03.02.10
Posted in .com, All, Free blog Tips, business, top tagged campaign, finance, markets, personal, reviews at 6:00 am by carydalton
FORT WORTH, Texas – Natural gas and oil producer Quicksilver Resources Inc. posted a fourth-quarter profit of $32.5 million, or 19 cents per share, Monday as revenue grew, compared with a loss a year earlier, when it recorded several charges.
A year earlier, the company lost $467 million, or $2.79 per share.
The results, which beat Wall Street’s expectations, sent Quicksilver’s shares up 50 cents, or 3.4 percent, to $15.42. The stock has traded the past 52 weeks at $3.98 to $16.59.
Excluding one-time items, the company earned $47.3 million, or 27 cents per share, up from an adjusted profit of $39.3 million, or 23 cents per share, a year earlier home kerosene heaters.
Revenue rose 12 percent to $234.1 million from $208.9 million.
Analysts, on average, were expecting a profit of 25 cents per share on sales of $217.4 million, according to a poll by Thomson Reuters.
For the full year, Quicksilver posted a loss of $557.5 million, or $3.30 per share, compared with a loss of $378.3 million, or $2.33 per share, a year earlier.
Adjusted earnings were 86 cents per share for 2009.
Revenue rose to $832.7 million from $800.6 million.
Quicksilver reports profitable 4Q, shares climb
Permalink
02.27.10
Posted in hot news, money, news, online, top tagged blogs, campaign, politics, reviews, work at 6:36 pm by carydalton
NEW YORK (Reuters) – Consumer sentiment was weaker in February, as Americans grew more impatient with the government's gridlock over efforts to stimulate jobs, a survey released on Friday showed.
While not fearful of another spike in layoffs, consumers have turned more gloomy about their job and income prospects, according to the Thomson Reuters/University of Michigan's Surveys of Consumers.
"Consumers have been getting more impatient with the slow progress of the stimulus program, and confidence in the Obama administration's economic policies has begun to wane," Richard Curtin, director of the surveys, said in a statement.
The survey's overall index of consumer sentiment was at 73.6 in February, down from 74.4 in January and below the 74.0 forecast by analysts polled by Reuters. The preliminary February reading was 73.7.
The gauge of current economic conditions was at 81 personal humidifier.8 for the month, up from January's reading of 81.1. This compares with 84.1 in the preliminary figures and 82.0 predicted by analysts.
The survey's barometer of consumer expectations weakened to 68.4 in February from 70.1 in January. It fell short of the 69.9 forecast by analyst but it did improve from the preliminary figure of 66.9.
The index of consumers' 12-month economic outlook fell to 80 from 84 in January, but it was up from 79 in early February.
The survey's 1-year inflation expectations eased to 2.7 percent in February from 2.8 in January, while the five-to-10-year inflation measure slipped to 2.7 from 2.9 a month ago.
(Reporting by Richard Leong and Caroline Valetkevitch, Editing by Chizu Nomiyama)
Consumer sentiment weakens in February
Permalink
02.21.10
Posted in .com, business, money, shortly, top tagged campaign, economics, financial, news, writing at 4:06 pm by carydalton
BERLIN – The Cockpit pilots union offered Saturday to meet with the chief of Lufthansa AG to try to head off a four-day strike beginning Monday that could cause headaches for thousands of travelers.
The union offer to meet with Lufthansa Chief Executive Wolfgang Mayrhuber came after Germany’s transport minister urged the two sides to return to talks and avoid a strike that could damage the country’s economy.
Lufthansa has said it is willing to talk, but not without conditions. It was not immediately clear if the meeting would take place.
Lufthansa has already canceled some 600 flights ahead of the strike and is scrambling to rebook travelers on partner airlines or trains.
“Lufthansa is doing everything in its power to inform its customers as soon as possible and offer them alternative travel options,” the company said on its Web site.
Travelers who are unable to reschedule are being reimbursed for their tickets, it said guaranteed pay day loans.
The airline, Germany’s largest, estimates the strike could cost it as much as euro100 million ($135.19 million).
The union is urging some 4,500 pilots who fly for Lufthansa, Lufthansa Cargo and Germanwings to walk off their jobs from February 22-25 to press the airline for increased job security.
Cockpit accuses the airline of outsourcing more and more flights to pilots employed by other companies, who work for less pay and under worse conditions.
Also Saturday, German Transport Minister Peter Ramsauer warned the strike could seriously damage the German economy.
“It can not be that the largest German air fleet is grounded for four days,” Ramsauer told the Bild am Sonntag weekly.
