Finance & Assurance

Toyota Recalls Become ‘Reinforcing Cycle’ as Scrutiny Increases

2010-02-09T19:09:00.000-08:00

February 09, 2010, 09:21 PM EST
By Jeff Plungis and Alan Ohnsman

Feb. 10 (Bloomberg) -- Toyota Motor Corp.’s perceived delays in fixing vehicles prone to unintended acceleration are intensifying scrutiny of the company’s products and leading to more reviews and recalls, automotive analysts said.

“Some of this is a negatively reinforcing cycle,” said Jeremy Anwyl, chief executive officer of Edmunds.com, a Santa Monica, California-based automotive research Web site. “To the outside world, it appears Toyota is trying to hide something. The more it appears that way, the more people start digging.”

The world’s biggest automaker announced yesterday its latest recall, of 437,000 hybrids including the Prius, the top- selling vehicle in Japan. Also yesterday, U.S. safety officials said they were reviewing Toyota’s Corolla, the world’s best- selling car, after complaints about how it steered.

“The king isn’t perfect,” said Jim Hossack, an industry analyst at AutoPacific Inc. in Fountain Valley, California. “Toyota had such a strong reputation for quality for so long, that it’s inevitable this would become such a big thing.”

Toyota has recalled almost 8 million vehicles on five continents to repair defects linked to unintended acceleration. At least three U.S. congressional committees plan hearings into how Toyota and the U.S. National Highway Traffic Safety Administration handled complaints about the problem.

The Toyota City, Japan-based company lost about $31 billion in market value since Jan. 21, when it began calling in autos to fix potentially sticky pedals.

Long Time Building

“Safety is involved here: this isn’t some spare-tire or a corroding tailgate recall,” Hossack said.

The intensity of the backlash against Toyota was greater because the company denied that consumer complaints about sudden acceleration indicated a real engineering problem, said Clarence Ditlow, executive director of the Center for Auto Safety, a Washington-based advocacy group.

“This has been building for a long time,” Ditlow said. “In Toyota’s drive to be the No. 1 manufacturer, it lost sight of the engineering that got it there in the first place.”

Recalls aren’t a problem for consumers, as long as the problem is clearly identified and fixed, said Mike Quincy, an automotive specialist at Consumer Reports magazine, whose vehicle ratings influence sales.

The Yonkers, New York-based magazine removed its recommendation from Toyota models that were suspended from sale in the U.S. The endorsements will probably be restored, Quincy said.

Congress Awaits

“It seems like the perfect storm right now for Toyota,” he said. “Is this a nationwide, blood-in-the-streets kind of catastrophe? No. It’s been blown out of proportion.”

According to Safety Research & Strategies Inc., a Rehoboth, Massachusetts, group that provides data to plaintiffs’ attorneys and consumers, there were 2,262 documented incidents in the U.S. of unintended acceleration involving Toyota vehicles from 1999 through Jan. 29, 2010. NHTSA confirms at least 2,000 such U.S. complaints in that period.

Safety Research found at least 19 deaths linked to sudden acceleration of Toyota vehicles.

From 1999 through January 2010, Toyota sold 22.03 million Toyota, Lexus and Scion vehicles in the U.S. Using the safety group’s figure, the problem occurred in 0.01 percent of the vehicles Toyota sold in the period.

The company got a temporary reprieve when the House Oversight Committee postponed because of snowstorms a hearing that was scheduled for today. The hearing was reset for Feb. 24, the day before another hearing by the House Energy and Commerce Committee.

The Senate Commerce Committee announced yesterday a hearing for March 2.

Once Congress gets involved, “they add theater,” said Hossack, a former engineer for Ford Motor Co. and Mazda Motor Corp. “It will be all to the aid of senators and congressman running for re-election. Not sure that it will yield anything of significance.”

--Editors: Joe Winski, Larry Liebert

To contact the reporter on this story: Jeff Plungis in Washington at +1-202-624-1835 or jplungis@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at +1-202-624-1936 or lliebert@bloomberg.net

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source: http://www.businessweek.com/news/2010-02-09/toyota-recalls-become-reinforcing-cycle-as-scrutiny-increases.html

Asia Up on Europe, Australia

2010-02-09T19:08:00.000-08:00

By SHRI NAVARATNAM

SINGAPORE -- Asian stock markets were higher Wednesday, with Australian shares getting a lift from better-than-expected earnings.

Expectations that European Union members are working towards helping fiscally-stressed Greece were encouraging buyers back into the market after several days of uncertainty over euro-zone debt problems. Tachibana Securities operating officer Kenichi Hirano said the Greece news was lifting sentiment in Tokyo. "The market knew that sooner or later, there would be a rescue plan, because Europe couldn't just abandon Greece," he said, referring to the prospect of an imminent rescue deal for Greece.

Germany is considering a plan with its European Union partners to offer Greece and other troubled euro-zone members loan guarantees in a bid to calm fears of a government default and prevent a widening of the credit woes in the euro-zone, people familiar with the matter said.

Japan's Nikkei 225 was up 1.0%, Australia's S&P/ASX 200 was 1.0% higher, South Korea's Kospi Composite advanced 0.3% and New Zealand's NZX-50 rose 0.5%. Dow Jones Industrial Average futures were 12 points higher in screen trade.

The Australian market was rising on the back of better-than-expected results from mining giant BHP Billiton and hopes of a resolution to Greece's fiscal travails.

BHP rose 2.2% after its underlying first half net profit of US$5.7 billion beat consensus estimates. Rio Tinto tacked on 3.6%, riding BHP's surge.

Boral rose 4.5% after a stronger-than-expected first half net profit, while CBA rose 0.9% after its first half net profit met expectations. "The earnings season in Australia is fantastic," said IG Markets institutional dealer Chris Weston. "Companies are boosting dividends and there's a lot of positive comments on earnings."

Shipping and resources stocks were driving Tokyo shares higher, underpinned by gains in commodities on Tuesday.

Nippon Yusen advanced 2.5%, Mitsui O.S.K. Lines rose 3.0% and Itochu gained 1.7%.

