September 21, 2021

Lennar Profit Is Up on Housing Recovery

Shares of the company, however, slipped 0.83 percent on concerns that the growth in orders was slowing and that part of the gain in profit had come from a one-time accounting gain.

“Low mortgage rates, affordable home prices, reduced foreclosures and an extremely favorable ‘rent vs. own’ comparison continue to drive the recovery,” the chief executive, Stuart Miller, said in a statement.

The housing market, which fell into a deep rut six years ago, has been recovering as low interest rates and rising rents are prompting consumers to buy homes.

Home sales and prices are rising, encouraging builders to start construction projects. Single-family home prices rose in October, for nine straight months of gains, recent figures show.

Mr. Miller said that Lennar was “extremely well positioned” to gain market share in 2013 and that the company expected to be strongly profitable. The PulteGroup and D.R. Horton are the top two American home builders.

Lennar, which is based in Miami, delivered 4,443 homes, up 32 percent, in the fourth quarter, while the average selling price of the homes delivered rose 7 percent to $261,000.

Its operating margin on home sales was 12.2 percent, up 6.6 percentage points, helped by an increase in selling prices and a decline in buyer incentives. Orders rose 32 percent, to 3,983 homes, while its backlog at the end of the quarter was worth $1.2 billion.

Net income rose to $124.3 million, or 56 cents a share, in the fourth quarter, from $30.3 million, or 16 cents a share, a year earlier. Revenue rose 42 percent, to $1.3 billion. Analysts had expected earnings of 44 cents a share on revenue of $1.31 billion, according to Thomson Reuters.

Article source:

Verizon Posts Loss on Pension Charges

Verizon Communications reported a net loss of $212 million in the fourth quarter of 2011, despite rising iPhone sales, compared with net income of $4.7 billion in the same quarter a year ago, the company said Tuesday.

The loss was primarily because of the impact of previously announced noncash pension charges, the company said.

The company said that revenue climbed 7.7 percent, to $28.4 billion in the quarter, from $26.4 billion in the same quarter a year earlier.

Adjusted for the pension charges, the per-share income was 52 cents, just below the expectations of Wall Street analysts of 53 cents a share. Revenue was right in line with forecasts, according to a survey of analysts by Thomson Reuters.

“Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012,” said Lowell McAdam, Verizon’s chief executive, in a statement.

The company, based in New York, said that it sold 4.2 million units of Apple’s iPhone 4S since its release in October.

However, profit margins dropped due to the high subsidies that Verizon must pay for each new iPhone purchased by customers when they commit to a two-year contract.

Wireless carriers subsidize a part of the retail price on most new cellphones in order to attract customers. However, the companies eventually recoup the costs over the duration of a phone’s two-year contract through monthly cellphone bills.

Verizon said this week that it had a large lead over its rival ATT in the race to build out a newer, faster network called 4G Long Term Evolution, or LTE. The company now has the LTE technology deployed in 195 markets, compared to ATT’s 26 markets.

Article source:

Economix Blog: Median Payments for Mortgages and Rent Converge



Dollars to doughnuts.

For years my colleague David Leonhardt has been helping people calculate whether it makes more sense to rent or buy a home, based on the relative costs of each decision. This week, the economists at Capital Economics noticed an interesting phenomenon related to this tradeoff. For the first time in three decades, the median monthly mortgage payment is about the same as the median rental payment:

Source: Capital Economics, Thomson Reuters

Of course, this chart is a little bit misleading because it excludes many of the upfront expenses of buying a home, like a down payment and closing costs. Perhaps more important, not everyone has the option to buy.

Credit conditions are still significantly tighter than they were a few years ago, despite the Federal Reserve’s efforts to loosen credit markets. Many lenders now require a credit score of 700 as opposed to 650, the previous standard. Capital Economics estimates that that requirement alone has shut 13 million households out of the mortgage market.

Article source:

Retail Sales Rose in May but Fell Short of Forecasts

Sales at discount stores that have been open at least a year grew by 7.8 percent in May, the best showing by any group of retailers in terms of sales last month, according to a survey of 24 retailers released on Thursday.

But the overall measure of what are known as same-store sales, compiled by Thomson Reuters, rose 4.9 percent on average in May, slightly below the 5.4 percent that analysts had forecast. It was also below the 8.9 percent growth in April, which was one of the biggest increases in the index in the last few years.Analysts said the May figures reflected the continued pressures on consumers from an uncertain jobs market, depressed housing sector, and the recent rise in gasoline prices. But retailers have tried to adapt to attract buyers who are still conservative about how much they open their wallets, and where.