___
On the Net:
http://www.lufthansa.com
Pilots offer to talk with Lufthansa before strike
Permalink
02.13.10
Posted in All, economic, hot news, news, top tagged All, campaign, life, opinion, personal at 11:12 pm by carydalton
The global coal industry is in the midst of a permanent structural shift in the form of the emerging dominance of the Asia-Pacific region.
China and India are at the heart of the transformation, firmly placed as the world's No. 1 and No. 3 biggest coal producing nations, respectively. (The U.S. is No. 2.)
And demand in the world's two most populous nations is growing rapidly.
India's imports of thermal coal, used in power generation, rose 60% in 2009 to 57 million tons. China shifted to a net importer last year to the tune of 70 million tons of thermal coal, despite large domestic resources of the black rock.
Both countries are also experiencing a spike in demand for metallurgical coal, a main ingredient of steel, as their economies continue to mushroom.
At the end of January, Peabody Energy (NYSE:BTU - News) said it is expanding a mine in Australia at a cost of $70 million to boost capacity by 1 million tons within several years to meet growing demand for metallurgical, or met coal, used by steel companies in China, India and other Asian nations.
"China and India have permanently changed the seaborne metallurgical and thermal coal market landscape," CEO Gregory Boyce said. Peabody enjoyed a 37% increase in Australian coal shipments in the second half of 2009.
Alpha Natural Resources (NYSE:ANR - News) said it sees much strength in the metallurgical markets in 2010. It raised its metallurgical shipment guidance by about 1 million tons, to 11 million to 13 million tons for this year.
Meanwhile back in the U.S., the enormous stockpiles of coal racked up by utilities during the depths of the recession are starting to shrink after extremely cold weather in December and January.
According to U.S. utilities, which use coal to generate nearly half of America's electricity, roughly 50 to 60 gigawatts of coal will go offline over the next 10 years or so.
The U.S. will need to replace that energy, and renewables such as solar, wind, small hydro, modern biomass, geothermal and biofuels are one of the paths to take to fill that void.
1. Business
IBD's Energy-Other group includes any energy source that is not oil or natural gas. The group's 800-pound gorilla is coal.
Coal mining, especially underground, is a capital- and labor-intensive business. It is also a very high fixed-cost business.
Electricity demand has been the primary value driver for thermal and steam coal for a long time, with steel being the other big driving force.
In 2009, the U.S. produced 1.08 billion tons of coal, mined primarily from four major coal basins with smaller ones spread across the country. The four are the northern and central Appalachian basins, the Illinois basin and northern Wyoming's Powder River Basin.
Peabody is the largest U.S. coal miner, producing 215 million tons last year. It is the only U.S.-based company in the group with international mining operations, in this case Australia.
Arch Coal (NYSE:ACI - News) is the second-largest company in the group; Alpha Natural Resources moved into the No. 3 slot with last year's acquisition of Foundation Coal for $1.4 billion in stock. Consol Energy (NYSE:CNX - News) and Massey Energy (NYSE:MEE - News) are fourth and fifth, respectively.
The U.S. is capable of generating roughly 1,000 gigawatts of electricity per year. Coal generates some 325 gigawatts, natural gas kicks in 400 and nuclear makes up another 100, according to Brian Gamble, an analyst at Simmons & Co. The rest, he says, is split between hydropower, solar, wind, geothermal and biomass.
"The segment of the U.S. power grid that is made up of renewables is quite small," Gamble said. "It is a growing market, albeit from a small base, but we don't expect solar, wind or any other renewable to gain significant market share for some time."
The group includes several solar companies, including Chinese firms like Trina Solar (NYSE:TSL - News) and Suntech Power (NYSE:STP - News).
First Solar (NMS:FSLR) is the largest U.S.-based solar company by market share. Other American firms include Real Goods Solar (NMS:RSOL), GT Solar International (NMS:SOLR) and SunPower (NMS:SPWRA).
While multinationals such as GE (NYSE:GE - News) and Siemens (NYSE:SI - News) have made a strong push into wind power, those diversified industrial giants are listed in other stock groups. In the Energy-Other group, Danish company Vestas Wind Systems (OTCBB:VWDRY.ob - News) is the largest wind-power company.
Ormat Technologies (NYSE:ORA - News) and U.S. Geothermal (AMEX:HTM.a - News) operate plants of geothermal energy, power generated from heat stored in the Earth payday advance.