Toyota Motor was up 0.7% as investors continued to bargain hunt following sharp falls recently. The small gains came despite the automaker's announcement Tuesday of a global recall of nearly half a million of its Prius hybrid vehicles to resolve a problem with their brakes. The fresh setback comes on top of the automaker's recent recall of around eight million vehicles in the U.S. and Europe to fix problematic gas pedals.

New Zealand shares were trading higher on an improvement in sentiment, but Craig Investment Partners broker Bryon Burke said buyers weren't rushing into the market.

"There's no commitment on the buy-side. I don't see it going further north anyway," he said.

Coal exporter Pike River Coal rose 4.6% on stronger commodity prices and on indications the New Zealand government may open conservation land to mining.

Blue chip stocks were pushing higher, led by bellwether Telecom rising 0.9% and Fletcher Building tacking on 0.7%. Property companies took a breather after Tuesday's relief rally that was driven by news the government will not impose a land tax. AMP Office Property Trust was down 2.6% and Kiwi Income Property fell 1.9%.

The South Korean market was supported by gains in financial and steel stocks, although some brokers said it was unclear how far the market will rebound.

"Sentiment looks to have stabilized," said Min Sang-il at E*Trade Securities. "But the market still lacks confidence about whether the stock market will stabilize soon, preventing any meaningful rebound."

In foreign exchange markets, the euro remained bid on expectations of a Greek rescue package. The euro was fetching $1.3794 against the dollar, up from $1.3779 late in New York Tuesday, and was at ¥124.03 against the yen compared with ¥123.52. The dollar was buying ¥89.92 from ¥89.63.

"Investors are hopeful that Thursday's EU Leaders Summit...may help shed a bit more light on how policymakers are planning to tackle Greece's escalating debt crisis. Europe's fiscal woes are likely to remain the key focus for (the euro) near term," said Danica Hampton, currency strategist at the Bank of New Zealand.

Japanese government bond futures were down, tracking Tuesday's weaker U.S. Treasurys. Lead March JGB futures were down 0.15 at 139.18 points.

Spot gold was at $1,078.80 a troy ounce, up $1.20 from the New York close. March Nymex crude oil futures were down 25 cents at $73.50 per barrel on Globex.

Write to Shri Navaratnam at shri.navaratnam@dowjones.com

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source: http://online.wsj.com/article/SB10001424052748704820904575056003819341826.html?mod=googlenews_wsj

GLOBAL MARKETS: European Stocks Steady, US Futures Rise

2010-02-09T02:08:00.000-08:00

By Michele Maatouk
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--European stocks were steady Tuesday despite continuing concerns about sovereign debt and weakness in U.S. stocks, which closed at a three-month low.

"The problems with Greece and the potential for these to spread to other European countries still exist," said David Morrison, strategist at GFT, adding that the weekend's G7 meeting did little to alleviate fears.

Losses were limited, however, as gains in the basic-resources sector and firmer U.S. stock futures provided support. Basic resources stocks were boosted by higher metals prices: Xstrata added 2.6%, while ArcelorMittal rose 1.3%. The DJ Stoxx 600 basic-resources index was up 1.0% at 462.33.

"There is no dominant theme to this morning's session, so traders are taking a lead from U.S. futures, which are pointing to a firmer open this afternoon," said David Morrison, market analyst at GFT. "Traders in Europe are trying to adjust to Monday's selloff on Wall Street, which has been almost completely reversed this morning," he added.

By 0905 GMT, the pan-European Dow Jones Stoxx 600 index was down 0.1% at 238.77 but London's FTSE 100 was 0.3% higher at 5108.14. Frankfurt's DAX was up 0.2% at 5495.16 but Paris's CAC-40 was down 0.1% at 3604.87.

Among the smaller markets in focus, Greece's ASE index was up 1.1% at 1826.11, Spain's Ibex 35 index was up 0.2% at 10,229.10 and Portugal's PSI-20 index was up 0.1% at 7443.78.

In the futures markets, the March Dow Jones Industrial Average contract was up 0.6% while the Standard & Poor's 500 and the Nasdaq 100 contracts were each up 0.8%.

On the economic calendar, the only figures of note are the U.K. trade balance at 0930 GMT and U.S. wholesale inventories at 1500 GMT.

On Wall Street, stocks fell Monday, led by financials such as Bank of America, Wells Fargo and J.P. Morgan Chase, as worries over increasing regulation and the impact of Europe's sovereign debt worries continued to weigh. Investors voiced concern over how big banks could be affected by the Obama administration's plans to restrict banks' size and the risks they can take on.

The Dow Jones Industrial Average fell 103.84 points, or 1.0%, to 9908.39. The measure is now off 1.6% for the month and is down 5% for the year. The technology-heavy Nasdaq Composite index fell 15.07, or 0.7%, to 2126.05. The Standard & Poor's 500 index declined 9.45, or 0.9%, to 1056.74, led by its financial sector.

Jitters over sovereign debt in European countries such as Greece and Portugal also took their toll Monday, with investors disappointed that the Group of Seven finance ministers, who met over the weekend in Canada, failed to say anything new on the matter. European officials again suggested that a bailout isn't on the European Union's agenda.

In Asia, shares were mostly higher Tuesday, recovering from earlier losses. But a cautious tone remained, with traders saying worries about sovereign debt are denting demand and hurting risk appetite.

Nevertheless, some were of the view that investors now seemed less worried that Europe's problems will hurt the global economy. "While Europe's debt woes are still simmering away in the background, it seems that investors are less fearful the swelling deficits will prove problematic for the global economy," said Danica Hampton, currency strategist at the Bank of New Zealand.

Japan's Nikkei 225 was down 0.2% but Hong Kong's Hang Seng index rose 1.0% and the Shanghai Composite was 0.5% higher.

Japanese stocks were pushed down by weakness in some exporters, although foreigners' buying in companies which recently reported strong earnings limited the losses.

In the European foreign exchanges, the euro and the pound gained against the dollar and the yen. At 0915 GMT, the euro was quoted at $1.3730, up from $1.3649 in late New York trade Monday, while the dollar was higher at Y89.70, up from Y89.26. Sterling was trading at $1.5598, up from $1.5584.

