Finance topics

Sprint Nextel Corp reported a wider quarterly loss and a revenue decline, but its success in slowing the loss of the most valuable wireless subscribers took some of the sting out of the results.

At the heart of Sprint’s struggles is the loss of postpaid monthly-bill-paying subscribers, the most lucrative subscribers in the mobile business. That dwindling subscriber base has put Sprint further behind rivals Verizon Wireless and AT&T Inc in the wireless wars.

In the third quarter, Sprint, the No. 3 U.S. mobile service, lost 801,000 postpaid subscribers, a significant number but well below the 870,000 losses analysts had feared.

Helped by the introduction of Palm Inc’s popular Pre smartphone, the subscriber losses slowed from 991,000 in the second quarter and 1.25 million in the first quarter.

“They still have an extremely long way to turn around the business and generate positive post-paid subscriber growth,” said Soleil/Nelson Alpha Research analyst Michael Nelson.

“Clearly, a loss of 800,000 a quarter isn’t going to cut it, but it does show some sign of improvement and says they are at least heading in the right direction.”

Its shares fell 4 percent in early afternoon trading.

Sprint Chief Executive Dan Hesse called the sequential improvement the best in more than five years, and said he expected a smaller postpaid subscriber loss again in the fourth quarter. Hesse expects improving subscriber trends in 2010.

The results are a far cry from the numbers put out by AT&T and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc no teletrek payday advance. Between them, AT&T and Verizon Wireless added more than 3 million subscribers in the third quarter.

Still, the improvement in the postpaid business helped offset depressed quarterly financial results, analysts said.

“Although it generated lower financial results, certainly the highlight of the quarter was the improvement in postpaid customer losses,” said Nelson.

Sprint’s third-quarter loss widened to $478 million, or 17 cents a share, from $326 million, or 11 cents a share, a year earlier. Revenue fell about 9 percent to $8.04 billion.

Excluding items, Sprint posted a loss of 19 cents a share, according to Thomson Reuters I/B/E/S, compared with analyst estimates of a loss of 15 cents per share. Revenue was forecast at $8.09 billion.

While losing monthly-bill-paying wireless customers, Sprint fared well with prepaid customers, adding some 666,000 of them in the quarter due to Boost Mobile, a service that allows for unlimited calls and texting at a set monthly fee.

Still, investors worry that Sprint could be overly dependent on growth from prepaid, a business that tends to be less profitable and less predictable than postpaid. Some also worry the market will pull back once the economy improves. 

Read more

Ford Motor Co named Zhejiang Geely Holding Group as preferred bidder for its loss-making Swedish unit Volvo in what could lead to the biggest overseas acquisition by China’s fast-growing auto sector.

Ford and privately owned Geely did not disclose a possible sale price for Volvo but media reports have put it closer to $2 billion than the $6.45 billion Ford paid for Volvo in 1999.

The announcement moves the long-running sale, which began in December, closer to a conclusion. Intellectual property concerns, which last week threatened to derail any deal with Geely, may have been overcome.

But it could be months before a final agreement. Ford named Tata Motors as preferred bidder for Jaguar and Land Rover, its other top-end European brands, in January 2008 and reached a final accord in March of that year.

Ford said it will engage in “detailed and focused” negotiations with Geely, but there was no specific timeline to conclude negotiations. Ford will not retain a stake.

This sale is complicated because Volvo is closely woven into Ford’s wider operations, undertaking much of the group’s safety work, for example, and Ford said it would continue cooperating with Volvo.

Ford Chief Financial Officer Lewis Booth told a news conference at Volvo’s Gothenburg head office that Ford and Volvo needed to make sure the deal contained “appropriate safeguards” and Geely had to undertake more due diligence payday advances.

But he said; “We believe that (Geely) have the potential to be a very good owner of Volvo … they take the heritage of Volvo and the brand of Volvo very seriously indeed.”

ENSHRINE INDEPENDENCE

Hangzhou-based Geely said its proposal, financed by Chinese banks, would “enshrine management independence” at Volvo while allowing the Swedish carmaker to source components and tap into sales networks in China.

Volvo would keep existing production and research and development facilities, union agreements and dealer networks, Geely said in a statement on Wednesday.

A Volvo union leader said he was unfamiliar with Geely and had asked to speak to its representatives as soon as possible.

Earlier, Geely had faced competition from rivals including a U.S.-led group including former Ford director Michael Dingman, dubbed the Crown consortium, and Beijing Automotive Industry Holding Corp (BAIC), sources familiar with the matter have said.

