NEW YORK - Wall Street pulled back Tuesday, with the Dow Jones industrials tumbling more than 100 points as a rush of quarterly results from bellwethers like AT&T Inc., DuPont and McDonald’s Corp. failed to impress investors. Oil prices also reached fresh highs, raising concerns about inflation.
AT&T’s earnings met Wall Street’s forecast while McDonald’s and DuPont reported stronger-than-expected numbers. But DuPont said a U.S. slowdown will offset growth abroad and McDonald’s said an important metric of its sales showed a decline for March. All three companies are among the 30 stocks that make up the Dow.
The comments gave trading a cautious tone. With hundreds of companies still to report results, investors are anxious over what the figures might say about the prospects for the economy.We’ve melted here, but it isn’t a plunge,” said Art Hogan, chief market analyst at Jefferies & Co. “We’re in a day-to-day assessment of how good earnings season is, and right now there’s more bad news than good news — the parade has been less positive than we’ve anticipated.”
Investors appeared little moved by news of continued weakness in the housing sector. Sales of existing homes fell 2 percent in March to a seasonally adjusted annual rate of 4.93 million units, while the median sales price dropped for a seventh straight month. The National Association of Realtors also said sales rose in the Northeast and West but fell in the Midwest and South.
But oil’s seemingly relentless march higher this year raises the specter of higher inflation that would lead consumers to cut back their discretionary spending. It would also make the Federal Reserve less likely to keep lowering interest rates.
Light, sweet crude for May delivery rose as high as $119.90 barrel, then slipped back to settle at $119.37, up $1.89. But it appeared inevitable crude would pass $120.
The Dow fell 104.79, or 0.82 percent, to 12,720.23.
Broader stock indicators also declined. The Standard & Poor’s 500 index fell 12.23, or 0.88 percent, to 1,375.94, and the Nasdaq composite index fell 31.10, or 1.29 percent, to 2,376.94.Bond prices edged up. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.69 percent from 3.72 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.
Some of the latest earnings reports appeared to confirm concerns about the economy, analysts said.
“It takes a while for the economy’s situation to work its way down to the companies,” said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. “What’s going on is earnings are reflecting the reality of a slowing economy, and that should go on until the second half of the year.”
Late Monday, Texas Instruments Inc. warned of a weak market for the chips it makes for high-end mobile phones. The company’s results were nearly in line with Wall Street’s expectations, however. The stock fell $1.77, or 5.8 percent, to $28.82.
In other corporate news, CIT Group Inc. fell $1.99, or 15.6 percent, to $10.75 after the financial services company said it would raise $1.5 billion from an offering of common and preferred stock. The company has been hit by strains in the mortgage and credit markets.
AT&T rose 22 cents to $37.81 after reporting that its first-quarter earnings rose 22 percent following growth in the company’s wireless division and as its enterprise services business saw a reversal of an earlier decline.
DuPont said profits jumped 26 percent as the chemical company saw higher sales and benefits from the weak dollar. But the company’s comments about the U.S. market appeared to weigh on the stock, which fell $2.09, or 4 percent, to $50.16.
McDonald’s slipped 32 cents to $58.35 after saying its first-quarter earnings grew 24 percent. The fast food chain benefited from the weak U.S. dollar and strong global sales. However, it also said its same-stores sales, or sales at restaurants open at least a year, declined in March.
The rising price of oil again sent energy stocks higher. Exxon Mobil Corp. rose 13 cents to $94.39, while Chevron Corp. rose $1.33 to $94.03.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 1.33 billion shares.
The Russell 2000 index of smaller companies fell 14.29, or 1.99 percent, to 703.71.
Overseas, Japan’s Nikkei stock average closed down 1.09 percent. In afternoon trading, Britain’s FTSE 100 fell 0.30 percent, Germany’s DAX index fell 0.86 percent, and France’s CAC-40 lost 0.77 percent.
Wednesday, April 23, 2008
Stocks close lower as investors digest earnings
NEW YORK - Wall Street pulled back Tuesday, with the Dow Jones industrials tumbling more than 100 points as a rush of quarterly results from bellwethers like AT&T Inc., DuPont and McDonald’s Corp. failed to impress investors. Oil prices also reached fresh highs, raising concerns about inflation.
AT&T’s earnings met Wall Street’s forecast while McDonald’s and DuPont reported stronger-than-expected numbers. But DuPont said a U.S. slowdown will offset growth abroad and McDonald’s said an important metric of its sales showed a decline for March. All three companies are among the 30 stocks that make up the Dow.
The comments gave trading a cautious tone. With hundreds of companies still to report results, investors are anxious over what the figures might say about the prospects for the economy.“We’ve melted here, but it isn’t a plunge,” said Art Hogan, chief market analyst at Jefferies & Co. “We’re in a day-to-day assessment of how good earnings season is, and right now there’s more bad news than good news — the parade has been less positive than we’ve anticipated.”
Investors appeared little moved by news of continued weakness in the housing sector. Sales of existing homes fell 2 percent in March to a seasonally adjusted annual rate of 4.93 million units, while the median sales price dropped for a seventh straight month. The National Association of Realtors also said sales rose in the Northeast and West but fell in the Midwest and South.
But oil’s seemingly relentless march higher this year raises the specter of higher inflation that would lead consumers to cut back their discretionary spending. It would also make the Federal Reserve less likely to keep lowering interest rates.
Light, sweet crude for May delivery rose as high as $119.90 barrel, then slipped back to settle at $119.37, up $1.89. But it appeared inevitable crude would pass $120.
The Dow fell 104.79, or 0.82 percent, to 12,720.23.
Broader stock indicators also declined. The Standard & Poor’s 500 index fell 12.23, or 0.88 percent, to 1,375.94, and the Nasdaq composite index fell 31.10, or 1.29 percent, to 2,376.94.
getCSS("3216310")
News moving the markets
Existing home sales fell 2 percent in March
DuPont’s profit rises on higher prices
Oil sets new record above $119 a barrel
Overseas sales boost McDonald’s profit
Bond prices edged up. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.69 percent from 3.72 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.
Some of the latest earnings reports appeared to confirm concerns about the economy, analysts said.
“It takes a while for the economy’s situation to work its way down to the companies,” said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. “What’s going on is earnings are reflecting the reality of a slowing economy, and that should go on until the second half of the year.”
Late Monday, Texas Instruments Inc. warned of a weak market for the chips it makes for high-end mobile phones. The company’s results were nearly in line with Wall Street’s expectations, however. The stock fell $1.77, or 5.8 percent, to $28.82.
In other corporate news, CIT Group Inc. fell $1.99, or 15.6 percent, to $10.75 after the financial services company said it would raise $1.5 billion from an offering of common and preferred stock. The company has been hit by strains in the mortgage and credit markets.
AT&T rose 22 cents to $37.81 after reporting that its first-quarter earnings rose 22 percent following growth in the company’s wireless division and as its enterprise services business saw a reversal of an earlier decline.
DuPont said profits jumped 26 percent as the chemical company saw higher sales and benefits from the weak dollar. But the company’s comments about the U.S. market appeared to weigh on the stock, which fell $2.09, or 4 percent, to $50.16.
McDonald’s slipped 32 cents to $58.35 after saying its first-quarter earnings grew 24 percent. The fast food chain benefited from the weak U.S. dollar and strong global sales. However, it also said its same-stores sales, or sales at restaurants open at least a year, declined in March.
The rising price of oil again sent energy stocks higher. Exxon Mobil Corp. rose 13 cents to $94.39, while Chevron Corp. rose $1.33 to $94.03.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 1.33 billion shares.
The Russell 2000 index of smaller companies fell 14.29, or 1.99 percent, to 703.71.
Overseas, Japan’s Nikkei stock average closed down 1.09 percent. In afternoon trading, Britain’s FTSE 100 fell 0.30 percent, Germany’s DAX index fell 0.86 percent, and France’s CAC-40 lost 0.77 percent.
AT&T’s earnings met Wall Street’s forecast while McDonald’s and DuPont reported stronger-than-expected numbers. But DuPont said a U.S. slowdown will offset growth abroad and McDonald’s said an important metric of its sales showed a decline for March. All three companies are among the 30 stocks that make up the Dow.
The comments gave trading a cautious tone. With hundreds of companies still to report results, investors are anxious over what the figures might say about the prospects for the economy.“We’ve melted here, but it isn’t a plunge,” said Art Hogan, chief market analyst at Jefferies & Co. “We’re in a day-to-day assessment of how good earnings season is, and right now there’s more bad news than good news — the parade has been less positive than we’ve anticipated.”