Elsewhere, spot gold was at $1069.10 per troy ounce, up $6.25 from the New York close in response to the weaker dollar. Nymex March crude oil futures were up 44 cents at $72.33 per barrel. And the March Dow Jones UBS Commodity Index was quoted at 128.60, up 0.60.

The European government bond markets were lower, with the March bund future down 0.09 at 123.82.

-By Michele Maatouk, Dow Jones Newswires; +44-20-7842-9447; michele.maatouk@dowjones.com

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source: http://online.wsj.com/article/BT-CO-20100209-703956.html?mod=WSJ_World_MIDDLEHeadlinesEurope

Nissan Expects Full-Year Profit on Rising Sales (Update2)

2010-02-09T02:06:00.000-08:00

February 09, 2010, 04:31 AM EST
(Adds Renault shares in seventh paragraph.)

By Kiyori Ueno and Tetsuya Komatsu

Feb. 9 (Bloomberg) -- Nissan Motor Co. predicted a return to profit this fiscal year, scrapping an earlier loss estimate, citing government incentives that boosted demand for the company’s vehicles in China and Japan.

Japan’s third-largest carmaker expects net income of 35 billion yen ($391 million) in the year ending March 31, compared with an earlier forecast of a 40 billion yen loss, it said in a statement today in Yokohama, Japan, where Nissan is based.

Nissan follows bigger rivals Honda Motor Co. and Toyota Motor Corp. in improving its earnings outlook. The maker of Teana sedans may also benefit after Toyota recalled about 8 million vehicles globally, tarnishing its reputation.

“I would say for the moment that Nissan has the edge over Toyota,” Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc. in Tokyo, said in a Bloomberg Television interview before the earnings announcement. “They have been doing very well.”

Nissan benefited from tax cuts and government subsidies in China, the world’s biggest auto market, and in Japan. It boosted its full-year vehicle sales estimates to 756,000 in China from 712,000 and to 625,000 in Japan from 612,000. In North America, Nissan increased its sales forecast to 1.045 million vehicles from 1 million.

Quarterly Profit

The company posted net income of 45 billion yen for the third quarter, compared with a median estimate of a 27.2 billion yen profit by four analysts surveyed by Bloomberg. Global sales rose to 2 trillion yen from 1.82 trillion yen a year earlier, the company said in the statement.

Nissan rose 2.4 percent to 731 yen at the 3 p.m. close of trading on the Tokyo Stock Exchange, before the earnings announcement. The shares have declined 9.8 percent this year. Renault SA, which owns 44 percent of Nissan, rose as much as 3.1 percent of 9:55 a.m. in Paris trading.

Chief Operating Officer Toshiyuki Shiga said on Feb. 1 that accelerator pedals in Nissan cars made by the same supplier that triggered recalls at Toyota aren’t defective. CTS Corp. pedals used by Nissan differ in structure and materials from those used by Toyota, he said.

Nissan will roll out its first battery-powered car, the Leaf, this year in Japan, the U.S. and Europe. Chief Executive Officer Carlos Ghosn predicts electric vehicles will account for 10 percent of global car sales by 2020.

The carmaker posted a net loss of 233.7 billion yen for the fiscal year ended March 31, 2009.

--Editors: Terje Langeland, Patrick Harrington

To contact the reporters on this story: Kiyori Ueno in Tokyo at +81-3-3201-3844 or kueno2@bloomberg.net; Tetsuya Komatsu in Tokyo at +81-3-3201-3370 tekomatsu@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at +81-3-3201-8362 or kinoue@bloomberg.net

source: website..Bloomberg

Euro Near 8-Month Low Against Dollar on Greece Fiscal Crisis

2010-02-08T18:58:00.000-08:00

By Yoshiaki Nohara and Ron Harui

Feb. 9 (Bloomberg) -- The euro traded near an eight-month low against the dollar on concern a European Union summit this week will fail to address Greece’s fiscal crisis, damping demand for assets in the region.

The 16-nation currency was close to the weakest in 11 months versus the yen after EU President Herman Van Rompuy said yesterday the Feb. 11 summit will focus on long-term economic strategy, making no direct reference to Greece. The yen dropped against 14 of 16 major counterparts amid speculation importers and traders sold the currency to profit from recent gains.

“Investors won’t be willing to take the risk to buy higher-yielding currencies unless organizations such as the European Central Bank and EU speak up to rescue Greece,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “If investors switch their attention to the fragility of Europe’s economy, euro weakness may accelerate.”

The euro traded at $1.3658 as of 10:38 a.m. in Tokyo from $1.3649 in New York yesterday. It dropped to $1.3586 on Feb. 5, the lowest since May 20. The European currency was at 121.97 yen from 121.81 yen. It slid to 120.71 on Feb. 5, the weakest since Feb. 24, 2009. The dollar was at 89.29 yen from 89.26 yen.

Europe’s currency dropped 1.3 percent last week against the dollar as Greece struggled to deal with its budget shortfall, the largest in the European Union. The country is trying to convince investors that the deficit, now at 12.7 percent of gross domestic product, can be brought down to the bloc’s 3 percent limit.

‘Worst Possible Signal’

“We are trying to implement a very difficult stability and growth program to which we are fully committed,” Greek Finance Minister George Papaconstantinou said in an interview with Bloomberg Television yesterday. “The worst possible signal which we could be sending out is one calling for outside help.”

European Central Bank President Jean-Claude Trichet will today depart a meeting of policy makers in Sydney a day early to attend the EU summit, ECB spokeswoman Regina Schueller said.

Trichet was in Sydney attending a symposium organized by the Reserve Bank of Australia to mark its 50th anniversary. Schueller said Trichet left early in order to make better flight connections and declined to comment further.

The yen declined versus on speculation Japanese companies sold it to take advantage of the currency’s 3.4 percent rally in the past week against the euro.

“Importers and those who have long positions are selling the yen,” said Hideaki Inoue, chief manager of foreign-exchange and financial products trading at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “This may be a short-lived position adjustment.” A long position is a bet an asset will rise.