Geely is not the only Chinese automaker reaching overseas: the smaller Tenzhong aims to close that deal to buy General Motors’s Hummer brand by early 2010.

Frankfurt-traded Ford shares stood 1.2 percent lower by 1251 GMT, at 4.96 euros a share, outperforming a 4.3 percent drop in the automaking sector. 

Read more

Fruit and vegetable producer Fresh Del Monte Produce Inc posted a higher-than-expected quarterly profit, mostly on tax benefits and lower interest expense, but its net sales missed expectations due to weak demand across most of its businesses.

For the third quarter, net income attributable to the company was $28.6 million, or 45 cents a share, compared with $29.3 million, or 46 cents a share, a year ago.

Excluding items, quarterly profit was 61 cents a share.

Net sales fell 8 percent to $766.2 million. Banana sales rose 5 percent, but this was offset by declining sales of most fresh fruits and vegetables and prepared food.

Analysts on average were expecting earnings of 37 cents a share, before special items, on revenue of $819 million, according to Thomson Reuters I/B/E/S.

The company, whose rivals include Chiquita Brands International Inc and the recently listed Dole Food Co Inc, saw tax benefits of $12.8 million in the quarter, compared with tax expenses of $2.6 million last year.

Fresh Del Monte’s shares closed at $21.92 Monday on the New York Stock Exchange.

(Reporting by Mihir Dalal in Bangalore; Editing by Himani Sarkar)

Read more

Prices paid to Australian producers rose in the third quarter as costs for electricity, water and gasoline climbed.

The producer prices index advanced 0.1 percent from the second quarter, when it fell 0.8 percent, the Bureau of Statistics said in Sydney today. The median estimate of 17 economists surveyed by Bloomberg was for a 0.3 percent gain. The index rose 0.2 percent from a year earlier.

The less-than forecast gain in wholesale prices as a surge in the Australian currency cuts the cost of imported goods and services, may give central bank Governor Glenn Stevens scope to slow the pace of interest-rate increases. Policy makers said last week their “very expansionary setting of policy was no longer necessary, and possibly imprudent.”

While domestic demand “remains reasonably firm, it’s unlikely to provide firms with any significant pricing power,” Shane Lee, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne, said ahead of today’s report.

Electricity, gas and water costs rose 12.1 percent in the third quarter and prices for gasoline gained 6 percent, today’s report showed. By contrast, the cost of computer services fell 7.1 percent.

A report this week may show consumer prices rose at a faster pace in the third quarter, gaining 0.9 percent from the previous three months when they increased 0.5 percent, according to the median estimate of 20 economists surveyed by Bloomberg. Inflation figures will be published on Oct. 28.

Gasoline Prices

The increase in wholesale prices was stoked by a 12 percent gain in gasoline costs during the third quarter. That offset a 7 percent climb in the Australian dollar, which reduced the cost of imports, Craig James, a senior economist at Commonwealth Bank of Australia, said ahead of today’s report.

Australian central bank officials, who this month became the first Group of 20 policy makers to raise borrowing costs since the height of the financial crisis, said last week that maintaining the benchmark interest rate at “very low levels” could threaten the bank’s goal of keeping inflation between 2 percent and 3 percent.

Stevens raised the benchmark lending rate on Oct. 6 to 3.25 percent from a 49-year low of 3 percent. Investors are certain he will increase the rate by at least another quarter point on Nov. 3, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange.

There is an 18 percent chance of a half-point increase, the futures showed at 8:52 a.m.

Gross domestic product expanded 1 percent in the first half of this year as consumers increased spending, spurred by the central bank slashing borrowing costs by a record 4.25 percentage points between September last year and April, plus A$42 billion ($39 billion) in government stimulus spending.

Source

Oilfield services leader Schlumberger Ltd reported lower quarterly earnings on Friday, hurt by weaker energy prices and slowing exploration spending.

Third-quarter net profit sank to $789 million, or 65 cents per share, from $1.54 billion, or $1.25 a share, a year earlier. The results beat the analysts’ average estimate by 2 cents per share, according to Thomson Reuters I/B/E/S.

Revenue slumped by about a quarter to 5.4 billion. Oilfield services revenue sank 22 percent to $4.95 billion.

“Our outlook for the remainder of 2009 assumes a continued modest recovery in North American gas drilling but no significant improvement in service pricing,” Chief Executive Officer Andrew Gould said in a statement.

(Reporting by Christopher Kaufman in New York and Braden Reddall in San Francisco; Editing by Lisa Von Ahn)

Read more

Yahoo Inc beat Wall Street’s profit and sales expectations as spending by advertisers showed signs of life in the third quarter and as months of cost-cutting and restructuring boosted the Internet company’s bottom line.