Investors appeared little moved by news of continued weakness in the housing sector. Sales of existing homes fell 2 percent in March to a seasonally adjusted annual rate of 4.93 million units, while the median sales price dropped for a seventh straight month. The National Association of Realtors also said sales rose in the Northeast and West but fell in the Midwest and South.
But oil’s seemingly relentless march higher this year raises the specter of higher inflation that would lead consumers to cut back their discretionary spending. It would also make the Federal Reserve less likely to keep lowering interest rates.
Light, sweet crude for May delivery rose as high as $119.90 barrel, then slipped back to settle at $119.37, up $1.89. But it appeared inevitable crude would pass $120.
The Dow fell 104.79, or 0.82 percent, to 12,720.23.
Broader stock indicators also declined. The Standard & Poor’s 500 index fell 12.23, or 0.88 percent, to 1,375.94, and the Nasdaq composite index fell 31.10, or 1.29 percent, to 2,376.94.
getCSS("3216310")
News moving the markets
Existing home sales fell 2 percent in March
DuPont’s profit rises on higher prices
Oil sets new record above $119 a barrel
Overseas sales boost McDonald’s profit
Bond prices edged up. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.69 percent from 3.72 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.
Some of the latest earnings reports appeared to confirm concerns about the economy, analysts said.
“It takes a while for the economy’s situation to work its way down to the companies,” said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. “What’s going on is earnings are reflecting the reality of a slowing economy, and that should go on until the second half of the year.”
Late Monday, Texas Instruments Inc. warned of a weak market for the chips it makes for high-end mobile phones. The company’s results were nearly in line with Wall Street’s expectations, however. The stock fell $1.77, or 5.8 percent, to $28.82.
In other corporate news, CIT Group Inc. fell $1.99, or 15.6 percent, to $10.75 after the financial services company said it would raise $1.5 billion from an offering of common and preferred stock. The company has been hit by strains in the mortgage and credit markets.
AT&T rose 22 cents to $37.81 after reporting that its first-quarter earnings rose 22 percent following growth in the company’s wireless division and as its enterprise services business saw a reversal of an earlier decline.
DuPont said profits jumped 26 percent as the chemical company saw higher sales and benefits from the weak dollar. But the company’s comments about the U.S. market appeared to weigh on the stock, which fell $2.09, or 4 percent, to $50.16.
McDonald’s slipped 32 cents to $58.35 after saying its first-quarter earnings grew 24 percent. The fast food chain benefited from the weak U.S. dollar and strong global sales. However, it also said its same-stores sales, or sales at restaurants open at least a year, declined in March.
The rising price of oil again sent energy stocks higher. Exxon Mobil Corp. rose 13 cents to $94.39, while Chevron Corp. rose $1.33 to $94.03.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 1.33 billion shares.
The Russell 2000 index of smaller companies fell 14.29, or 1.99 percent, to 703.71.
Overseas, Japan’s Nikkei stock average closed down 1.09 percent. In afternoon trading, Britain’s FTSE 100 fell 0.30 percent, Germany’s DAX index fell 0.86 percent, and France’s CAC-40 lost 0.77 percent.
Travelers should prepare for unfriendly skies
Jammed flights, high fares, delays will affect airlines, customers all summer
CHICAGO - Soaring fuel costs. Flights cut. Jobs lost.
The parent company of United Airlines reported a worse-than-expected quarterly loss Tuesday, citing a string of problems that are hurting other carriers as well. And for travelers, a vacation season of jammed planes, delayed flights and higher fares looms in what’s shaping up as the worst of times for both airlines and their customers.
“It’s going to be a rough summer,” said Terry Trippler, a Minneapolis-based travel expert. “It’s going to be one where you’ve got to plan another day into your travel schedule” just to prepare for schedule chaosMonths of rising concerns about the consequences of higher fuel prices jumped to new levels of anxiety among investors on a gloomy combination of developments that sent UAL Corp. shares down a staggering 35 percent and battered other airline stocks.
Not only did United post a $537 million first-quarter loss and announce cutbacks accordingly, crude oil surged near the once-unthinkable $120-a-barrel mark and Delta Air Lines Inc. CEO Richard Anderson said domestic carriers would need to raise fares by 15 percent to 20 percent just to break even.
With weaker demand because of the economy, cutbacks in corporate travel and likely “sticker shock” among consumers, it’s not clear whether the airlines can accomplish such increases. Airlines have tried to raise ticket prices a dozen times across most of their route networks since the start of the year, but most such attempts were rolled back after competitors refused to join in.
Anderson said higher fares would likely diminish demand for air travel, and prompt carriers to further reduce their schedules.
“We’ve got an industry that’s in trouble,” said Vaughn Cordle, chief executive and chief analyst at AirlineForecasts in Washington. “If oil prices stay anywhere near $100, $120 for the year ... we’ll have a massive restructuring of the airline industry.”
It’s time for passengers, too, to buckle up for a rough ride as the heavy travel season approaches. Planes will be fuller and ticket prices significantly higher than in past summers.
Just how bad cancellations and delays will be is hard to predict. Airlines’ recent cutbacks and the shutdowns of a handful of smaller carriers will remove some planes from the skies but won’t solve congestion, and the threat of weather problems and labor strife is ever-present.
Passengers have had a taste of the possible pandemonium already this year after massive flight cancellations by American Airlines and the Federal Aviation Administration stepping up its scrutiny of airplane inspections after years of more lenient enforcement.
The good news, relatively speaking: Americans may already be steeled to these types of stressful conditions.
“It’s not like this has come out of the blue,” Trippler said. “It’s getting progressively worse every year. But most summer air travelers are experienced.”
So far, they’re also determined to go regardless of ticket markups. Airlines have said their bookings still look strong, given the iffy economic situation.
Arthur Salus, president of Duluth (Ga.) Travel outside Atlanta, said demand remains strong for both domestic and international travel. After all, sky-high gasoline costs don’t look great by comparison, either.
More on this story
Airlines win big on those who overpackAirline execs, regulators often switch places Bon voyage, cheap flights
“People still have the money and they still want to travel,” he said. “If someone pays $20, $30, $40 more for a ticket, that’s not going to be a deterrent for them if they have to drive more than four to five hours.”
Eventually, though, both the airlines and analysts expect business to drop off as fares keep rising.
The likeliest price increases are in markets where companies do not compete head-to-head with budget carriers like Southwest Airlines Co. or face little competition from other traditional airlines. During the first week of April, for example, leisure fares from traditional carriers on 280 major routes rose 13 percent from the previous year, according to data compiled by travel research firm Harrell Associates.But prices to several smaller cities served by fewer flights rose substantially more. Prices between New York and Pittsburgh, for example, doubled to $68 one-way, while a ticket from Newark, N.J., to Cleveland rose 80 percent to $124, according to the data.
For United, as with other carriers, higher fares are only part of the response to what it called an “extraordinarily difficult” operating environment that worsened Tuesday with crude prices rising another $1.89 to a record $119.37.
The nation’s second-largest airline said its revenue growth of nearly 8 percent was more than offset by a $618 million jump in fuel costs, which rose nearly 50 percent in a year.After reporting its biggest loss since emerging from bankruptcy in 2006, the Chicago-based carrier said it will trim 2008 spending by $400 million, eliminate 1,100 jobs by the end of the year, cut domestic capacity 9 percent by the fourth quarter and ground 30 of its oldest and least-efficient aircraft.
“The path to sustainable profitability requires us to fundamentally overhaul every facet of our business,” said Glenn Tilton, United’s chairman, president and CEO. “The pressure of high energy prices and a weakening economy are a wake-up call that the pace of change must accelerate.”
Combining with another carrier could be next, especially in the wake of the proposed tie-up this month of Delta and Northwest Airlines Corp. While Tilton did not name Continental, United is known to be in talks with the Houston-based carrier. Consolidation, the CEO said, is “one of the changes required to address the gap between where we stand today and profitability and sustainability.”
United follows American Airlines parent AMR Corp. and Continental Airlines Inc. into the red for the quarter because of fuel costs. Southwest is the only large carrier to have reported a profit so far.
Among smaller carriers, JetBlue Airways Corp. reported an $8 million loss Tuesday that was narrower than expected. CEO Dave Barger said on a conference call that its $138 average fare in March was its highest monthly average ever. But the New York-based airline said fares would have had to have been 2 percent higher for it to have made a profit in the quarter.
