in the fiscal year that ends in March 2016. That is up from the bank’s projection of 1 percent growth in the year that ended in March 2013.

“Japan’s economy has stopped weakening and has shown some signs of picking up,” the Bank of Japan said in its economic report. “Looking ahead, it is expected to return to a moderate recovery path around mid-2013.” The bank cited a likely improvement in domestic demand as the increased money supply and other economic measures announced so far take effect.

However, worse-than-expected inflation data for March, released by the statistics bureau Friday, underlined the challenges ahead. Core consumer prices, which exclude food, fell 0.5 percent compared with March 2012, the fifth consecutive month of year-on-year declines.

The figure “offered another reminder that deflationary pressures remain strong,” Izumi Devalier, Japan economist at HSBC, wrote in a research note. Although a gradual escape from deflation is expected, thanks in part to higher energy prices, “the pace of inflation is unlikely to match” the Bank of Japan’s “optimistic projections,” Ms. Devalier added.

Although various factors will ultimately cause inflation to pick up, the hurdle for reaching the inflation target is “getting higher,” Miwako Nakamura, an economist at J.P. Morgan, wrote in a research note.

Under Mr. Kuroda, the central bank announced unexpectedly bold steps this month aimed at reinvigorating economic and price growth.

These included plans for the central bank to buy longer-term bonds aggressively and double its holdings of government bonds in two years. Mr. Kuroda described the program as “monetary easing in an entirely new dimension” that would make a change from incremental steps of the kind that had been pursued by his predecessors.

The financial markets have welcomed Mr. Abe’s and Mr. Kuroda’s joint efforts: The Nikkei 225-stock index has risen 30 percent since the start of the year, while the yen has fallen 14 percent against the U.S. dollar — much to the relief of Japanese exporters, for whom a weaker yen is welcome as it makes their goods cheaper for consumers abroad.

Several Japanese corporate giants, including Honda, Toyota and Canon, have cited the weaker yen as a reason for improved earnings and outlooks in recent days.

On Friday, Honda said its net profit for the financial year that ended in March was up 73.6 percent at ¥367.15 billion, or $3.72 billion, according to Reuters. Mazda made a yearly net profit of ¥34.3 billion, after a ¥107.7 billion loss in the previous year.

Many analysts, however, have cautioned that structural overhauls aimed at promoting foreign direct investment and bringing more women to the country’s aging and shrinking work force are needed if the turnaround in Japan’s economic fortunes is to be sustained.

Growth strategies aimed at stimulating private investment are the most important of the policy arrows in Mr. Abe’s quiver, Kunihiko Sugio, chief investment officer at Invesco Japan, said in a recent research note.

This “arrow,” he added, “is still in Abe’s hand waiting to be fired.”

Article source: http://www.nytimes.com/2013/04/27/business/global/27iht-yen27.html?partner=rss&emc=rss

Amazon’s Profit Falls as It Spends Heavily on Distribution Centers

On Thursday, Amazon told investors it’s still not time for a drink.

The Internet retailer reported a 37 percent decrease in profits for the first three months of the year.

That drop was expected, and it was even a bit less than some investors had forecast, which initially helped lift the company’s shares slightly in after-hours trading. The stock eventually ended up falling about 3 percent in after-hours trading.

Amazon said its net income for the first quarter, which ended March 31, fell to $82 million, or 18 cents a share, from $130 million, or 28 cents a share, a year earlier. Revenue jumped 22 percent to $16.07 billion from $13.18 billion.

While the company’s profit was better than analysts had expected, its revenue fell slightly short. Wall Street analysts expected Amazon to report earnings of 9 cents a share and revenue of $16.16 billion, according to an average of their estimates compiled by Thomson Reuters.

Amazon previously told analysts to expect its sales to grow to between $15 billion and $16.6 billion, or somewhere from 15 to 26 percent.

“It’s more of the same from Amazon,” said Colin Sebastian, an analyst at Robert W. Baird Company.

Mr. Sebastian added that the waves of investments that Amazon was making were unlikely to abate soon. “That’s going to be a continuing trend,” he said.

The seeming indifference of many investors to Amazon’s slim profits shows how much more effective the company has been at articulating its vision of future opportunities to Wall Street than another tech favorite, Apple.

Apple, which made a profit 116 times bigger than that of Amazon last quarter, has been plagued by investor doubts about its growth prospects, driving its stock down 33 percent over the l ast year.

Amazon’s shares are up 38 percent in that period.

Jordan Rohan, an analyst at Stifel Nicolaus, said investors had been reassured by comments from Amazon management that suggested the company was not being hurt as much by weakness in European economies as another e-commerce giant, eBay. “That’s an acknowledgment that the growth outlook for Amazon remains quite robust,” he said.

Amazon is spending heavily on fulfillment centers to speed delivery of physical goods to customers. It is also investing aggressively in data centers to expand its Amazon Web Services business, which provides start-ups and big corporate clients with computers and bandwidth they can rent as needed for their online initiatives.

Then there are the consumer devices that are becoming an increasingly important part of Amazon’s plan to deliver media electronically to customers. The company’s Kindle e-readers are now a full-blown family of tablet computers, which it sells for little or no profit, with the goal of making money over the long term by selling books, movies, music and other services.