The 14-day relative strength index of the euro versus the yen was at 24.61 today, staying below 30 for a fourth day, according to data compiled by Bloomberg, a sign the currency may be poised to change direction.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
Last Updated: February 8, 2010 20:57 EST

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source: http://www.bloomberg.com/apps/news?pid=20601101&sid=a1xNIjmTY.Mk

Markets Flinch at Debt Ills, Rate Plan

2010-02-08T18:39:00.000-08:00

FEBRUARY 9, 2010
By PETER A. MCKAY And E.S. BROWNING

Concerns that Greece's debt woes may spread to other nations mingled with the prospect that the Federal Reserve in the U.S. may soon begin tightening the spigot that helped fuel the markets' massive rebound. Traders cited a report in The Wall Street Journal on Monday that Fed Chairman Ben Bernanke is preparing a plan that the central bank will follow once the economy shows more signs of recovery.

Dow Jones Newswires' Paul Vigna and WSJ's Lee Hawkins details today's market losses and what it means for investors in the News Hub.

The 10000 mark on the Dow has been a frustrating milepost for American investors. The benchmark has crossed above or below the 10000 mark 57 times since first rising above that level in 1999—effectively meaning it has made no progress in more than 10 years. The latest decline could deal another blow to optimism that stocks will continue to rise.

The blue chips fell 103.84 points Monday, or 1%, to 9908.39, their lowest since early November. Banks led the decline—by one measure dropping to their lowest since August. Corporate bond markets also swooned.

The Dow industrials are now down 7.6% from their 15-month high set in January, the biggest drop since the current rally began last March. The only other significant stumble during the powerful rebound was in mid-June to mid-July, when the Dow dropped 7.1%.

Some optimistic investors are shrugging off this decline, saying that stocks were due for a pullback of about 10%. In this view, it is time to look for signs that the declines are losing steam in hopes of buying stocks cheaply. Some bulls appeared to begin buying late on Friday, helping turn the market around on that day. But bearish investors worry that the selling could take stocks down more than 10%, and that rallies like Friday's mark opportunities to sell.

Bank of America and other financials weighed on the stock market Monday.
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The current corporate earnings season has been generally favorable: More than 70% of companies in the S&P 500 stock index have beaten earnings estimates. But investors' focus over the past few weeks has been primarily on the creditworthiness of major industrialized countries, which have piled on huge amounts of debt in trying to spend their way out of a steep recession.

"Clearly, the sovereign-debt worries are first and foremost for the market right now," said Uri Landesman, portfolio manager at ING Investment Management. "We're going to need some more clarity on that before we establish a new trend."

U.S. stocks fell on a day when European markets stabilized, demonstrating investors' lingering worries about the U.S. economy. The benchmark indexes in Italy, Portugal and Spain all rose. The British market was mixed, with the FTSE 100 posting a 0.6% gain, while the broader FTSE 250 slipped 0.3%.

After a drubbing over the past few days, the euro was relatively stable against the U.S. dollar. One euro cost $1.3660 in late New York trading, down from $1.3665 on Friday.
[MARKETS]

In the bond market, investors demanded greater compensation for owning corporate debt, driving so-called risk premiums over safe U.S. Treasurys to their highest point in a year. Investors are keeping a particular eye on the corporate bond market after a record rally in 2009. A sharp pullback could make it much more expensive for companies to finance themselves, as the economy remains sluggish.

In the U.S., trading volume in recent weeks has also been sluggish, coming in below last year's average of more then five billion shares a day for stocks traded on the New York Stock Exchange. That reflects investors' nervousness: They are reluctant to commit a lot of money either to supporting stocks or to betting against them.

On Monday, trading volume was about 4.3 billion shares as financial shares led the broader stock market lower. The S&P 500 financial-sector index hit its lowest point since mid-August. Bank of America dropped 3.5%, while American Express fell 2.8%, Travelers declined 2.5%, and J.P. Morgan Chase slipped 1.6%.

Keith W. Springer, president of Capital Financial Advisory Services, notes that market watchers had been saying for months that a pullback has been necessary, but now that the rally in stocks has come to a pause, it has been met with increased alarm.

"Every time you have a market run-up, everybody goes, 'We need a 10% correction,'" Mr. Springer said. "And as soon as the market drops 5%, you have everybody crying."

Write to Peter A. McKay at peter.mckay@wsj.com and E.S. Browning at jim.browning@wsj.com

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source: http://online.wsj.com/article/SB10001424052748703615904575053861015196590.html?mod=WSJ_hpp_sections_markets

EA Shares Down on Lower-Than-Expected Forecast

2010-02-08T18:36:00.000-08:00

Monday, February 08, 2010

By Kathryn Glass
FOXBusiness

Despite reporting better-than-expected fourth-quarter results, shares of Electronic Arts Inc. (ERTS) fell nearly 10% in after-hours trading, when the company gave guidance that was below analyst estimates.

The video game software company expects non-GAAP earnings for the current fiscal year ending in March in the range of 50 to 70 cents a share on revenue between $3.65 billion and $3.90 billion. The forecast fell below expectations; analysts polled by Thomson Reuters had expected earnings of 74 cents a share on revenue of $4.07 billion.

EA expects an adjusted loss ranging from 35 cents a share to 40 cents a share in the first fiscal quarter, on non-GAAP revenue between $460 million and $500 million.

In the fiscal third quarter, EA saw a loss of $82 million or 25 cents a share, compared to a year ago when the company saw a loss of $641 million or $2.00 a share.

Adjusted earnings per share fell to $109 million or 33 cents a share, compared to $179 million, or 56 cents a share last year during the quarter. Non-GAAP revenue fell 23% to $1.35 billion, compared to revenue of $1.74 billion a year ago, as a result of fewer video game titles during this holiday season, the company said.

Analysts had predicted adjusted earnings of 31 cents a share on revenue of $1.34 billion.

"EA is growing share in our packaged goods business and our digital businesses continue to grow rapidly," said Chief Executive Officer John Riccitiello in a statement. "Mass Effect 2 is the first blockbuster of 2010 and we are looking forward to the launch of Dante's Inferno and Battlefield Bad Company 2."

Shares of EA were down $1.44 or 8.23% in trading after hours. The stock rose 23 cents or 1.33% to close Monday’s regular session at $17.49 a share.