The record fuel prices make it virtually impossible for a low-cost startup airline to enter the market for the time being.
Calyon Securities airline analyst Ray Neidl said carriers will need to continue cutting back on flights and raising prices in order to cope with higher oil prices.
“We’ve got too much capacity and prices are too low,” he said. “Airlines just can’t survive with the current air fares if oil stays this high.”
More on this story
Airlines win big on those who overpackAirline execs, regulators often switch places Bon voyage, cheap flights
Neidl said he expects airlines will continue to find ways to charge for added services, such as extra bags and more legroom. But that trend, he said, would be happening even without the surge in fuel costs.
“People do want to pay the rock-bottom fare and not have to subsidize other services,” he said.
High oil prices and the global credit squeeze also are affecting demand for new planes. While airlines can still negotiate substantial discounts, European planemaker Airbus said Tuesday that the ever-weaker dollar and high metals prices are forcing it to raise prices. Airbus announced increases of as much as 3 percent to catalog prices — on top of the 2.74 percent annual hike for 2007 already programmed.
The parent company of United Airlines reported a worse-than-expected quarterly loss Tuesday, citing a string of problems that are hurting other carriers as well. And for travelers, a vacation season of jammed planes, delayed flights and higher fares looms in what’s shaping up as the worst of times for both airlines and their customers.
“It’s going to be a rough summer,” said Terry Trippler, a Minneapolis-based travel expert. “It’s going to be one where you’ve got to plan another day into your travel schedule” just to prepare for schedule chaosMonths of rising concerns about the consequences of higher fuel prices jumped to new levels of anxiety among investors on a gloomy combination of developments that sent UAL Corp. shares down a staggering 35 percent and battered other airline stocks.
Not only did United post a $537 million first-quarter loss and announce cutbacks accordingly, crude oil surged near the once-unthinkable $120-a-barrel mark and Delta Air Lines Inc. CEO Richard Anderson said domestic carriers would need to raise fares by 15 percent to 20 percent just to break even.
With weaker demand because of the economy, cutbacks in corporate travel and likely “sticker shock” among consumers, it’s not clear whether the airlines can accomplish such increases. Airlines have tried to raise ticket prices a dozen times across most of their route networks since the start of the year, but most such attempts were rolled back after competitors refused to join in.
Anderson said higher fares would likely diminish demand for air travel, and prompt carriers to further reduce their schedules.
“We’ve got an industry that’s in trouble,” said Vaughn Cordle, chief executive and chief analyst at AirlineForecasts in Washington. “If oil prices stay anywhere near $100, $120 for the year ... we’ll have a massive restructuring of the airline industry.”
It’s time for passengers, too, to buckle up for a rough ride as the heavy travel season approaches. Planes will be fuller and ticket prices significantly higher than in past summers.
Just how bad cancellations and delays will be is hard to predict. Airlines’ recent cutbacks and the shutdowns of a handful of smaller carriers will remove some planes from the skies but won’t solve congestion, and the threat of weather problems and labor strife is ever-present.
Passengers have had a taste of the possible pandemonium already this year after massive flight cancellations by American Airlines and the Federal Aviation Administration stepping up its scrutiny of airplane inspections after years of more lenient enforcement.
The good news, relatively speaking: Americans may already be steeled to these types of stressful conditions.
“It’s not like this has come out of the blue,” Trippler said. “It’s getting progressively worse every year. But most summer air travelers are experienced.”
So far, they’re also determined to go regardless of ticket markups. Airlines have said their bookings still look strong, given the iffy economic situation.
Arthur Salus, president of Duluth (Ga.) Travel outside Atlanta, said demand remains strong for both domestic and international travel. After all, sky-high gasoline costs don’t look great by comparison, either.
Airlines win big on those who overpackAirline execs, regulators often switch places Bon voyage, cheap flights
“People still have the money and they still want to travel,” he said. “If someone pays $20, $30, $40 more for a ticket, that’s not going to be a deterrent for them if they have to drive more than four to five hours.”
Eventually, though, both the airlines and analysts expect business to drop off as fares keep rising.
The likeliest price increases are in markets where companies do not compete head-to-head with budget carriers like Southwest Airlines Co. or face little competition from other traditional airlines. During the first week of April, for example, leisure fares from traditional carriers on 280 major routes rose 13 percent from the previous year, according to data compiled by travel research firm Harrell Associates.But prices to several smaller cities served by fewer flights rose substantially more. Prices between New York and Pittsburgh, for example, doubled to $68 one-way, while a ticket from Newark, N.J., to Cleveland rose 80 percent to $124, according to the data.
For United, as with other carriers, higher fares are only part of the response to what it called an “extraordinarily difficult” operating environment that worsened Tuesday with crude prices rising another $1.89 to a record $119.37.
The nation’s second-largest airline said its revenue growth of nearly 8 percent was more than offset by a $618 million jump in fuel costs, which rose nearly 50 percent in a year.After reporting its biggest loss since emerging from bankruptcy in 2006, the Chicago-based carrier said it will trim 2008 spending by $400 million, eliminate 1,100 jobs by the end of the year, cut domestic capacity 9 percent by the fourth quarter and ground 30 of its oldest and least-efficient aircraft.
“The path to sustainable profitability requires us to fundamentally overhaul every facet of our business,” said Glenn Tilton, United’s chairman, president and CEO. “The pressure of high energy prices and a weakening economy are a wake-up call that the pace of change must accelerate.”
Combining with another carrier could be next, especially in the wake of the proposed tie-up this month of Delta and Northwest Airlines Corp. While Tilton did not name Continental, United is known to be in talks with the Houston-based carrier. Consolidation, the CEO said, is “one of the changes required to address the gap between where we stand today and profitability and sustainability.”
United follows American Airlines parent AMR Corp. and Continental Airlines Inc. into the red for the quarter because of fuel costs. Southwest is the only large carrier to have reported a profit so far.
Among smaller carriers, JetBlue Airways Corp. reported an $8 million loss Tuesday that was narrower than expected. CEO Dave Barger said on a conference call that its $138 average fare in March was its highest monthly average ever. But the New York-based airline said fares would have had to have been 2 percent higher for it to have made a profit in the quarter.
The record fuel prices make it virtually impossible for a low-cost startup airline to enter the market for the time being.
Calyon Securities airline analyst Ray Neidl said carriers will need to continue cutting back on flights and raising prices in order to cope with higher oil prices.
“We’ve got too much capacity and prices are too low,” he said. “Airlines just can’t survive with the current air fares if oil stays this high.”
Airlines win big on those who overpackAirline execs, regulators often switch places Bon voyage, cheap flights
Neidl said he expects airlines will continue to find ways to charge for added services, such as extra bags and more legroom. But that trend, he said, would be happening even without the surge in fuel costs.
“People do want to pay the rock-bottom fare and not have to subsidize other services,” he said.
High oil prices and the global credit squeeze also are affecting demand for new planes. While airlines can still negotiate substantial discounts, European planemaker Airbus said Tuesday that the ever-weaker dollar and high metals prices are forcing it to raise prices. Airbus announced increases of as much as 3 percent to catalog prices — on top of the 2.74 percent annual hike for 2007 already programmed.
Tuesday, April 22, 2008
Bank of America's profit plunges 77%
Drop in earnings far sharper than forecasts, although No. 2 bank stays in black despite writedownsNEW YORK (CNNMoney.com) -- Bank of America Corp.'s quarterly profits plunged 77% as the bank set aside more cash for bad loans and took another writedown on its mortgage-related portfolio, the company said Monday.
The Charlotte, N.C.-based bank managed to stay in the black: Net income fell to $1.21 billion, or 23 cents a share, from $5.26 billion, or $1.16 a share, a year ago.
The first-quarter results, however, were worse than expected, as analysts surveyed by earnings tracker Thomson Financial had forecast profits of 41 cents a share.
"These results clearly did not meet our expectations," said Chairman and CEO Kenneth Lewis. "The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance."
The company also took $1.9 billion in writedowns on the value of its collateralized debt obligations and leveraged loans, although that amount was less than the writedowns in the fourth quarter.
Those losses helped create a significant drag on results in the company's corporate and investment banking division, where profit dived 92% during the quarter.
Credit and capital
While Bank of America's investment management division also suffered, much of the quarter's dismal results stemmed from loan troubles in the bank's consumer and small business division.