Name Of The Game: It's simple: produce and supply coal, wind, solar, hydropower and other renewables to fulfill the world's energy needs, which are expected to grow rapidly over the next 20 to 30 years, says Michael Dudas, an analyst with Jefferies & Co.
2. Market
U.S. utilities are the biggest customers for coal producers and renewable energy alike.
Steel makers are the next biggest consumers of coal.
The entire coal market, which is dominated by the publicly traded miners and small mom-and-pops, is estimated at roughly north of $52 billion. The U.S. is expected to produce 1.07 billion tons of coal this year, with public coal companies churning out more than half that output.
The renewables market is a bit tougher to size as the adoption of these alternative energies is still in early phases. But rough estimates for the global wind and solar market is roughly $100 billion, with 70% of that produced by wind. The U.S. wind market is roughly $20 billion, according to Simmons' estimates.
3. Climate
The biggest issue facing the coal industry is permits being held up by the Environmental Protection Agency that are needed to continue producing coal. Environmentalists contend coal mining is destroying landscapes where these basins are located.
"The problem here is that we are going to experience energy usage growth of 50% over the next 25 years, and we can't do it without coal, which is one of the cheapest forms of energy," Dudas said.
Coal stockpiles rose last year as demand fell. Businesses were forced to close and shutter production, while consumers used less heat to save on their energy bills, Dudas says.
"Coal producers will have to manage their output and in some cases shut mining operations down until the stockpiles begin to decline, which has already begun," he said.
Last week, U.S. industry executives from the wind, solar, hydropower, geothermal and biomass sectors pushed for a federal renewable energy standard, which would set a percentage of how much energy must come from renewable sources in the U.S.
The group wants an extension of tax incentives and said stimulus funds powered most renewable expansion last year. President Barack Obama has urged Congress to set a national standard that would require 25% renewable power by 2025.
A federal standard, which they say will foster economic growth and create jobs, could spur these industries at a time when China is moving swiftly into alternative energy production.
4. Technology
Most technological advances in this industry group have occurred in renewables.
For example, ethanol producers, such as BioFuel Energy (NMS:BIOF) and Pacific Ethanol (NMS:PEIX), use corn oil extraction technologies to produce the biofuel.
Companies such as Hy-Drive Technologies provide natural gas or hydrogen-generating systems for diesel and commercial fleets.
And FuelCell Energy (NMS:FCEL) makes stationary fuel cells, which electrochemically produce electricity directly from hydrocarbon fuels for commercial, industrial, utility and government customers.
Solar power companies have to be tech-savvy to generate electricity from sunlight. This can be direct as with photovoltaics, or indirect as with concentrating solar power, where the sun's energy is focused to boil water, then used to generate power.
5. Outlook
Over the next decade, coal plant retirements will take roughly 50 to 60 gigawatts of coal generation offline.
The U.S. will need to replace that lost energy, and renewables are the answer, Gamble says.
"It will take a mix to fill the void, and there will be a shift, but renewables won't fill that need overnight," he said. "In order to make this happen, there will have to be additional infrastructure built, which becomes an expensive proposition no matter how you slice it."
Nuclear, natural gas and renewable energy can each fill part of that role, but additional coal assets must be built in the meantime.
Upside: The world has unquenchable thirst for energy as emerging economies continue their rapid growth and populations in developed nations continue to swell. That demand should fuel business for traditional sources like coal as well as renewables.
Risks: Another recession could further sap demand for coal, which could increase stockpiles and restrain mining operations. Also, tougher regulation in the U.S. would make starting new projects difficult.
A Renewed Sense Of Energy
Permalink
01.15.10
Posted in All, Free blog Tips, hot news, shortly, top tagged blogs, campaign, events, politics, world at 5:06 am by carydalton
WASHINGTON (Reuters) – Sales at U.S. retailers unexpectedly fell in December as consumer spent less on vehicles and an array of other goods during the holiday shopping month, data showed on Thursday, raising concerns about the durability of the economy's recovery.
The Commerce Department said total retail sales fell 0.3 percent last month, the first decline in three months, after rising by an upwardly revised 1.8 percent in November. Sales in November were previously reported to have increased 1.3 percent.
Analysts polled by Reuters had forecast retail sales gaining 0.5 percent last month.
Compared to December 2008, sales rose 5.4 percent, but fell 6.2 percent for the whole of 2009.
Motor vehicle purchases fell 0.8 percent, while sales at electronics and appliance stores dropped 2.6 percent.
The data, coming in the wake of a report last week showing a surprise drop in non-farm payrolls in December, could add to worries that the economic expansion that started in the third quarter of 2008 could falter once government stimulus ends bad credit personal loan lenders.