==================
source: http://www.foxbusiness.com

Randgold Gains Most in Four Months in London as Profit Triples

2010-02-08T02:12:00.000-08:00

February 08, 2010, 04:51 AM EST

By Thomas Biesheuvel

Feb. 8 (Bloomberg) -- Randgold Resources Ltd., a developer of mines in west and central Africa, rose the most in four months in London trading after fourth-quarter profit tripled and the company accelerated mine development.

The Jersey, Channel Islands-based company gained as much as 7.4 percent, the biggest intraday jump since Oct. 6. It posted net profit of $32.08 million, up from $9.12 million a year earlier after gold rose to a record in the quarter, and said it would speed up development of its Kibali mine. Randgold raised its annual dividend by 30 percent to 17 cents.

“It’s by far the best quarterly we’ve ever had,” Chief Executive Officer Mark Bristow said in an interview today. “Last year is going to change the face of our company in the future because of the Kibali deal.”

The company, which last year bought the Kibali mine in the Democratic Republic of Congo with South Africa’s AngloGold Ashanti Ltd., will start output January 2014. Randgold, which produced 488,255 so-called attributable ounces in 2009, is predicting annual output of 1.2 million ounces by 2014. It is also developing mines in Senegal, Mali and Ivory Coast.

Attributable production in the three months to Dec. 31 reached 137,332 ounces. Earnings also gained after gold for immediate delivery in London averaged $1,101 an ounce in the fourth quarter, 38 percent higher than a year earlier. The metal reached a record $1,226.56 an ounce on Dec. 3.

Randgold’s sales advanced 78 percent to $138.6 million.

The company climbed 306 pence, or 7.3 percent, to 4,515 pence by 9:25 a.m. in London, valuing the business at 4.07 billion pounds ($6.3 billion).

source: businessweek.com

--Editor: Tony Barrett, Alastair Reed

To contact the reporter on this story: Thomas Biesheuvel in London +44-20-7073-3259 or tbiesheuvel@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at +44-20-7673-2631 or scasey4@bloomberg.net.

How to Accept Credit Card Payments for Small Businesses

2010-02-08T00:44:00.001-08:00

One reason consumers are so loyal to their credit cards is that so many cards come with perks nowadays. If they pay with a credit card, they can get cash back, frequent flier miles, or other rewards. As a small business, you will have to give up a transaction fee to the credit card companies. It usually runs 2.5% to 5.5% of the sales. However, the risk of getting stiffed on receivables goes away. When that transaction is authorized you know you will get your money, but you should always conduct a business credit card comparison.

Fortunately it is easier than ever to set up your small business to accept credit cards.

The first step is to establish merchant status with the credit card companies. To accept Visa or MasterCard, you have to establish a merchant account with any one of the thousands of banks that issue those cards. These are known as "acquiring banks."

You can go directly to the bank or to an independent credit card processor - a company whose business is processing credit card transactions for small businesses. Whether a bank or an independent processor, they will evaluate your product or service to determine the potential for chargebacks - funds returned to customers over disputed transactions. They may ask you to put down a security deposit that they can access in case chargebacks end up being more than your account balance.

Shop around for the best bank or processor. This will affect the percentage you pay for each credit card transaction. Compare services, fees, and terms to find the best overall deal for you. Also evaluate the hardware (like those little Verifone terminals) and software and decide if you can master it easily. Make sure you get yourself a small business credit card in the process to, many banks will offer deals to premium clients.

Make sure that the transaction equipment and software for accepting credit cards integrates with your company's computer and accounting procedures. Usually it does, but you don't want to get caught out on this one and have to hire a programmer to fix the problem. In fact, some small business software manufacturers integrate credit card processing directly into their software.

Once you have your merchant accounts set up and integrated into your software, start accepting the cards. Put card logos on your front door, website, and your invoices. The processing companies will provide these logos for you to use. Sure, you might cringe at first thinking of the 3% or so you're paying for each transaction, but once you see your sales go up and problems with accounts receivable go down, you'll be glad you took the leap to accepting credit cards.

Asia shares at 5-month low on Europe woes, euro hit

2010-02-08T00:29:00.000-08:00

HONG KONG (Reuters) - Asian shares fell on Monday and the euro dipped as festering debt problems in the euro zone prompted investors to shift out of riskier assets, dousing optimism over a fall in the U.S. jobless rate last week.

Japan

Japan's Nikkei average sank to a two-month closing low as exporters like Sony Corp (6758.T) were clobbered by a strong yen, which has climbed to multi-month peaks as investors look for safe havens where they can ride out the recent market turmoil.

Markets are worried that problems in Greece, Portugal and other weaker euro zone states could upset or derail the still fragile global economic recovery and they sold growth-linked currencies like the New Zealand dollar and the Australian dollar.

European shares were seen mixed at the open. Futures for DJ Euro Stoxx slipped 0.1 percent, while futures for Germany's DAX were flat and France's CAC 40 were up 0.5 percent. U.S. stock futures were marginally higher.

The euro fell 0.4 percent to $1.3619, edging back toward an 8-½ month low hit on Friday. The single currency has lost around 10 percent from a 15-month high of $1.5145 in late November.

At a weekend meeting, European ministers tried to assure their counterparts in the Group of Seven that the euro zone's debt crisis is under control and they would make sure Greece sticks to its budget-cutting plan.

But analysts said Europe needs to go beyond words to restore confidence among investors that it will prevent a sovereign default.

In Asia, losses in the energy and industrial sector dragged stocks to 5-month lows on fears that headwinds facing the global economy would dampen demand for oil and other commodities and cut corporate profits.

"It is adding to the concerns investors have overall in taking more risk into their portfolios," said Mark Konyn, who oversees about $11 billion as Asia-Pacific chief executive of RCM, a unit of Allianz Global Investors.

"The lack of clarity is adding to the volatility," he said.

Japan's Nikkei average .N225 fell 1 percent to close below the 10,000 mark, ending just above the crucial 200-day moving average as anxiety over Europe had investors cutting exposure.