During the quarter, the company set aside an eye-popping $4.78 billion in response to growing troubles in its home equity, small business and homebuilder portfolios.
"I think adding reserves in this environment was the responsible and right thing to do," said David George, senior research analyst at Robert W. Baird & Co. Inc. "It probably will continue but maybe not to the degree of this quarter - credit quality is still incrementally worsening."
Banks worried about further erosion in the economy - namely the drop in consumer spending and rise in unemployment - have been working to fortify their balance sheets against further losses in consumer-related loan portfolios.
Still, Bank of America appeared relatively well-capitalized.
Bank of America said its Tier 1 capital ratio, a gauge of the bank's ability to absorb huge losses, was 7.51% - down from a year ago, but up from the previous quarter after a $13 billion preferred stock sale in January.
Both regulators and investors have lately kept a close eye on capital levels as banks struggle to stay afloat.
Joe Price, the company's chief financial officer, said he expected those levels to improve later in the year. It has been widely speculated that Bank of America is planning to sell it prime brokerage business, which services hedge fund clients, and is even considering trimming its 9% stake in China Construction Bank to raise capital, the Financial Times reported Monday.
CEO Lewis, on a conference call, said the company would most likely issue preferred shares if it needs to raise more capital. But he did not rule out cutting Bank of America's attractive dividend if the company found itself in the midst of a prolonged recession. Right now, the company pays a quarterly dividend of 64 cents, or 6.81% of the stock price - by far the largest payout of any Dow Jones Industrial Average company.
"If things really got bad, then we would look at the dividend," said Lewis.
Looking forward
Lewis on Monday echoed the comments of other financial services firms, saying that the industry was in the "last innings" in terms of writedowns. But he warned that ongoing problems in the housing market and broader economy would pose hurdles.
"Second quarter will be a critical quarter for us to see if earnings return to more normal levels," said Lewis.
But playing into that outlook, was the health of the American consumer.
In his prepared remarks, Lewis said the company was "concerned" about consumers because of the ongoing woes in the housing market, rising unemployment and higher fuel and food prices.
At the same time, the firm reiterated its earlier statement that it planned to close on its planned $4 billion purchase of troubled mortgage giant Countrywide Financial Corp. (CFC, Fortune 500) in the early part of the third quarter.
The deal, which was announced in early January, still has to meet approval of both shareholders and federal regulators. The Federal Reserve is sponsoring two public hearings on the merger in Chicago and Los Angeles starting Tuesday.
Bank of America is ranked second largest in assets, behind only Citigroup Inc. (C, Fortune 500), which had far worse results in the quarter, posting a loss of more than $5 billion. Other financial firms to report losses in the first quarter include Washington Mutual Inc. (WM, Fortune 500), Wachovia Corp. (WB, Fortune 500) and brokerage firm Merrill Lynch & Co. (MER, Fortune 500). JPMorgan Chase & Co. (JPM, Fortune 500), the nation's No. 3 bank, reported lower earnings that, unlike Bank of America, beat forecasts.
Shares in Bank of America (BAC, Fortune 500) fell more than 2% in midday trading on the New York Stock Exchange. .
The Charlotte, N.C.-based bank managed to stay in the black: Net income fell to $1.21 billion, or 23 cents a share, from $5.26 billion, or $1.16 a share, a year ago.
The first-quarter results, however, were worse than expected, as analysts surveyed by earnings tracker Thomson Financial had forecast profits of 41 cents a share.
"These results clearly did not meet our expectations," said Chairman and CEO Kenneth Lewis. "The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance."
The company also took $1.9 billion in writedowns on the value of its collateralized debt obligations and leveraged loans, although that amount was less than the writedowns in the fourth quarter.
Those losses helped create a significant drag on results in the company's corporate and investment banking division, where profit dived 92% during the quarter.
Credit and capital
While Bank of America's investment management division also suffered, much of the quarter's dismal results stemmed from loan troubles in the bank's consumer and small business division.
During the quarter, the company set aside an eye-popping $4.78 billion in response to growing troubles in its home equity, small business and homebuilder portfolios.
"I think adding reserves in this environment was the responsible and right thing to do," said David George, senior research analyst at Robert W. Baird & Co. Inc. "It probably will continue but maybe not to the degree of this quarter - credit quality is still incrementally worsening."
Banks worried about further erosion in the economy - namely the drop in consumer spending and rise in unemployment - have been working to fortify their balance sheets against further losses in consumer-related loan portfolios.
Still, Bank of America appeared relatively well-capitalized.
Bank of America said its Tier 1 capital ratio, a gauge of the bank's ability to absorb huge losses, was 7.51% - down from a year ago, but up from the previous quarter after a $13 billion preferred stock sale in January.
Both regulators and investors have lately kept a close eye on capital levels as banks struggle to stay afloat.
Joe Price, the company's chief financial officer, said he expected those levels to improve later in the year. It has been widely speculated that Bank of America is planning to sell it prime brokerage business, which services hedge fund clients, and is even considering trimming its 9% stake in China Construction Bank to raise capital, the Financial Times reported Monday.
CEO Lewis, on a conference call, said the company would most likely issue preferred shares if it needs to raise more capital. But he did not rule out cutting Bank of America's attractive dividend if the company found itself in the midst of a prolonged recession. Right now, the company pays a quarterly dividend of 64 cents, or 6.81% of the stock price - by far the largest payout of any Dow Jones Industrial Average company.
"If things really got bad, then we would look at the dividend," said Lewis.
Looking forward
Lewis on Monday echoed the comments of other financial services firms, saying that the industry was in the "last innings" in terms of writedowns. But he warned that ongoing problems in the housing market and broader economy would pose hurdles.
"Second quarter will be a critical quarter for us to see if earnings return to more normal levels," said Lewis.
But playing into that outlook, was the health of the American consumer.
In his prepared remarks, Lewis said the company was "concerned" about consumers because of the ongoing woes in the housing market, rising unemployment and higher fuel and food prices.
At the same time, the firm reiterated its earlier statement that it planned to close on its planned $4 billion purchase of troubled mortgage giant Countrywide Financial Corp. (CFC, Fortune 500) in the early part of the third quarter.
The deal, which was announced in early January, still has to meet approval of both shareholders and federal regulators. The Federal Reserve is sponsoring two public hearings on the merger in Chicago and Los Angeles starting Tuesday.
Bank of America is ranked second largest in assets, behind only Citigroup Inc. (C, Fortune 500), which had far worse results in the quarter, posting a loss of more than $5 billion. Other financial firms to report losses in the first quarter include Washington Mutual Inc. (WM, Fortune 500), Wachovia Corp. (WB, Fortune 500) and brokerage firm Merrill Lynch & Co. (MER, Fortune 500). JPMorgan Chase & Co. (JPM, Fortune 500), the nation's No. 3 bank, reported lower earnings that, unlike Bank of America, beat forecasts.
Shares in Bank of America (BAC, Fortune 500) fell more than 2% in midday trading on the New York Stock Exchange. .
BEIJING (AP) -- Global automakers issued ambitious forecasts Sunday of up to 65% sales growth in China's booming market this year - a striking contras
Beverage giant amends rules to create separate posts before Muhtar Kent takes over as chief eNEW YORK (AP) -- Coca-Cola Co., the world's biggest beverage company, said Tuesday that it amended its bylaws to separate the roles of chairman and chief executive before incoming CEO Muhtar Kent takes over in July.
In December, CEO E. Neville Isdell said he would step down, effective July 1, with Chief Operating Officer Kent taking over.
Isdell, who has been CEO since 2004, will serve as chairman until Coca-Cola's (KO, Fortune 500) annual shareholders meeting.
According to a filing with the Securities and Exchange Commission, shareholder approval is not needed to amend the Atlanta-based company's bylaws. xecutive officer this summer.
In December, CEO E. Neville Isdell said he would step down, effective July 1, with Chief Operating Officer Kent taking over.
Isdell, who has been CEO since 2004, will serve as chairman until Coca-Cola's (KO, Fortune 500) annual shareholders meeting.
According to a filing with the Securities and Exchange Commission, shareholder approval is not needed to amend the Atlanta-based company's bylaws. xecutive officer this summer.
Car makers count on booming Chinese market
Top global automakers compete for position in China where car sales growth is set to top 15%.BEIJING (AP) -- Global automakers issued ambitious forecasts Sunday of up to 65% sales growth in China's booming market this year - a striking contrast to the gloom in the United States and elsewhere.