Amazon is also developing a television set-top box that it is expected to announce in the fall, a device that could give its video services a more meaningful audience in living rooms. The company recently introduced pilot episodes for 14 original comedy and children’s television shows and is soliciting viewer feedback to determine which ones will be turned into full series.

In a conference call, Tom Szkutak, Amazon’s chief financial officer, repeated an oft-stated Amazon motto about its priorities. “We believe putting customers first is the only way to create lasting value for shareholders,” he said.

Article source: http://www.nytimes.com/2013/04/26/technology/amazons-profit-falls-as-it-spends-heavily-on-distribution-centers.html?partner=rss&emc=rss

Luxembourg Backs Challenge to Financial Transaction Tax

As Europe’s largest financial centre, London has the most to lose if finance firms move their trading operations to parts of the world free from such taxes.

“We are very sympathetic to the stance of the UK … We will certainly bring our support to the case that has been started in the European Court of Justice,” Frieden said during a question and answer session at the City Week banking conference.

The British government last week filed a deadline day challenge to the tax at the European Court of Justice.

A successful legal case against the tax would hinder its application outside those countries that sign up to it and could significantly cut the amount of revenue it brings in.

As the biggest trading centre in the EU, Britain would probably end up collecting much of the tax even though it won’t be applying it.

Germany has argued that banks, hedge funds and high-frequency traders should pay for a financial crisis that began in mid-2007 and exposed sovereign debt problems that forced euro zone countries to bail out peers such as Portugal and Greece.

Frieden told Reuters shortly after he made the comments that Luxembourg was now looking at whether to formally add its signature to the UK’s challenge, rather than just voice support.

“This is something that I have to examine. We are now in a political process and then I have to look into the details,” he said.

Speaking at the same conference, Thomas Donohue, head of the U.S. Chamber of Commerce, also stressed his country’s objections to the plans.

“European leaders are moving forward with proposals that are non-starters for the United States, for example the financial transaction tax and cap on bonuses for U.S. employees.”

“We will not allow the FTT to happen and we are going to be very careful how compensation is capped, regulated and dealt with like price control,” he said.

(Reporting by Marc Jones; Editing by Toby Chopra/Ruth Pitchford)

Article source: http://www.nytimes.com/reuters/2013/04/22/business/22reuters-banking-tax-luxembourg-fin-min.html?partner=rss&emc=rss

EBay Posts Gains, but Results Miss Estimates

In first quarter financial results released on Wednesday, revenue swelled to $3.7 billion, up 14 percent from a year earlier. EBay said net income was $677 million, or 51 cents a share, a 19 percent increase from a year earlier.

“We had a strong first quarter, with accelerating user growth across both Marketplaces and PayPal,” said John Donahoe, eBay’s president and chief executive, in a news release. “Technology is creating a commerce revolution, and we are in the forefront with strong mobile leadership and a focus on helping retailers and brands engage consumers anytime, anywhere.”

But the results, as well as second-quarter forecasts, fell short of Wall Street’s expectations, causing the stock to fall 1.6 percent in after-hours trading. The company forecast a second-quarter profit of 61 to 63 cents a share and revenue of $3.8 billion to $3.9 billion. Analysts were looking for earnings of 66 cents a share on revenue of $3.95 billion, according to Thomson Reuters.

EBay has successfully transformed itself from a site known as the virtual equivalent of a yard sale or dusty thrift shop to a sophisticated online marketplace, now competing with Amazon and other online retailers. It said that fixed-price merchandise, as opposed to its original auctioned merchandise, is now 68 percent of all goods sold. Most recently, the company has been experimenting with same-day delivery and courier services that let customers order through their mobile devices for delivery hours later. The company reported that its core retailing business, called Marketplaces, still shows strong growth, adding close to 4 million users during the period, bringing the total to 116 million, a lift of 13 percent.

Revenue from that division also grew 13 percent to $1.96 billion in the quarter. Four years ago, revenue in the unit was declining 18 percent. Some analysts say the future of the company depends largely on the continued success of its payments products, which primarily means PayPal, eBay’s mobile payments business, which continues to be a fountain of revenue. During the first quarter, the company said PayPal sales grew 18 percent, to $1.5 billion. The company also added 5 million PayPal customers during the quarter, bringing the total to 128 million.

Benjamin Schachter, a financial analyst at Macquarie Securities who follows eBay, said the company’s momentum is reflected in its stock price, which has steadily risen and closed at $56.10 on Wednesday.

“They’ve turned it around in the last couple of years,” he said. “But the question is, Can they keep that momentum going?”

That, he said, depends on how successfully eBay enables shoppers to buy and sell using their mobile devices as well as how they turn PayPal into an offline, real-world alternative to credit cards and cash.

“The idea is that when you walk into a store, instead of pulling out a Visa, you will pay with PayPal, either through your phone, saying your name or a separate, stand-alone device,” Mr. Schachter said. “The reason the stock is doing so well is because people are excited about the business possibilities.”

This article has been revised to reflect the following correction:

Correction: April 17, 2013

An earlier version of this article misstated the percent increase in eBay’s net income from a year earlier. It is 19 percent, not 20 percent. The error was repeated in the headline. The article also misstated revenue from the company’s Marketplaces division. It is 1.96 billion, not 1.54 billion.

Article source: http://www.nytimes.com/2013/04/18/technology/ebays-net-income-rises-20-percent.html?partner=rss&emc=rss