Shares of Yahoo, the top U.S. seller of online display ads but a distant No. 2 to Google Inc in search, jumped 5 percent after the results, which analysts said boded well for the fourth quarter, when ad spending should improve further.

Yahoo’s revenue from display advertising was much better than expected, said RBC Capital Markets analyst Ross Sandler, citing the 2 percent sequential increase in U.S. display ad sales.

“That basically says that large Fortune 500 advertisers who want high-quality, premium inventory are going back to Yahoo more in the third quarter than they were in the first or second,” he said.

Yahoo’s net profit more than tripled year-over-year, though a big chunk of the upside came from the sale of its stake in Chinese Web site alibaba.com.

Yahoo has undergone significant restructuring since Chief Executive Carol Bartz took over in January. It said in April it would lay off 5 percent of its workforce, or about 675 jobs, and it also pulled the plug on underperforming properties.

Yahoo also signed a 10-year Web search partnership with Microsoft Corp to challenge Google, a pact that U.S. and European antitrust regulators are evaluating.

Chief Financial Officer Tim Morse said on a conference call that the company still believes the deal will close in early 2010, and that they can make significant progress on integration in one or two major markets next year 24 hour payday loan.

Morse, who began as Yahoo CFO in July and handled Tuesday’s earnings conference call on his own due to Bartz’ having “come down with something” — which he characterized as not serious — said large advertisers began to spend again in the third quarter.

“I’m not going to predict when the growth rebounds, but I feel good that things are no longer on the downward trend.”

Excluding traffic acquisition costs that Yahoo shares with partners, net revenue was $1.13 billion in the third quarter, close to the average analyst forecast of $1.12 billion. That compared with net revenue of $1.14 billion in the June quarter and $1.33 billion in the year-earlier period.

RISING TIDE LIFTS ALL YAHOO BOATS?

Some analysts said the improvement that Yahoo experienced was a reflection of a brightening overall economic climate as much as anything else.

“Most of the benefit that they are seeing is because the economy is improving — a rising tide — not because of all the changes they’ve made,” said JMP Securities analyst Sameet Sinha.

Net income was $187.8 million, or 13 cents a share, in the third quarter, up from $54.3 million, or 4 cents per share, in the year-earlier quarter. Analysts were looking for 7 cents per share, according to Thomson Reuters I/B/E/S. 

Read more

Bank of New York Mellon Corp reported a third-quarter net loss amid higher loan loss provisions, but earnings excluding one-time items topped expectations.

The world’s largest trust bank said on Tuesday it lost a net $2.5 billion, or $2.05 per share, in the quarter, compared with earnings of $303 million, or 26 cents a share, a year earlier.

Excluding investment securities losses and other special items, the company earned 54 cents per share. On that basis, analysts had forecast 48 cents, according to Thomson Reuters I/B/E/S.

Revenue, excluding securities losses, rose to 3.3 billion from $3.2 billion. Provisions for credit losses jumped to $147 million from $23 million.

The bank’s shares were at $28.00 in premarket trade, up 2.8 percent from a Monday close at $27.23 on the New York Stock Exchange.

Like other banks and insurers, Bank of New York Mellon, which focuses on securities services for institutional clients and asset management, has been hurt by losses on complex debt and mortgage-related securities during the financial crisis.

It said it is restructuring $8.5 billion of these securities in a bid to reduce risk in this investment portfolio.

“We took advantage of the recent strength in the fixed income markets by selling or recognizing losses on a significant portion of our investment securities portfolio,” said Chief Executive Officer Robert Kelly.

Bank of New York Mellon in August paid $136 million to redeem U.S. Treasury Department warrants to buy its stock. The warrants, which would have let the government buy 14.5 million shares, were issued under the government’s Troubled Asset Relief Program.

Bank of New York Mellon in June bought back $3 billion of preferred shares it had issued to the government.

(Reporting by Christopher Kaufman and Elinor Comlay; editing by John Wallace)

Read more

Japan’s demand for services rose for a third month in August, signaling that the country’s recovery from its deepest postwar recession is spreading to consumers.

The tertiary index, which captures 63 percent of the economy, advanced 0.3 percent from July, the Trade Ministry said today in Tokyo. The median forecast of 21 economists surveyed by Bloomberg News was for a 0.1 percent increase.

Source

As the deadline passes on a U.S. tax amnesty program that has lured thousands of wealthy Americans to declare offshore assets, attention now turns to prosecutions of those who kept their holdings hidden.