Sales of some individual models to newly prosperous Chinese drivers soared by up to 100% in the first quarter over the same period of 2007, said executives speaking at the Beijing auto show.
Toyota Motor Corp. expects to sell 700,000 vehicles in China this year, up 40% from 2007, said executive Yuzo Ushiyama.
"As the 40% (target) is much bigger than the overall market growth, this is challenging," Ushiyama told reporters. "But we want to try (700,000 vehicles) as our goal."
Automakers are looking to China to drive sagging sales at a time when demand in the United States is expected to decline this year while Europe and Japan are flat.
Sales in China, already the world's No. 2 vehicle market after the United States, are forecast to grow 15 to 20% this year, driven by a boom that saw the economy grow by 10.6% in the first quarter.
Last year, Chinese drivers bought 5.5 million cars, minivans and SUVs and 3 million commercial vehicles, up from just 1.6 million vehicles sold in 1997. J.D. Power and Associates says sales should grow by 1 million vehicles annually through 2015.
"I think every year for some time in the future the same thing is going to happen," said Philip Murtaugh, Chrysler LLC's chief executive for Asia.
The number of Chinese families that can afford a car is expected to mushroom from 10 million in 2005 to 75 million in 2005, according to Jim Raymond, a General Motors (GM, Fortune 500) executive.
The rivalry for a share of China's market has turned the Beijing auto show into a major industry event that this year drew more than 100 Chinese and foreign automakers. On Sunday, as companies held presentations for reporters, they competed for attention with live bands, acrobats and dancers. The show opens to the public on Thursday.
On Sunday, Daimler CEO Dieter Zetsche was joined on stage by Chinese film star Zhang Ziyi as he showed off the new Mercedes-Benz SUV, the GLK, which goes on sale in China next year.
Major U.S., Japanese and European competitors are growing faster than the market as a whole, building market share at the expense of China's dozens of tiny automakers.
Volkswagen AG's sales in China grew 32% in the first quarter, executives said. They gave no full-year projection but said they hope to top 1 million vehicles in 2008, which would be a 10% increase over 2007's 910,491 cars.
"In no other country does this brand sell as many cars as in China," said VW chairman Martin Winterkorn.
Hyundai Motor Co.'s Chinese joint venture expects to see sales rise 65% this year to 380,000 cars, executive vice president Li Honglu told Dow Jones Newswires.
France's PSA Peugeot-Citroen expects to sell 150,000 cars in China this year, a 30% increase over 2007's 115,000 vehicles, according to Jean-Louis Chamla, vice president of international sales and marketing.
Daimler AG said Mercedes-Benz sales in China rose 42% in the first quarter. That included a 110% jump in sales of the R-class minivan.
Zetsche declined to give a 2008 forecast but said Mercedes will add 20 new dealerships in China this year, bringing the total to 120.
Still, automakers said they face intense competition and pressure to cut prices in China, where dozens of small Chinese producers measure their share of the fragmented market in fractions of a percentage point.
"I think this is just the most competitive market in the world," said Carlos Tavares, executive vice president of Nissan.
Chevy Volt is no 'electric Camaro'Volvo gets a little crazy5 best cars for the money
Sales of some individual models to newly prosperous Chinese drivers soared by up to 100% in the first quarter over the same period of 2007, said executives speaking at the Beijing auto show.
Toyota Motor Corp. expects to sell 700,000 vehicles in China this year, up 40% from 2007, said executive Yuzo Ushiyama.
"As the 40% (target) is much bigger than the overall market growth, this is challenging," Ushiyama told reporters. "But we want to try (700,000 vehicles) as our goal."
Automakers are looking to China to drive sagging sales at a time when demand in the United States is expected to decline this year while Europe and Japan are flat.
Sales in China, already the world's No. 2 vehicle market after the United States, are forecast to grow 15 to 20% this year, driven by a boom that saw the economy grow by 10.6% in the first quarter.
Last year, Chinese drivers bought 5.5 million cars, minivans and SUVs and 3 million commercial vehicles, up from just 1.6 million vehicles sold in 1997. J.D. Power and Associates says sales should grow by 1 million vehicles annually through 2015.
"I think every year for some time in the future the same thing is going to happen," said Philip Murtaugh, Chrysler LLC's chief executive for Asia.
The number of Chinese families that can afford a car is expected to mushroom from 10 million in 2005 to 75 million in 2005, according to Jim Raymond, a General Motors (GM, Fortune 500) executive.
The rivalry for a share of China's market has turned the Beijing auto show into a major industry event that this year drew more than 100 Chinese and foreign automakers. On Sunday, as companies held presentations for reporters, they competed for attention with live bands, acrobats and dancers. The show opens to the public on Thursday.
On Sunday, Daimler CEO Dieter Zetsche was joined on stage by Chinese film star Zhang Ziyi as he showed off the new Mercedes-Benz SUV, the GLK, which goes on sale in China next year.
Major U.S., Japanese and European competitors are growing faster than the market as a whole, building market share at the expense of China's dozens of tiny automakers.
Volkswagen AG's sales in China grew 32% in the first quarter, executives said. They gave no full-year projection but said they hope to top 1 million vehicles in 2008, which would be a 10% increase over 2007's 910,491 cars.
"In no other country does this brand sell as many cars as in China," said VW chairman Martin Winterkorn.
Hyundai Motor Co.'s Chinese joint venture expects to see sales rise 65% this year to 380,000 cars, executive vice president Li Honglu told Dow Jones Newswires.
France's PSA Peugeot-Citroen expects to sell 150,000 cars in China this year, a 30% increase over 2007's 115,000 vehicles, according to Jean-Louis Chamla, vice president of international sales and marketing.
Daimler AG said Mercedes-Benz sales in China rose 42% in the first quarter. That included a 110% jump in sales of the R-class minivan.
Zetsche declined to give a 2008 forecast but said Mercedes will add 20 new dealerships in China this year, bringing the total to 120.
Still, automakers said they face intense competition and pressure to cut prices in China, where dozens of small Chinese producers measure their share of the fragmented market in fractions of a percentage point.
"I think this is just the most competitive market in the world," said Carlos Tavares, executive vice president of Nissan.
Chevy Volt is no 'electric Camaro'Volvo gets a little crazy5 best cars for the money
Global boost for Halliburton profits
HOUSTON (AP) -- Increasing its global presence is paying off for oilfield services provider Halliburton Co., whose first-quarter income rose nearly 6% on growing business in the Middle East, Asia and Latin America, the company said Monday.
Business in the first three months of 2008 also was better than expected in North America, where higher costs and lower pricing squeezed results at the end of 2007.
Halliburton Chairman and Chief Executive Dave Lesar said the company has "engineered a soft landing in a very tough pricing environment in North America," and it's poised to take advantage of what customers are indicating will be increased drilling for natural gas.
Outside North America, revenue growth rates have topped the company's target of 20%, Lesar said on a conference call with investors.
"Our outlook for Halliburton remains very favorable, and we expect to see strong global demand for our products and services through the end of the decade," he said.
Halliburton shares fell 64 cents to $46.79 in early afternoon trading. They reached an all-time high of $47.77 during trading Friday, when rival Schlumberger (SLB) reported a nearly 14% jump in first-quarter profit and predicted growth for the remainder of the year. The shares have traded as low as $30 in the past year.
Halliburton said it earned $584 million, or 64 cents per share, in the three months ended March 31, compared with a year-earlier profit of $552 million, or 54 cents per share. Revenue rose to $4.03 billion from $3.42 billion a year earlier.
Analysts surveyed by Thomson Financial had expected earnings of 64 cents per share on revenue of $3.99 billion.
The company, which provides a variety of services and equipment to oil and gas companies, said the January-March results were hurt by a $14 million, after-tax charge related to an investment in Bangladesh but benefited by $22 million from the sale of a U.S. joint venture.
Using a golf term, analysts at Tudor, Pickering, Holt & Co. Securities said Halliburton's results were "right down the fairway," noting both the North America and Latin America divisions performed above expectations.
In March 2007, Halliburton said it would split its corporate headquarters between Houston and Dubai, where Lesar now works, placing him closer to important markets in the Middle East and Asia.
In the most-recent quarter, Halliburton's revenue outside North America was up 24% from a year earlier.
Halliburton's drilling and evaluation division reported operating income of $384 million, a 6% year-over-year increase.