Sherif Mityas, a partner in the retail practice at A.T. Kearney, a global management consulting firm, called the results “a bit underwhelming.”

“In totality we are still seeing significant headwinds from a consumer confidence perspective,” said Mr. Mityas. “You are seeing that show up in consumer retail sales.”

The monthly survey of same-store sales is used as a gauge for buoyancy in the retail sector and the strength of consumers, whose ability to spend is seen as a reflection of any progress in the economic recovery.

The survey fell a day ahead of the Labor Department’s monthly report on the jobs market. Analysts are forecasting an unemployment rate of 8.9 percent, down from 9 percent, and the addition of 170,000 jobs in May, although other jobs data this week has raised some concerns about whether those expectations will be met.

Economists said higher food and gasoline prices, although they have been moderating recently, have taken their toll on retailers in the United States. With people out of work and a depressed housing market, “people are feeling less confident about where their money is going,” Mr. Mityas said.

“The American consumer is still unfortunately focused on their needs when they open their wallet,” he said.

Still, the Thomson Reuters survey also suggested that while discount consumers were seeking bargains, higher end consumers were feeling less of a pinch. Retail sales at department stores rose 3.8 percent, but that was below the 4.5 percent increase expected. Apparel for teenagers also did well, climbing 4.5 percent overall, slightly above expectations of 4.2 percent.

Another survey of chain store sales from the International Council of Shopping Centers released on Thursday also suggested, as the Reuters survey did, that consumers on the high and low ends of the income scale were doing the most shopping. Neither survey includes Wal-Mart.

“The fact that luxury stores are plowing ahead gives some credence to suspicions that the high-end American consumer is pulling out of the recession relatively well, while the rest are having their incomes swallowed up by higher food and gasoline prices,” said Chris G. Christopher Jr., the senior principal economist for IHS Global Insight.

“In addition, shoppers are increasingly shopping for clothing from discount stores and staying away from the more expensive apparel outlets,” he said, commenting on the ICSC survey.

The Thomson Reuters survey accounts for sales in the four weeks through May 28. It quoted some retailers as saying that unseasonably cool and wet weather in the beginning of the month hurt traffic, but as the weather turned warmer near the end of the month, business picked up.

In the Thomson Reuters analysis, same-store sales at Saks showed the best increases of individual retailers, with a 20.2 percent jump in May, followed by Costco’s 13 percent rise.

Saks said in a statement that a four-day sales event helped push up May’s calculations. Macy’s reported same-store sales were up 7.4 percent. The department store said in a statement that it was raising its guidance, with same-store sales rising by about 5 percent in the second quarter from the previous estimate of about 4 percent. Macy’s includes online sales in its same-store sales calculations. Mr. Mityas said Saks and Macy’swere pursuing consumers with better pricing and merchandising.

“They are clearly setting the bar,” he said.

Nordstrom was up 7.4 percent.Among the companies that missed forecasts by the biggest margin were Destination Maternity, which showed same-store sales declining by 8.6 percent, the worst drop of the 24 retailers, worse than the decline of 1 percent forecast by analysts. J.C. Penney, which had been expected to show a 3.3 percent rise, fell by 1 percent. Gap Inc and Stage Store also fell short of forecasts.

Teen retailers The Buckle Inc and Zumiez Inc. beat expectations, with same-store sales rising 7.8 percent and 8.8 percent in May.

Article source:

Boeing’s Profit Rises but Revenue Slips

The ’company said Wednesday that it made $586 million, or 78 cents a share, compared with $519 million, or 70 cents a share, in the period a year ago when the company took a 20 cents-per-share charge related to health care legislation.

Analysts on average expected Boeing to report a first-quarter profit of 70 cents a share, according to Thomson Reuters.

Revenue, however, slipped 2 percent to $14.9 billion.

Boeing, which competes with EADS unit Airbus, splits its business almost evenly between commercial airplanes and defense products.

The commercial airplane unit’s first-quarter revenue decreased by 5 percent to $7.1 billion on fewer 777 deliveries.

Boeing repeated that first delivery for the long-delayed 787 Dreamliner was on track for the third quarter.

First-quarter revenue for the military subdivision was $7.6 billion, in line with the year-ago quarter.

Article source:

Revenue Rises at Google but Profit Misses Forecasts

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

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

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

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

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

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

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

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

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

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

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

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

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

Article source: