Thursday, October 15, 2009

“Stock futures steady ahead of more bank earnings - WTOP Radio” plus 4 more

“Stock futures steady ahead of more bank earnings - WTOP Radio” plus 4 more

Stock futures steady ahead of more bank earnings - WTOP Radio

Posted: 15 Oct 2009 04:09 AM PDT

By SARA LEPRO
AP Business Writer

NEW YORK (AP) - Stock futures fell Thursday as investors were disappointed by earnings reports from Goldman Sachs Group Inc. and Citigroup Inc.

The market's expectations for bank earnings have increased after JPMorgan Chase & Co. set a high bar Wednesday with a surprisingly strong profit that helped propel the Dow Jones industrials past the 10,000 mark for the first time in a year.

Goldman Sachs said it earned $3.19 billion, or $5.25 per share in the third quarter. Profits were boosted by increased activity in fixed income, commodities and currency trading. But revenue from its investment banking operations fell sharply from the previous quarter, reflecting slow activity in dealmaking. Goldman also said it set aside about $5.35 billion for compensation and bonuses, more than in the prior year third quarter.

Citigroup, meanwhile, reported a slightly smaller loss per share than expected but said its credit losses remain elevated.

Bank earnings are a particular focus for investors, as a healthy banking system is integral to a strong economy, and the best indication that the market has recovered from the financial devastation of last fall.

Tech firms Google Inc., IBM Corp. and Advanced Micro Devices will issue their results after the market's close Thursday.

On Wednesday, the Dow jumped 144 points to close at 10,015 _ its biggest gain since Aug. 21 and highest close since Oct. 3 last year. Broader stock indexes also rallied to 2009 highs.

Ahead of the market's open, Dow Jones industrial average futures fell 40, or 0.4 percent, to 9,912. Standard & Poor's 500 index futures fell 5.90, or 0.5 percent, to 1,081.80, while Nasdaq 100 index futures fell 8.25, or 0.5 percent, to 1,739.50.

The Dow is now up 53 percent since hitting a 12-year low in March, while the Standard & Poor's 500 index is up 61.4 percent and the Nasdaq composite is up 71.2 percent. Some believe the market is overvalued, given the problems that still plague the economy, including high unemployment.

The earnings reports from major corporations are the key to keeping the market's rally going. Investors want to see companies grow their profits through sales and not just cost-cutting, which would signal that consumers and businesses are becoming more comfortable spending again.

JPMorgan, the first major bank to report its quarterly results, set a precedent for its peers on Wednesday, reporting a $3.59 billion profit that came in well above Wall Street's expectations. Though the bank said it expects loan losses to remain high well into the future, business in its investment banking division is booming, and should help to offset those losses.

Goldman shares fell $6.16, or 3.3 percent, to $186.12 in premarket trading, while Citigroup shares lost 19 cents, or 3.8 percent, to $4.81.

In other earnings news, Southwest Airlines Co. said it lost $16 million in the third quarter because of fuel hedges and an early retirement program. Excluding those one-time items, the discount carrier said it would have made a profit of $23 million.

Also Thursday, investors will get a number of economic reports, including the Labor Department's weekly tally of initial claims for jobless benefits, as well as its September report on inflation.

Economists believe new claims for jobless benefits likely rose slightly last week to 525,000. First-time claims, an indicator of recent layoffs, fell in the prior week to their lowest level since early January. Separately, economists expect the Labor Department's Consumer Price Index rose just 0.2 percent in September, after a 0.4 percent gain in August and a flat reading in July.

In other trading, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.44 percent from 3.42 percent late Wednesday.

The dollar was mixed against other major currencies. Gold prices slid about $14 to $1,050.

Oil prices added 3 cents to $75.21 a barrel in electronic premarket trading on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average jumped 1.8 percent, while Hong Kong's Hang Seng index rose 0.5 percent. In afternoon trading, Britain's FTSE 100 fell 0.4 percent, Germany's DAX index was down 0.4 percent, and France's CAC-40 lost 0.2 percent.


(Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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Calpers reviewing fees paid to outside manager - CNBC

Posted: 15 Oct 2009 04:09 AM PDT

NEW YORK - The nation's largest pension fund, the California Public Employees' Retirement System, says it is investigating fees paid to an outside manager that directed the fund's investments.

Calpers said late Wednesday it is reviewing payments of $50 million over a five-year period to Arvco Financial Ventures, which is headed by former Calpers board member Al Villalobos.