Operating income at its completion and production arm was $529 million, up 11% from the year-ago quarter. Income in the Middle East/Asia sector rose 61%, which helped offset a 2% decline in operating income in North America.
Still, overall revenue rose 11% in North America, "confirming this market is much stronger than may have been anticipated just a few months ago," Lesar said.
Another bright spot was Latin America, where revenue grew 25% from a year ago, aided by the opening of two manufacturing facilities in the region.
And Halliburton (HAL, Fortune 500) is looking to possibly expand its international presence. The company said Friday it has held talks with European oilfield contractor Expro International Group PLC about a possible all-cash purchase of the overseas outfit.
Halliburton's confirmation of talks came a day after a private equity consortium led by London-based Candover Group said it would buy Expro International for $3.2 billion. Halliburton has said its offer would top the one by Candover.
On Monday's conference call, Halliburton executives declined to discuss the potential deal in great detail, but they acknowledged that acquiring Expro would give it a new offering - providing services and products to measure and control the flow of oil and gas from wells.
Business in the first three months of 2008 also was better than expected in North America, where higher costs and lower pricing squeezed results at the end of 2007.
Halliburton Chairman and Chief Executive Dave Lesar said the company has "engineered a soft landing in a very tough pricing environment in North America," and it's poised to take advantage of what customers are indicating will be increased drilling for natural gas.
Outside North America, revenue growth rates have topped the company's target of 20%, Lesar said on a conference call with investors.
"Our outlook for Halliburton remains very favorable, and we expect to see strong global demand for our products and services through the end of the decade," he said.
Halliburton shares fell 64 cents to $46.79 in early afternoon trading. They reached an all-time high of $47.77 during trading Friday, when rival Schlumberger (SLB) reported a nearly 14% jump in first-quarter profit and predicted growth for the remainder of the year. The shares have traded as low as $30 in the past year.
Halliburton said it earned $584 million, or 64 cents per share, in the three months ended March 31, compared with a year-earlier profit of $552 million, or 54 cents per share. Revenue rose to $4.03 billion from $3.42 billion a year earlier.
Analysts surveyed by Thomson Financial had expected earnings of 64 cents per share on revenue of $3.99 billion.
The company, which provides a variety of services and equipment to oil and gas companies, said the January-March results were hurt by a $14 million, after-tax charge related to an investment in Bangladesh but benefited by $22 million from the sale of a U.S. joint venture.
Using a golf term, analysts at Tudor, Pickering, Holt & Co. Securities said Halliburton's results were "right down the fairway," noting both the North America and Latin America divisions performed above expectations.
In March 2007, Halliburton said it would split its corporate headquarters between Houston and Dubai, where Lesar now works, placing him closer to important markets in the Middle East and Asia.
In the most-recent quarter, Halliburton's revenue outside North America was up 24% from a year earlier.
Halliburton's drilling and evaluation division reported operating income of $384 million, a 6% year-over-year increase.
Operating income at its completion and production arm was $529 million, up 11% from the year-ago quarter. Income in the Middle East/Asia sector rose 61%, which helped offset a 2% decline in operating income in North America.
Still, overall revenue rose 11% in North America, "confirming this market is much stronger than may have been anticipated just a few months ago," Lesar said.
Another bright spot was Latin America, where revenue grew 25% from a year ago, aided by the opening of two manufacturing facilities in the region.
And Halliburton (HAL, Fortune 500) is looking to possibly expand its international presence. The company said Friday it has held talks with European oilfield contractor Expro International Group PLC about a possible all-cash purchase of the overseas outfit.
Halliburton's confirmation of talks came a day after a private equity consortium led by London-based Candover Group said it would buy Expro International for $3.2 billion. Halliburton has said its offer would top the one by Candover.
On Monday's conference call, Halliburton executives declined to discuss the potential deal in great detail, but they acknowledged that acquiring Expro would give it a new offering - providing services and products to measure and control the flow of oil and gas from wells.
Record gas prices squeeze drivers
NEW YORK (AP) -- Cabbies here complain their take-home pay is thinner than it used to be. Trucking companies across the country are making drivers slow down to conserve fuel. Filling station owners plead that really, really, the skyrocketing prices aren't their fault.
And the rest of us? With gas prices now averaging $3.51 a gallon nationwide, according to AAA and the Oil Price Information Service, more and more Americans who have to drive are weighing the need for each and every trip.
"To get to the doctors and all that, it's an awful lot of money," said Carol Licata, a 75-year-old retiree from Arnold, Pa., who said a larger portion of her fixed income is now going toward gas. "I don't drive that often, but have to take necessary trips ... and (gas) takes a big chunk out of our budget."
Some would-be drivers are considering less energy-dependent alternatives simply for money's sake.
In Los Angeles, for example, fiction writer Brian Edwards sold his gas-guzzling Ford truck and now relies on his skateboard or the bus to get around. Sharon Cooper of Chicago, meanwhile, said she is planning to buy a bicycle to use on her 21/2-mile commute to work.
And everyone, it seems, is more than willing to join in the griping.
"It's hell," said legal aide Zebib Yemane, who spent $5 on gas for her Chevy compact at a 76 station in downtown Los Angeles just so she could make it to a cheaper gas station east of the area.
"When going downhill, I used to step on the gas. Now I don't," said Yemane, who said she normally spends $80 a week on fuel and asks people for rides and takes the bus to save money.
"Bottom line, we can't afford it no more, man. It's too much," Bak Zoumane said as he filled up his yellow cab at a BP station in midtown New York. The West African immigrant said his next car will likely be a hybrid so he won't have to pay so much at the pump.
Gasoline prices typically rise in the spring as stations switch over to pricier summer-grade fuel and demand picks up as more travelers take to the road.
But this year prices are rising even faster than normal, experts say, because of the massive jump in benchmark crude prices, which spiked to a record $117.76 a barrel Monday before settling a record settlement price of $117.48 on the New York Mercantile Exchange, up 79 cents from the previous close. It was the sixth day in a row prices set new records.
Those soaring prices are putting added strain on refiners and filling-station operators, which are struggling to pass the higher feedstock costs onto consumers. So even as drivers pay more, retailers - the most public face of the oil business - are getting increasingly squeezed.
"The farther you get from the wellhead, the greater the misery," said Tom Kloza of the Oil Price Information Service in Wall, N.J. "There's a lot of stations across the country that are literally on the brink of bankruptcy."
Samer Katib, the manager of a Marathon station in Chicago, said business has fallen at least 30 percent this year because customers are cutting back on driving and only using their cars when absolutely necessary.
"It's just go to your work and go home," he said of people's driving habits these days, adding that customers no longer stop in for profit-fattening drinks like they used to. "They need all their money for gas," he said.
"I wish I could make gas prices cheaper," Katib added. "But if we do that, we cannot survive."
Other businesses are getting pinched as well.
Mitch Goldstone, who owns a photo-scanning shop in Irvine, Calif., said he began giving out gas cards Monday to encourage people to shop after noticing a sharp decline in customer traffic - something he attributed to soaring gas prices.
AAA figures show California has higher prices than anywhere in the country, with regular now selling for an average of $3.86 a gallon.
"It's a mess here," Goldstone said. "People just are not shopping and everyone's trying to figure out a way to get people back in their cars."
Diesel prices are rising even higher than gasoline, putting pressure on trucking and other shipping companies that use the fuel to transport goods around the country.
The American Trucking Associations on Monday said it will host a "fuel strategies workshop" in June to help fleet operators cope with soaring prices.
ATA Chief Economist Bob Costello said fuel has now surpassed labor as the trucking industry's biggest cost, prompting some companies to install devices that prevent drivers from speeding. Companies are also shelling out for auxiliary power units and offering bonuses to drivers who cut down on idling and operate their trucks more efficiently.
"Every little bit helps," he said.
And the rest of us? With gas prices now averaging $3.51 a gallon nationwide, according to AAA and the Oil Price Information Service, more and more Americans who have to drive are weighing the need for each and every trip.
"To get to the doctors and all that, it's an awful lot of money," said Carol Licata, a 75-year-old retiree from Arnold, Pa., who said a larger portion of her fixed income is now going toward gas. "I don't drive that often, but have to take necessary trips ... and (gas) takes a big chunk out of our budget."
Some would-be drivers are considering less energy-dependent alternatives simply for money's sake.
In Los Angeles, for example, fiction writer Brian Edwards sold his gas-guzzling Ford truck and now relies on his skateboard or the bus to get around. Sharon Cooper of Chicago, meanwhile, said she is planning to buy a bicycle to use on her 21/2-mile commute to work.