Stubbornly high unemployment remains the weakest link in the recovery from the worst economic downturn since the 1930s. Job worries are expected to constrain consumer spending, which normally accounts for more than two-thirds of economic activity.
Excluding motor vehicles and parts, retail sales fell 0.2 percent in December, the biggest decline since July, after rising 1.9 percent the prior month. Economists had expected a 0.3 percent increase.
Core retail sales, which excludes autos, gasoline and building materials, fell 0.3 percent after rising 0.9 percent in November.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)
Retail sales unexpectedly fall in December
Permalink
01.07.10
Posted in .com, All, Free blog Tips, economic, hot news tagged campaign, life, markets, news, political at 10:30 am by carydalton
TOKYO (MarketWatch) — Japan’s newly appointed Finance Minister Naoto Kan sent his nation’s currency significantly lower against its U.S. counterpart Thursday, as he used his inaugural press conference to talk down the yen.
Kan said many Japanese companies are in favor of the dollar trading around 95.00 yen, and that he will work with the Bank of Japan to get the currency to “appropriate” levels. The dollar spiked to 92.63 yen, from 92.15 yen before Kan spoke.
It is unusual for Japanese ministers to make comments on specific foreign-exchange levels.
The currency market trend “has been corrected a lot toward yen weakness since the Dubai shock … but I’m hoping the correction will make a bit more progress, making the yen weaker,” Kan was quoted as saying by Dow Jones Newswires.
Japanese Prime Minister Yukio Hatoyama on Wednesday appointed the deputy prime minister — who will also keep that title — to replace Hirohisa Fujii, who stepped down for health-related reasons.
Kan “is a bit of a contrast to Fujii, who had, in our view, adopted a ‘benign neglect’ stance’” through December toward the Japanese yen, said strategists at Barclays Capital.
By contrast, Kan “has been expressing his preference” for a weaker yen, they said payday loan online.
“Thus, the government’s stance to prevent renewed [Japanese yen] strength has become clearer, and we think Kan’s appointment is likely to reduce the upside risk” for the yen, they wrote in a note to clients.
Ironically, Fujii once did the opposite of what Kan did Thursday.
In September, even before he was sworn in as finance minister, Fujii inadvertently sent the yen soaring when he was quoted as telling reporters that a strong yen had some economic benefits and that the recent foreign-exchanges moves weren’t rapid.
Not all analysts believe a weaker-yen stance is a given from now.
“We continue to expect the government to give priority to more pressure on the BOJ for additional easing and to reserve intervention as the last resort,” said Tomoko Fujii, a rates and currency strategist at Bank of America Securities-Merrill Lynch.
“We also think that the BOJ is likely to remain reactive. The BOJ probably intends to ease policy further only after sharp [Japanese yen] appreciation increases risks of deeper deflation,” she said in emailed comments.
Japan’s new finance minister call for weaker yen
Permalink
12.30.09
Posted in .com, economic, hot news, money, world of money tagged All, business, campaign, life, world at 11:29 pm by carydalton
WASHINGTON (Reuters) – The Obama administration said on Wednesday it would provide GMAC Financial Services an additional $3.8 billion of government aid, and said it was raising the government's stake in the company to 56 percent from 35 percent.
"These actions offer the best chance for GMAC to complete its overall restructuring plan and return to the private capital markets for its debt financing and capital needs in 2010," the Treasury Department said in a statement.
GMAC, which was formerly owned by General Motors , had already received $12.5 billion of aid from the U.S. government since December 2008. The latest cash infusion will bring total taxpayer aid to $16.3 billion.
The money will help shore up the auto loan and mortgage company as it wrestles with the worst housing market in decades.
Many analysts see GMAC's mortgage assets, which make up about a third of the company's $178.2 billion balance sheet, as the main obstacle to the company reaching profitability.
In a separate statement, the company said the government's investment put it in a position to explore strategic alternatives for its mortgage business.
One bondholder, speaking on condition of anonymity, said that the best route for GMAC to follow now would be to sell off GMAC's mortgage servicing business, which collects payments from borrowers and is worth more than $3 billion on the company's books.
The bondholder said the company could continue to make new home loans through its Ally Bank unit. GMAC's remaining mortgage assets could be used to pay off coming debt obligations, he added easy fast payday loans.
GMAC's auto finance operations were profitable in the third quarter, earning about $164 million after taxes, while the mortgage business lost nearly $600 million.
The company has already received $12.5 billion of aid from the U.S. government since December 2008, representing about half of the bank's equity as of September 30.