But Kenichi Hirano, operating officer at Tachibana Securities said stocks were starting to look cheap as the Nikkei's 14-day RSI (relative strength index) was at 36 -- its lowest since late November.

Anything from 30 or lower is considered oversold territory.

The yen, which is widely used as a funding currency for investing in riskier higher-yielding assets, rose as these risk-trades were unwound amid the euro zone's troubles.

It has gained 4 percent against the dollar so far this year and is hovering near a 10-month peak against sterling and its highest in nearly seven months against the Australian dollar.

Asia Pacific shares outside Japan as measured by MSCI .MIAPJ0000PUS fell 0.6 percent to its lowest levels since early-September. The index is down over 10 percent year to date and hovering just above the crucial 200-day moving average.

The Thomson Reuters index of Asia ex-Japan equities .TRXFLDAXPU fell 0.76 percent.

Growing euro zone problems also soured the appetite for currencies like the New Zealand dollar and the Australian dollar, which are dependant on global economic growth.

The kiwi fell to a low of $0.6857, just off $0.6807 struck in Friday's offshore trade, its lowest since September 4. The Aussie hovered around $0.8660 for much of the session, above a four-month low of $0.8576 hit on Friday.

Last week, the cost of insuring debt from the three eurozone countries -- Greece, Portugal and Spain -- jumped as Greece's debt woes was put on the agenda of the meeting of G7 rich nations' finance ministers and central bankers in Canada.

But analysts say a fears of default are unfounded.

"Our baseline scenario is that a sovereign default by an EU member country would be averted by EU action. We think there's limited juice left in the eurozone break-up trade (so) we advise those not yet in to stay out," said ING in a client note.

(Additional reporting by Aiko Hayashi in TOKYO)

Japan

==============================================
source: http://www.reuters.com

Bloomberg --> Xstrata Full-Year Profit Declines 41% on Commodity Prices

2010-02-08T00:26:00.000-08:00

February 08, 2010, 02:14 AM EST

By Firat Kayakiran

Feb. 8 (Bloomberg) -- Xstrata Plc, the world’s largest exporter of coal used for power, said full-year profit declined 41 percent after prices of the fuel declined.

Net income fell to $2.77 billion, from $4.7 billion a year earlier, the Zug, Switzerland-based company said today in a statement. Operating earnings before interest, tax, depreciation and amortization, or Ebitda, fell 27 percent to $7.05 billion, beating the $6.67 billion median of 19 analyst estimates compiled by Bloomberg.

The average thermal coal price at Australia’s Newcastle port, a benchmark for Asia, was $72 in 2009, down from $129 a year earlier, according to a McCloskey Group Ltd. index. Xstrata said Feb. 1 that output of the fuel rose to a record in 2009 after buying Colombian mines in March from Glencore International AG, the mining company’s biggest shareholder.

“The medium term outlook for commodity demand remains very promising,” Xstrata’s Chief Executive Officer Mick Davis said in the statement. Demand will stem from China and other industrializing countries taking steps to rebalance their economies towards domestic consumption-led growth over the next decade, he said.

Coal was the largest contributor to Xstrata’s operating earnings last year, followed by copper. Coal output rose 11 percent to 95.2 million metric tons, with the Colombian Prodeco mines contributing 10.5 million tons. Glencore has the option to buy back the assets from Xstrata.

Copper Output

The company last week said mined copper output declined 5 percent to 906,898 tons on lower shipments from the Mt. Henry, Alumbrera and Antamina mines. Nickel gained 5 percent to 57,052 tons and zinc in concentrate rose 20 percent to 1.03 million tons. Chrome fell 30 percent to 786,000 tons.

The average price of copper for immediate delivery on the London Metal Exchange last year dropped to $5,178 a ton from $6,959 a year earlier. Average nickel prices fell 30 percent to 14,711 a ton. Zinc declined 11 percent to $1,682 a ton.

Xstrata plans to expand output 50 percent by 2013, mainly at its copper and coal units, Davis said in London on Dec. 8. The company said Dec. 3 it would increase capital spending 89 percent to $6.8 billion in 2010 as commodity demand revives.

--Editors: Tony Barrett, Simon Casey

To contact the reporter on this story: Firat Kayakiran in London at +44-20-7330-7484 or fkayakiran@bloomberg.net

To contact the editor responsible for this story: Simon Casey at +44-20-7673-2631 or scasey4@bloomberg.net

-0- Feb/08/2010 06:30 GMT

=================

source: http://www.businessweek.com

BofA's Price may need to be sidelined

2010-02-07T22:35:00.000-08:00

NEW YORK/ORLANDO, Florida (Reuters) - Bank of America Corp executive Joseph Price has already been moved from his job as CFO, but a lawsuit from New York's Attorney General raises questions about whether Price might need to be sidelined entirely.

The consumer, small business and credit card units Price, 49, now heads are at the heart of the largest U.S. bank. These units include most of the troubled loans that have triggered the bank to report two consecutive quarters of losses.

The businesses need attention that Price may not be able to give as he deals with the lawsuit, analysts say.

"The lawsuit is going to be a distraction," said Gary Townsend, chief executive officer of Hill-Townsend Capital. "It is unhelpful to Bank of America in dealing with the business challenges it has."

The Charlotte, North Carolina-based bank has been grappling to right itself after its acquisition of Merrill Lynch & Co just over a year ago became mired in controversy over soaring losses and bonus payments to Merrill bankers.

Chief Executive Brian Moynihan, who took charge after Kenneth Lewis retired at the end of last year, is hoping to distance the bank from the 2009 problems that triggered its stock slump to 25-year lows last February.

There are signs the bank is recovering and it said last month that the credit quality of many of its loans is improving. Bank of America shares finished 2009 up almost 7 percent, while the broader KBW Banks Index finished the year down 4 percent.

But the Merrill controversy has not gone away. New York Attorney General Andrew Cuomo accused the bank, Lewis -- and Price -- on Thursday of intentionally failing to disclose massive losses at Merrill prior to a shareholder vote on the merger.

The New York suit comes as the U.S. Securities and Exchange Commission reached a preliminary settlement agreement with the bank over similar issues.