And everyone, it seems, is more than willing to join in the griping.
"It's hell," said legal aide Zebib Yemane, who spent $5 on gas for her Chevy compact at a 76 station in downtown Los Angeles just so she could make it to a cheaper gas station east of the area.
"When going downhill, I used to step on the gas. Now I don't," said Yemane, who said she normally spends $80 a week on fuel and asks people for rides and takes the bus to save money.
"Bottom line, we can't afford it no more, man. It's too much," Bak Zoumane said as he filled up his yellow cab at a BP station in midtown New York. The West African immigrant said his next car will likely be a hybrid so he won't have to pay so much at the pump.
Gasoline prices typically rise in the spring as stations switch over to pricier summer-grade fuel and demand picks up as more travelers take to the road.
But this year prices are rising even faster than normal, experts say, because of the massive jump in benchmark crude prices, which spiked to a record $117.76 a barrel Monday before settling a record settlement price of $117.48 on the New York Mercantile Exchange, up 79 cents from the previous close. It was the sixth day in a row prices set new records.
Those soaring prices are putting added strain on refiners and filling-station operators, which are struggling to pass the higher feedstock costs onto consumers. So even as drivers pay more, retailers - the most public face of the oil business - are getting increasingly squeezed.
"The farther you get from the wellhead, the greater the misery," said Tom Kloza of the Oil Price Information Service in Wall, N.J. "There's a lot of stations across the country that are literally on the brink of bankruptcy."
Samer Katib, the manager of a Marathon station in Chicago, said business has fallen at least 30 percent this year because customers are cutting back on driving and only using their cars when absolutely necessary.
"It's just go to your work and go home," he said of people's driving habits these days, adding that customers no longer stop in for profit-fattening drinks like they used to. "They need all their money for gas," he said.
"I wish I could make gas prices cheaper," Katib added. "But if we do that, we cannot survive."
Other businesses are getting pinched as well.
Mitch Goldstone, who owns a photo-scanning shop in Irvine, Calif., said he began giving out gas cards Monday to encourage people to shop after noticing a sharp decline in customer traffic - something he attributed to soaring gas prices.
AAA figures show California has higher prices than anywhere in the country, with regular now selling for an average of $3.86 a gallon.
"It's a mess here," Goldstone said. "People just are not shopping and everyone's trying to figure out a way to get people back in their cars."
Diesel prices are rising even higher than gasoline, putting pressure on trucking and other shipping companies that use the fuel to transport goods around the country.
The American Trucking Associations on Monday said it will host a "fuel strategies workshop" in June to help fleet operators cope with soaring prices.
ATA Chief Economist Bob Costello said fuel has now surpassed labor as the trucking industry's biggest cost, prompting some companies to install devices that prevent drivers from speeding. Companies are also shelling out for auxiliary power units and offering bonuses to drivers who cut down on idling and operate their trucks more efficiently.
"Every little bit helps," he said.
Dollar falls on BoA earnings
BERLIN (AP) -- The dollar was mixed Monday and slid near a new low against the euro after Bank of America Corp. reported worse-than-expected first-quarter earnings.
The 15-nation currency rose as high as $1.5946 and fetched $1.5916 in late New York trading, up from $1.5805 Friday and not far off its all-time high of $1.5982 reached last Thursday.
Meanwhile, the pound fell after the Bank of England, in a bid to address fallout from the U.S. subprime mortgage crisis, announced a 50 billion-pound plan to allow banks to swap mortgage-backed securities for Treasury bills. The pound dropped to $1.9798, compared with $1.9940 late Friday,
The dollar has been weighed down by a combination of gloomy U.S. economic data and high European inflation - fueling expectations that the U.S. Federal Reserve will cut interest rates yet again, while the European Central Bank will leave rates unchanged.
The 15-nation currency rose as high as $1.5946 and fetched $1.5916 in late New York trading, up from $1.5805 Friday and not far off its all-time high of $1.5982 reached last Thursday.
Meanwhile, the pound fell after the Bank of England, in a bid to address fallout from the U.S. subprime mortgage crisis, announced a 50 billion-pound plan to allow banks to swap mortgage-backed securities for Treasury bills. The pound dropped to $1.9798, compared with $1.9940 late Friday,
The dollar has been weighed down by a combination of gloomy U.S. economic data and high European inflation - fueling expectations that the U.S. Federal Reserve will cut interest rates yet again, while the European Central Bank will leave rates unchanged.
RBS aims to raise $24B in new capital
LONDON (AP) -- Royal Bank of Scotland Group PLC said Tuesday it had suffered further losses of $11.7 billion from the U.S. subprime mortgage crisis and would ask investors for $23.9 billion in new capital to shore up its reserves.
The company said it would ask shareholders to approve a rights issue that would offer 11 new shares for every 18 existing shares at $3.98 per share.
The company joins Citigroup (C, Fortune 500), Swiss bank UBS (UBS) and other big financial institutions in being forced to write down billions in assets from the subprime crisis and turn to investors for more capital.
RBS (RBS) said it expects further writedowns on mortgage-backed securities, collateralized debt obligations and other assets of $11.8 billion before taxes, or $8.6 billion net.
RBS shares fell 3.3% to $7.17 in morning trading on the London Stock Exchange.
"Following the rights issue, RBS believes that it will be in a strong position to realize the substantial value in its U.K. and international franchises and to take advantage of the growth opportunities available to it," the company said in an announcement to the London Stock Exchange.
RBS said it also intends to dispose of its insurance business and other unidentified, smaller assets.
RBS, Britain's second-largest bank by market capitalization, stretched its reserves last year in leading a consortium including Belgian-Dutch group Fortis and Spain's Banco Santander in the takeover of Dutch giant ABN Amro Holding NV. Then it was hit by the freeze-up of the market in securities based on mortgages.
The bank said it had raised its targets to maintain a Tier 1 capital ratio of between 7.5% and 8.5% and a core Tier 1 capital ratio in excess of 6%.
"This is a difficult time for the financial services industry, and it has presented us with specific challenges. Central to these has been the question of our capital ratios, which have been the focus of much attention, both internal and external, over recent months," said RBS' chairman, Sir Tom McKillop.
"It was the board's declared intention to rebuild our Tier 1 capital to the middle to upper end of our historic range of 7% to 8% over a three-year period, but in light of the current market environment, this level and timing are considered no longer appropriate," McKillop said.
RBS Group's retail operations in Britain include the Royal Bank of Scotland, Ulster Bank and Natwest.
Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, said RBS would benefit from being the first of Britain's big banks to go to its shareholders for a capital injection.
"The depth of the discount on the shares being offered will almost certainly ensure a healthy take-up from existing investors," said Hunter.
"The share price has been hemmed down by a number of factors over recent months, not least of which have been the credit crunch fallout and the feeling that it may have paid a very full price for the ABN acquisition," Hunter said.
"Equally, the statement will raise serious questions, since the bank has only recently increased its dividend by 10% whilst insisting that it had no need to shore up its capital," Hunter said.
The company said it would ask shareholders to approve a rights issue that would offer 11 new shares for every 18 existing shares at $3.98 per share.
The company joins Citigroup (C, Fortune 500), Swiss bank UBS (UBS) and other big financial institutions in being forced to write down billions in assets from the subprime crisis and turn to investors for more capital.
RBS (RBS) said it expects further writedowns on mortgage-backed securities, collateralized debt obligations and other assets of $11.8 billion before taxes, or $8.6 billion net.
RBS shares fell 3.3% to $7.17 in morning trading on the London Stock Exchange.
"Following the rights issue, RBS believes that it will be in a strong position to realize the substantial value in its U.K. and international franchises and to take advantage of the growth opportunities available to it," the company said in an announcement to the London Stock Exchange.
RBS said it also intends to dispose of its insurance business and other unidentified, smaller assets.
RBS, Britain's second-largest bank by market capitalization, stretched its reserves last year in leading a consortium including Belgian-Dutch group Fortis and Spain's Banco Santander in the takeover of Dutch giant ABN Amro Holding NV. Then it was hit by the freeze-up of the market in securities based on mortgages.
The bank said it had raised its targets to maintain a Tier 1 capital ratio of between 7.5% and 8.5% and a core Tier 1 capital ratio in excess of 6%.