The Internal Revenue Service’s amnesty program, which ends at 5 p.m. EDT on Thursday, has seen 7,500 individuals come forward over six months, getting in before the IRS pursues them. In exchange they get vastly lowered penalties and in most cases protection against criminal prosecution.

For those who failed to turn themselves in, the Justice Department is pursuing criminal cases.

The U.S. government has already opened cases against about 150 clients of UBS AG, names it obtained when the Swiss bank paid $780 million to settle a criminal suit in February after admitting it helped Americans skirt the law.

In August, UBS settled a related civil case by agreeing to turn over about 4,450 client names.

Government officials say the issue is bigger than UBS and any one country.

“The IRS has new momentum in this entire area and in the coming months our efforts will only intensify,” IRS Commissioner Doug Shulman said on Wednesday. He added that the government will be “scouring” the amnesty forms for clues of other financial advisors who aided evaders.

A top U.S. prosecutor recently said cases will be brought every few weeks. Private lawyers say the cases are crucial for deterrence.

“The criminal tax prosecutor’s job is to keep a handful of cases in the media so that everyone will see that there is at least that potential for being prosecuted,” said Mark Matthews, a former IRS deputy commissioner for enforcement who now counsels private clients.

He said to keep the momentum going, the government will need to shift resources beyond UBS.

“This story has understandably focused on one financial institution and one country, but the truth is this was a global offer,” for amnesty, Matthews said.

Indeed, IRS announced on Wednesday it was broadening its international presence, opening new offices in Beijing, Sydney and Panama City.

Clients of other banks have come in under the amnesty program, including those of UBS rival Credit Suisse and London-based HSBC, lawyers said.

“The IRS has done a very good job of scaring the hell out of everybody,” said Ken Rubinstein, a lawyer with his own firm who counsel clients in tax matters. He said he expects more prosecutions to keep the heat on offshore bank customers.

The precedent set by the UBS case will allow the government to get more information from other countries and banks, he added. 

Read more

The arrest of fugitive film director Roman Polanski by Swiss authorities on U.S. charges serves as a warning to bankers indicted for helping Americans evade U.S. taxes: be careful where you travel.

From the UBS AG() tax case, U.S. prosecutors so far have charged four foreigners with aiding Americans hide money overseas — including the former head of the Swiss banking firm’s wealth management section Raoul Weil — but none have been arrested because they are outside the U.S. reach.

These tax crimes are not covered under an extradition treaty between the United States and Switzerland, making it a safe haven as the Obama administration tries to crack down on the billions of dollars believed to be hidden overseas.

But many other countries are stricter on tax crimes and the four could face arrest if they left Switzerland.

“They’re basically prisoners in their own country,” said Peter Zeidenberg, a former federal prosecutor and now a partner at DLA Piper. “They’re going to be spending the rest of their lives scrutinizing the extradition treaties of every place they want to travel.”

Polanski was arrested in Switzerland after fleeing the United States in 1978 to avoid sentencing in an underage sex case. Despite not including most tax crimes, the U.S.-Swiss extradition pact could apply to Polanski but it might take years of legal battles to bring him to the United States.

“Be careful where you travel is one important message of the Polanski case,” said Alexander Greenawalt, an international law professor at Pace Law School in New York. But he noted that there is some discretion enforcing such arrest warrants.

“In theory you could travel to a country that might be dangerous for you,” he said. “If the authorities are not going through the right procedures or not pursuing the case, you might still be safe.”

BANKER INDICTED

In the tax case, prosecutors have also indicted Swiss banker Hansruedi Schumacher, who once worked for UBS but moved to Neue Zuercher Bank where he allegedly encouraged American clients to switch their accounts to his new employer because it would likely avoid U.S. scrutiny.

Schumacher was quickly fired by NZB after he was indicted in August. The bank also shut down its private banking business for U.S. customers earlier this year.

Also charged was Swiss lawyer Matthias Rickenbach who was accused of working with Schumacher to provide legal advice to his clients, allegedly advising them that because NZB did not have U.S. operations it would be less likely to receive pressure from the United States to reveal those accounts.

“The DOJ has shown time and again that it is going to be much more aggressive than it has been in the past going after these cases,” said Glen Donath, a former prosecutor now a partner at Sonnenschein Nath and Rosenthal LLP.

The U.S. Internal Revenue Service has given Americans until October 15 to come clean about any assets they hold overseas or face criminal prosecution. Already the IRS has granted one extension but has insisted it would be the only one.

Adding pressure for Americans to come forward is an August deal by the Swiss and U.S. governments to have UBS turn over 4,450 accounts of Americans to U.S. tax authorities. 

Read more