Some analysts and people familiar with the bank suggest that Price, who has been at the bank since 1992, should take a leave of absence.

A former accountant who worked at PriceWaterhouse before joining the bank, Price will have his attention divided between the demands of running the largest U.S. consumer bank and fighting a complex civil lawsuit.

"It puts them in a very difficult position when they're trying to move their strategy forward, to have an executive under such gun fire," said Eleanor Bloxham, chief executive of corporate governance advisory firm The Value Alliance.

A leave of absence "may be warranted in this case simply from the standpoint of his own ability to manage the business, even if the bank supports him publicly," she said.

Price's counsel, William Jeffress, Washington, D.C.-based partner at Baker Botts LLP, declined comment on whether Price would be replaced, saying that was between his client and his employer.

Bank of America spokesman Scott Silvestri declined to comment on any possible change in Price's status.

CHANGING ROLES

As it did with Lewis while he battled multiple investor lawsuits and regulatory inquiries over the Merrill acquisition, Bank of America has publicly stood by Price since the charges were announced.

To some extent, the bank and Price may consider that, since he is no longer directly communicating with investors, the charges against him cannot do any new damage, some analysts noted.

"Bank of America probably knew where (Cuomo's probe) was heading and yet just in January they named Joe Price to a new role," said Jaime Peters, an analyst at Morningstar in Chicago. "(That) shows the confidence they have in him to go ahead and run one of their biggest and most important businesses."

The consumer unit Price now heads includes large portfolios of sub-prime loans Bank of America acquired when it bought mortgage company Countrywide in 2008 and one of the worst performing U.S. credit card portfolios. Moynihan, who previously held Price's role, moved the former CFO to the job when he took the reins from Lewis as part of a wider management reshuffle at the start of the new year.

But still, as the bank looks to move on under Moynihan, the lawsuit and Price's presence at the bank could be a vivid tie to the troubles that caused its share price to plummet and ultimately prompted Lewis to retire last year.

"There's no question in my mind that (the charges are) damaging to the reputation of Bank of America," Townsend added. "Bank of America has it's work to do to repair it's standing with investors and the public more generally."

(Reporting by Elinor Comlay and Joe Rauch; editing by Andre Grenon)

========================

source: http://www.reuters.com/article/idUSTRE6145IJ20100205

Super Bowl ads: An appeal to family

2010-02-07T22:30:00.000-08:00

By Aaron Smith, staff writerFebruary 7, 2010: 10:44 PM ET

NEW YORK (CNNMoney.com) -- While the themes in this year's Super Bowl ads ran the gamut from poking fun of emasculated males to take-offs on popular TV shows, experts agreed that a simple appeal to motherly love seemed to speak strongest to viewers.

The highly anticipated spot from anti-abortion group Focus on the Family, featuring Heisman trophy winner Tim Tebow and his mother Pam, managed to avoid controversy, they said, mainly through the vagueness of its message.

"That was a surprising ad because it was incredibly understated and very gentle," said Tim Calkins, marketing professor at the Kellogg Super Bowl Advertising Review. "You could see that they were trying to avoid polarizing people."

The ad, which ran during one of the earliest and most coveted spots in the game, was successful in the sense that it would draw people to the Christian organization's Web site, he said, but its effectiveness of its message was somewhat hampered by lack of detail.

"It was also very confusing, because you couldn't figure out what was the point," said Calkins.

Steve McKee, president of McKee Wallwork Cleveland Advertising, said the Focus on the Family spot seemed to be "trying to raise people's awareness on life," with Pam Tebow's reference to her fifth child Tim as her "miracle baby" who "almost didn't make it into this world."

McKee also believed the ad was successful, in that it will draw viewers to Focus on the Family's Web site.

Other featured themes

In particular, the Charger ad featured headshots of various men with an voiceover narrating their thoughts.

"I will empty the dishwasher and carry around your lip balm, but I will cut lose in my Dodge Charger," said Calkins, describing the content and message of the ads.

Calkins said this "very down ad about a guy who has been domesticated" might resonate with recessionary workers who have lost their jobs.

Anheuser-Busch, the top advertiser with five minutes of ad time in the game, had one of the best ads, he said, which borrowed heavily from ABC's show "Lost." In the ad, plane-crash castaways realize their situation isn't so bad when they discover a cache of Bud Lite. "Were going to be OK," says one of the castaways, clutching the beer and panting in a near-hysterical voice.

"That may well go down as one of the most popular spots," said Calkins, because it was humorous and it tapped into the popularity of the fact that "Lost" is in its final season.

McKee said that Google's ad, entitled "Parisian love," was drawing the most viewer interest on his company's Adbowl site. The ad tracks a Google (GOOG, Fortune 500) search that begins in the blossoming stages of a trans-Atlantic relationship with a French woman, ending with a search on the phrase "how to assemble a crib."

"It was the least expensive ad and the best ad so far," said McKee. "It was basically a product demo on the Super Bowl."

Several ads, from Careerbuilder.com, Dockers and a Sumo-themed ad from text message informational service KGB, tapped into the changing roles of men in society by featuring scantily-clad men as a source of humor.

McKee noted that Careerbuilder.com and Dockers ads ran back to back. With their similar visual theme, he noted, they ran the risk of overlapping products and confusing them for viewers.

"Does it further the awareness of both, or does it hurt both?" he wondered.

======================
source: http://money.cnn.com

Oil rises on bargain-hunting, eyes Euro debt woes

2010-02-07T22:16:00.000-08:00

(Adds economist’s comment in seventh paragraph.)

By Finbarr Flynn

Feb. 8 (Bloomberg) -- Japanese bank lending fell by the most in more than four years in January as some companies deferred capital investments and others turned to bond markets to raise funds.

Lending, excluding loans by credit associations, dropped 1.7 percent last month from a year earlier, the largest decline since September 2005, the Bank of Japan said today. The drop, amid a five-year low in demand for loans, compares with a 1.2 percent contraction in December.

With more than a third of factory capacity sitting idle in Japan, companies remain reluctant to increase spending even as the economy recovers from its worst postwar recession. Those that do seek funds are returning to bond markets that are warming after the credit freeze triggered by the collapse of Lehman Brothers Holdings Inc. in September 2008.