"This is a difficult time for the financial services industry, and it has presented us with specific challenges. Central to these has been the question of our capital ratios, which have been the focus of much attention, both internal and external, over recent months," said RBS' chairman, Sir Tom McKillop.
"It was the board's declared intention to rebuild our Tier 1 capital to the middle to upper end of our historic range of 7% to 8% over a three-year period, but in light of the current market environment, this level and timing are considered no longer appropriate," McKillop said.
RBS Group's retail operations in Britain include the Royal Bank of Scotland, Ulster Bank and Natwest.
Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, said RBS would benefit from being the first of Britain's big banks to go to its shareholders for a capital injection.
"The depth of the discount on the shares being offered will almost certainly ensure a healthy take-up from existing investors," said Hunter.
"The share price has been hemmed down by a number of factors over recent months, not least of which have been the credit crunch fallout and the feeling that it may have paid a very full price for the ABN acquisition," Hunter said.
"Equally, the statement will raise serious questions, since the bank has only recently increased its dividend by 10% whilst insisting that it had no need to shore up its capital," Hunter said.
Italian trade team visits ID&BoI
A high profile Italian delegation engaged in construction-infrastructure projects and headed by the Italian Ambassador to Islamabad visited ID&BoI in order to acquire information on investment climate and opportunities and seek joint ventures with prominent Pakistani counterpart companies, says a press release.
Samsung chairperson resigns after indictment
Seoul, April 22 (DPA) Samsung Group chairperson Lee Kun Hee Tuesday announced his resignation, less than a week after he was indicted for tax invasion and breach of trust.Lee, 66, apologised for the distress that the three-month investigation of South Korea’s largest conglomerate had caused and took full responsibility, “both legally and morally”, for the scandal.
“I pledged to make Samsung as a top-class company about 20 years ago, but I’m really sorry for not living up to the promise,” Lee said at a nationally televised news conference.
At the same time, Samsung announced a reform plan that includes dissolving its strategic planning office, which coordinates group operations and is considered the conglomerate’s power centre.
Special prosecutors finished their inquiry into bribery charges against the company by indicting Lee last Thursday while also saying they were unable to prove allegations that Samsung had used multimillion-dollar slush funds to bribe public officials.
Lee, who was among 10 top Samsung executives indicted, was accused of using nearly 1,200 accounts established under other people’s names to carry out profitable stock transactions and avoid 113 billion won ($114.3 million) in taxes.
The breach of trust charge stemmed from accusations that Lee played an important role in the illegal transfer of power at Samsung to his only son, Lee Jae Yong.
He faces five years in prison and a fine if convicted.
Lee Kun Hee and the other indicted Samsung executives were not jailed ahead of their trials because prosecutors said such arrests would cause “enormous disruptions” in the running of Samsung.
The conglomerate includes Samsung Electronics Co, the world’s largest maker of liquid crystal displays and second-largest chipmaker. It is also involved in shipbuilding, construction, financial services and the chemical industry and produces a fifth of the exports from South Korea, the world’s 13th-largest economy.
Lee Kun Hee took over the leadership of Samsung in 1987 from his father, the company’s founder.
He had trouble with the law previously when he was convicted in 1996 for bribing two former presidents. He received a suspended prison term and was granted a presidential pardon in 1997.
“I pledged to make Samsung as a top-class company about 20 years ago, but I’m really sorry for not living up to the promise,” Lee said at a nationally televised news conference.
At the same time, Samsung announced a reform plan that includes dissolving its strategic planning office, which coordinates group operations and is considered the conglomerate’s power centre.
Special prosecutors finished their inquiry into bribery charges against the company by indicting Lee last Thursday while also saying they were unable to prove allegations that Samsung had used multimillion-dollar slush funds to bribe public officials.
Lee, who was among 10 top Samsung executives indicted, was accused of using nearly 1,200 accounts established under other people’s names to carry out profitable stock transactions and avoid 113 billion won ($114.3 million) in taxes.
The breach of trust charge stemmed from accusations that Lee played an important role in the illegal transfer of power at Samsung to his only son, Lee Jae Yong.
He faces five years in prison and a fine if convicted.
Lee Kun Hee and the other indicted Samsung executives were not jailed ahead of their trials because prosecutors said such arrests would cause “enormous disruptions” in the running of Samsung.
The conglomerate includes Samsung Electronics Co, the world’s largest maker of liquid crystal displays and second-largest chipmaker. It is also involved in shipbuilding, construction, financial services and the chemical industry and produces a fifth of the exports from South Korea, the world’s 13th-largest economy.
Lee Kun Hee took over the leadership of Samsung in 1987 from his father, the company’s founder.
He had trouble with the law previously when he was convicted in 1996 for bribing two former presidents. He received a suspended prison term and was granted a presidential pardon in 1997.
Monday, April 21, 2008
Prices of petroleum products hiked by Rs3 per litre
ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) increased the petrol and diesel prices further by Rs3 per litre.The new petroleum products’ prices will take effect after 12 midnight. The announcement of the price rise came after a delay of one day because matter was to be consulted with the Federal Finance Minister, Ishaq Dar.The price of petrol and diesel were proposed to be increased by Rs3.50 per litre. However, finally the prices were raised by Rs3 per litre after consultation with the Federal Minister, Ishaq Dar.Meanwhile, the prices crude oil jumped to 115 dollars per barrel in the international market on Thursday.Unlike Pakistan, India slashed the prices of petroleum products by paisas 73. The announcement was made by Inidan Prime Minister, Manmohan Singh on Tuesday as part of the “Mehangai Khatam Karo Scheme” (eliminate price hike scheme). ( via Geo)
Oil prices cross 116 dollars a barrel in International market
NEW YORK: Crude oil prices crossed 116 dollars in the international market for the first time Friday after a pipeline attack in Nigeria, Africa's biggest oil producer, analysts said. New York's main oil futures contract, light sweet crude for delivery in May, shot up to 116.10 dollars around 1520 GMT, then eased back to 115.46 dollars. (via geo)
Emirate Islamic Bank to open 15 branches in Pakistan
HYDERABAD: The Emirate Global Islamic Bank’s branch banking head Ahmed Jamal said that the business community would be benefited by the promotion of Islami banking in Pakistan.He said this while addressing at a opening ceremony of a branch of the Emirate Global Islamic Bank in Hyderabad.Deputy Sharia advisor Mufti Abdullah Siddiqui, president Hyderabad Chamber of Commerce & Industry (HCCI) Haji Yaqoob, members of the HCCI and elite of the city attended the ceremony.Ahmed Jamal said that the Emirate Global Islamic Bank is opening 15 branches all over the country.
Qatar, Muscat to invest $ 8 billion in Pakistan
ISLAMBAD: Qatar will invest five billion dollars in Pakistan while Muscat will make an investment of $ 2.750 billion in various projects of Balochistan.This was stated by the ambassadors of Qatar and Muscat in their meetings with federal finance minister Ishaq Dar.The Qatar ambassador said that the Qatar Takaful Insurance Company is also being established in Pakistan.Ambassador of Jordan Dr. Saleh Ahmed said in a meeting with federal finance minister Ishaq Dar that the agreement on free trade between Jordan and Pakistan would be finalized by August while Muscat ambassador Muhammad Syed Mahmud said in his meeting with Ishaq Dar that Muscat would extend its fullest cooperation with the new government of Pakistan.He said that Muscat would provide $2.75 billion for various projects in Balochistan.
Indian Bonds yield peaks ten months’ highest
MUMBAI: Following the enhancement of banks’ cash reserve requirement (CRR) by the Reserve Bank of India, Indian Bonds yield has ascended to ten months’ highest.Indian 10-year Federal Bond today seen traded at 8.21 percent, which is at its highest since June 2007. Indian Central Bank had increased the banks’ cash reserve requirement by 50 basis points. Analysts said that Rs185 billion would be siphoned off from the banking system, following the enhancement in CRR. The analysts are not ruling out further raise in CRR in the days to come.
via geo
Saturday, April 19, 2008
Pakistan loses a point in global ICT ranking
LONDON: Pakistan has lost 1 point in the annual E-readiness ranking of Information and Communication technology.
In new annual ranking published by the Economist Intelligence Unit, Pakistan stands at 64th position with 4.10 points out of 70 countries. Last year Pakistan was placed at 63rd position with 3.79 points.
The E-readiness ranking shows a slow pace of growth in Pakistan’s ICT sector as compared with other states. The ranking has placed India at 54th position. Infrastructure and usage of ICT is used as standard in the ranking.
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