The review comes after Calpers adopted a policy in May to ensure transparency in the fund's investment decisions. When the policy was adopted the Board of Administration told Calpers to request placement agent information from funds that previously received capital. That request led to the information that prompted the investigation.

Both the Securities and Exchange Commission and the California Attorney General's Office are aware of the review, Calpers said. The pension fund, which has about $200 billion in market assets, said it plans to work with the SEC and the attorney general's office as it looks into the situation.

Calpers said independent advisers, including Steptoe & Johnson LLP, will oversee the review to make sure that a "full and fair examination" is performed.

The announcement of the investigation comes on the heels of legislation signed earlier this week by Gov. Arnold Schwarzenegger that mandates all of the state's public pension funds disclose information on placement agent fees.

New York officials have been investigating similar managers that they claim received kickbacks for funneling pension fund investments to certain firms.

Like many pension funds, Calpers was hammered during the recent market downturn. Those losses could force California taxpayers to cover shortfalls in pension payments to retired state workers.

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Oracle's Larry Ellison to IBM: "make our day" - ksl.com

Posted: 15 Oct 2009 03:48 AM PDT

By JORDAN ROBERTSON
AP Technology Writer

SAN FRANCISCO (AP) - Larry Ellison ratcheted up his rhetoric against IBM Corp. on Wednesday, challenging Oracle Corp.'s longtime partner and rival to "make our day" in a battle over business software performance.

Ellison, Oracle's billionaire CEO, shook up the technology world in April by outbidding IBM and snatching up struggling server and software maker Sun Microsystems Inc. for $7.4 billion. The deal, which still needs approval from European antitrust authorities, would make Oracle more of a one-stop technology shop, like IBM. It led to a feeding frenzy on Sun's customers, with IBM and Hewlett-Packard Co. playing on fears about Oracle's plans for Sun's technology to steal business from Sun.

Ellison fought back Wednesday in a speech in San Francisco, promoting a $10 million prize Oracle is offering to any organization that finds Oracle's database software doesn't run at least twice as fast on Sun servers as it does on IBM's fastest computers.

"IBM, you are more than welcome to enter," he said, to laughs from a crowd of Oracle customers at the company's OpenWorld conference. "If you'd like to take us on, make our day."

IBM spokesman Tim Breuer said the heightened rancor may be fueled by the "large amounts of share" Sun has been losing to IBM. Market research firm IDC's latest numbers show Sun, the fourth-biggest server maker, losing more than a percentage point of market share in the past year, while IBM has widened its lead as the world's No. 1 server seller.

Breuer said the number of contracts IBM has stolen away from Sun more than doubled from the first to second quarter this year after the Oracle-Sun tie-up was announced. He declined to comment specifically about Ellison's challenge.

In his speech, Ellison also showed off a highly anticipated new package of applications that the company has spent years developing and is a key part of Oracle's challenge to Germany-based business software maker SAP AG.

But he spent much of the hour-and-a-half keynote taking shots at Armonk, N.Y.-based IBM, a technology powerhouse that makes most of its money selling services and software but also has a strong presence in computer servers. It's a profitable trifecta that other technology companies are trying to emulate.

Technology services providers are hot targets. Last month, Xerox Corp. bought Affiliated Computer Services Inc. for $6.4 billion, and Dell Inc. bought Perot Systems Corp. for $3.9 billion. A year ago, HP expanded its own services business with the $13.9 billion takeover of Electronic Data Systems Corp.

Oracle's move on Sun marks a new direction for the Redwood Shores, Calif.-based company.

Last month, the companies unveiled a new "database machine" built from Sun hardware and Oracle software that they said was twice as fast as the previous generation of the device, which was built by HP. When that device was unveiled last year, it marked the first time in Oracle's history that Oracle sold computer hardware.

On Wednesday, Ellison touted data that he says shows Oracle's software running on Sun's servers outperforms systems from IBM, a claim IBM has disputed since it first surfaced in August in an Oracle advertising campaign.

The claim earned Oracle a $10,000 fine from the Transaction Processing Performance Council, an industry group that said Oracle didn't submit its test results before running the ads.


(Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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Business lender CIT Group says chairman, CEO Peek plans to resign at ... - Minneapolis Star Tribune

Posted: 13 Oct 2009 05:23 AM PDT

NEW YORK - CIT Group Inc., struggling as it continues efforts to restructure its debt, said Tuesday chairman and CEO Jeffrey M. Peek will resign at the end of the year.

It is widely believed that the commercial lender, which has received $2.3 billion in federal bailout money, may be forced to seek bankruptcy court protection, and analysts said Peek's departure could be a sign that the company does plan a Chapter 11 filing that would enable it to reorganize its operations and finances.

Sameer Gokhale, a senior analyst at Keefe, Bruyette & Woods Inc. said that if CIT plans to reorganize, it would make sense to bring in a new CEO to run a new capitalized firm, he said.

It provides a "fresh start for the company," Gokhale said.

CIT is one of the largest lenders to small and mid-sized companies, and its customers range from Dunkin' Donuts franchisees to department store operator Dillards Inc. The company has suffered billions of dollars in losses as its borrowing costs outstripped the income it generates from lending to customers. As CIT's customers have struggled amid the recession, they have fallen behind on repaying loans, putting the company in the same predicament as many other financial institutions.

Some experts have warned that a collapse of CIT would deal a blow to an economy struggling to recover. The retail sector would be hit especially hard because CIT serves as a short-term financier to about 2,000 vendors that supply merchandise to 300,000 stores, according to the National Retail Federation. Analysts have said 60 percent of the apparel industry depends on CIT for financing.

CIT had $54.09 billion in outstanding long-term borrowings as of June 30, including $13.85 billion due by June 30, 2010. The company is trying to reduce its near-term debt burden by $5.7 billion.

CIT's shares fell 12 cents, or 11.5 percent, to close at 92 cents Tuesday.

Peek, 62, who has been with CIT Group since 2003, said in a statement the debt restructuring CIT is currently attempting, its second in recent months, makes this "the appropriate time to focus on a transition of leadership."

Daniel Alpert, a managing partner at the investment bank Westwood Capital, said Peek, possibly fearing that the restructuring would fail, might have decided he had run out of options to help the company and wanted to turn it over to someone else.

CIT has asked its biggest debt holders to approve a prepackaged reorganization plan in case it is forced to file for Chapter 11 bankruptcy protection. However, Alpert said, bondholders' conflicting demands could up-end that plan, forcing the company into a protracted court-supervised reorganization.

CIT received a $3 billion emergency loan from some of its largest bondholders in the summer in an attempt to stave off collapse, but its losses have continued to pile up. The loan was secured by essentially all of CIT's remaining assets not already backing other loans.

Debt holders who did not participate in that deal could fight a prepackaged agreement in an attempt to improve their chances of recovering investments during bankruptcy, Alpert said.

The government gave CIT $2.3 billion at the height of the credit crisis last year, when it gave hundreds of billions of dollars to struggling financial institutions. However, with essentially all of CIT's assets backing other outstanding debt, the government is unlikely to recover all of that money, Alpert said. In the hierarchy of creditors, the government would fall below secured creditors when being repaid in a Chapter 11 case, he added.

The government refused to give the company additional money this summer.

Peek was part of a generation of financial company executives who involved their firms in the risky business of subprime mortgages, one of the primary causes of the financial crisis that erupted last year. He first served as CIT Group's president and chief operating officer, before being named CEO in 2004 and chairman in 2005.

Before joining CIT, Peek served as a vice chairman at Credit Suisse First Boston LLC, overseeing the firm's financial services division. He also spent 20 years working at Merrill Lynch & Co.

The board of directors is creating a search committee to find a new CEO.

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Take Charge Thursday: Starting a Business - WNDU

Posted: 15 Oct 2009 04:02 AM PDT

It's Take Charge Thursday! This week we're talking about turning your hobby into a business.

We'll fill you in on what experts say entrepreneurs need to think about before giving it a shot.

We'll also show you some examples of people who have started their own businesses successfully, and pass along what advice they have for others.

"I would say the very first thing is you've got to love what you're doing because otherwise it's not worth it," said John D'Avella of D'Avella Family Winery. "And then the next thing is if you have the customers and the market, you're going to succeed."

"Marketing is the main part of the business," said business consultant Debra Williams. "You can have a great business idea, a great service, but if nobody knows about it, it's just that: a great business, a great service, with no customers."

Be sure to tune in tonight, beginning with Newscenter 16 at 5, for tips from local business counselors that can help you for free. Our phone bank will be on hand to take your calls.

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