“We’re seeing the reverse of high-loan demand at the start of last year when access to capital markets was difficult,” Seiichi Shimizu, associate director-general at the Bank of Japan’s bank surveillance department, said at a briefing today. “Demand by companies for funds for capital expenditure and working capital remains weak.”

Acom Co. and Nippon Building Fund Inc. sold bonds in January for the first time since 2008, and were among 32 Japanese companies to issue bonds since the start of the year. Bonds issued by Japanese companies rose by 50 percent in January to 795 billion yen ($8.9 billion), from 529 billion yen in the same month a year earlier, Bloomberg data show.

Machinery Orders

Machinery orders, an indicator of business investment, plunged to a record low in November. Large companies plan to cut capital spending 13.8 percent in the year ending March, according to the Bank of Japan’s Tankan survey.

“It just highlights how weak domestic demand is at this point,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “Since the yen’s strengthening, it’s likely that exporters will continue to move their factories overseas. That means capital spending at home is going to stay low.”

An index of demand for loans to businesses plunged to minus 17 in January from October, the lowest since July 2004, the Bank of Japan said in a quarterly survey of loan officers.

Lending by Japan’s 10 so-called city banks, including Mitsubishi UFJ Financial Group Inc., fell 3.4 percent following a 3.1 percent drop the previous month, the Bank of Japan said.

Mitsubishi UFJ rose 0.2 percent to 458 yen at the lunch time break in Tokyo. Sumitomo Mitsui Financial Group Inc., Japan’s second largest bank behind Mitsubishi UFJ, declined 0.8 percent. The Topix Banks Index, which tracks 84 lenders, rose 0.1 percent.

“Companies aren’t willing to take on the risk of increasing borrowing and spending amid deflation,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo.

-- With assistance from Aki Ito and Keiko Ujikane in Tokyo. Editors: Brett Miller, Malcolm Scott.

To contact the reporter on this story: Finbarr Flynn in Tokyo at +81-3-3201-2541 or fflynn3@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at +852-2977-6626 or lagerkranser@bloomberg.net

===========

source: http://www.reuters.com/article/idUSTRE6142V820100208

Geithner Says U.S. Will ‘Never’ Lose Its Aaa Debt Rating

2010-02-07T22:12:00.000-08:00

February 08, 2010, 12:09 AM EST

By Rebecca Christie

Feb. 8 (Bloomberg) -- Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.

“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”

Geithner said investors around the world turn to U.S. Treasury securities and dollar-denominated assets whenever they are worried about global stability. That reflects “basic confidence” in the U.S. and its ability to bounce back from the global recession, he said.

Moody’s Investors Service Inc. last week said the U.S. government’s bond rating will come under pressure in the future unless additional measures are taken to reduce budget deficits projected for the next decade.

The U.S. plans to rein in the deficit once the labor market recovers, Geithner said. In the short run, that means focusing on ways to “make sure that this economy is growing again,” he said. The administration says the deficit will shrink over the next four years as more Americans find jobs and the economy accelerates.

“This is within our capacity to do,” Geithner said.

The Obama administration has proposed additional tax cuts and small-business assistance in its bid to jumpstart the U.S. economy. Geithner and other officials have said it’s too soon to start cutting spending because ending stimulus programs now could derail the economy.

Recession Risks

Geithner said the risk of a “double dip” recession in the U.S. has declined, particularly given recent reports showing the economy grew at a 5.7 percent pace in the fourth quarter of last year.

“We have much, much lower risk of that today than at any time over the last 12 months or so,” Geithner said. “We are beginning the process of healing.”

Geithner defended the Obama administration’s efforts to help homeowners avoid foreclosure through subsidized mortgage modifications. When asked why few homeowners have so far received permanent reworked loans, the Treasury chief responded that the administration is “absolutely committed” to following through on its promises.

“For eligible Americans -- they’re getting permanent modifications that substantially lower their monthly payment,” he said. “For the average household that translates into hundreds and hundreds of dollars every month for them.”

Geithner taped the interview before heading to Iqaluit, in Canada’s northern territory of Nunavut, for a meeting with finance ministers from the Group of Seven industrial nations. He told ABC that he wasn’t worried that tighter financial regulation would put U.S. banks at an international disadvantage.

“I’m very confident we can make sure that we are working very closely to raise global standards around the world so we have a level playing field,” Geithner said.

--Editors: Brendan Murray, Ann Hughey.

To contact the reporter on this story: Rebecca Christie in Washington at +1-202-654-1273 or rchristie4@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at +1-202-624-1862 or cwellisz@bloomberg.net

-0- Feb/08/2010 05:00 GMT

===================

source: http://www.businessweek.com

Assurance University Produces New Seminar to Prepare Business Leaders for Department of Labor Audits

2010-02-06T19:57:00.000-08:00

SCHAUMBURG, IL (January 28, 2010) - Assurance Agency, based in Schaumburg, IL, has produced a new educational seminar titled “If the Department of Labor Stops by Today, Would You Pass a Surprise Audit?” The seminar will be held on February 23, 2010 at Assurance’s headquarters and is designed for CFOs, CEOs and executive level business leaders of companies, regardless of size.

Insurance industry expert speakers will give an in depth explanation of the differences between an employee (W2) and an independent contractor (1099) from the standpoint of two critical government agencies – the IRS and Illinois Department of Employment Security. This will allow one to gain a better understanding of how to protect yourself when hiring and classifying a W2 versus a 1099 hire. The seminar will also cover how and when an individual contractor can pursue benefits under an ERISA plan. With this knowledge, you will be able to diminish your potential liability for misclassification.

Professionals interested in attending can sign up by clicking here or by calling 847.463.7171. Space is limited and registration is required. Business leaders are encouraged to sign up immediately for admittance.

This seminar is sponsored in part by Assurance’s elite Visionary level business partners: Blue Cross Blue Shield of IL, CHC Wellness, Chelsea Rhone LLC, Crump, Highland Risk Services, McAuley Woods & Associates, Slavin & Slavin, Travelers, UniCare, West Bend and Zenith Insurance Company.

source: http://www.assuranceagency.com