It has been speaking to the Treasury about its capital needs for months, after a government "stress test" found that the former financing unit of General Motors needed about $11.5 billion. The company has been unable to raise private capital.
In November, GMAC Chief Executive Al de Molina resigned and was replaced by Michael Carpenter, a board member and former Citigroup executive.
GMAC said in November that it asked the Treasury to postpone decisions about putting more capital into GMAC until Carpenter and other managers had assessed the company's condition.
On news reports of the planned capital infusion, the cost to insure GMAC's debt against default in the credit derivatives market fell to around 4.4 percentage points, or $440,000 a year for five years, from 4.66 percentage points at Tuesday's close, according to market data company Markit.
(Additional reporting by Corbett B. Daly and Tim Ahmann in Washington, and Dan Wilchins and Karen Brettell in New York; Editing by Derek Caney, Dave Zimmerman and Steve Orlofsky)
Treasury to dole out $3.8 billion to GMAC, raise stake
Hot News: Currencies: Dollar higher after home-price, confidence data
Permalink
12.28.09
Posted in .com, All, business, news, world of money tagged campaign, news, personal, politics, writing at 5:18 pm by carydalton
Shares on Wall Street crept higher Monday as investors returning from a long weekend were heartened by good news on retail sales. Wall Street exchanges are riding a five-day winning streak and are trading at highs for the year.
In early trading, the Dow Jones industrial average was 0.24 percent or 24.94 points higher, while the broader Standard & Poor’s 500-stock index rose 3.32 points or 0.29 percent.
The dollar weakened against other currencies, giving commodities prices a boost. Bond prices fell.
Monday’s gains were underpinned by optimism over improved holiday spending data in the United States as well as a jump in Japan’s factory production, suggesting an economic recovery is gathering pace.
In the United States, figures from MasterCard Advisors’ SpendingPulse, which track all forms of payment, showed that retail sales rose 3.6 percent from Nov. 1 through Dec. 24, compared with a 2.3 percent drop a year ago. Consumer spending is one of the biggest drivers of economic growth and is vital to a sustained recovery.
Investors will also be keeping a close eye on airline stocks after a failed attack on a Northwest flight on Christmas Day. Another incident on the same flight to Detroit from Amsterdam on Sunday raised further alarm.
European and Asian stock markets also moved higher Monday.
In Paris, the CAC 40 index rose 0.84 percent to 3,945.62, closing in on 4,000 points, a level it last saw in October 2008. The DAX in Frankfurt rose 0.72 percent to 6,000.17. London exchanges were closed for the Boxing Day holiday.
The French nuclear engineering giant Areva SA was among the big decliners in Paris after it was beat out for a $20 billion nuclear power contract in the United Arab Emirates by a South Korean consortium led by the Korea Electric Power Corporation.
Areva shares fell 2.7 percent. The loss was a blow to Areva, which is trying to export its nuclear technology around the world.
Earlier markets in Asia were the first to resume trading after the Christmas holiday and investors focused on regional developments in the absence of cues from the United States or Europe one hour payday loan.
Aiding sentiment in Asian stock markets was news that Japan’s factory output rose the most in six months in November as a recovery in export demand from Asia boosted production of cars, flat screen televisions and other products in the world’s second-biggest economy.
Japan’s recovery from the world economic crisis has been undermined by deflation and strong yen but an improvement in demand for exports has raised hopes it can avoid slipping back into recession next year. The figures also showed that China’s lavish stimulus spending is helping the region’s recovery.
“A recovery in exports, especially in Asia, supported growth in industrial output,” a senior economist at the Japan Research Institute, Hideki Matsumura, said.
Among the key sectors, November output for transportation machines, which include passenger cars, jumped 5.9 percent. Output for information technology equipment, which includes popular liquid crystal display televisions, gained 2.7 percent. Shipments in November edged up 0.9 percent month-on-month with inventories rising 0.2 percent.
While growth in Japan’s factory output was stronger than expected, the nation’s retail sales in November fell 1.0 percent from a year earlier, marking the 15th consecutive month of decline.
In Tokyo trade, the Nikkei 225 stock average closed up 139.52 points, or 1.3 percent, to 10,634.23 — the highest finish since late August. Hong Kong’s Hang Seng reversed course to end down 36.78, or 0.2 percent, at 21,480.22, while the Shanghai benchmark jumped 47.43 points, or 1.5 percent, to 3,188.78.
A Soft Start but Wall Street Moves Higher
Permalink
Posted in .com, All, Free blog Tips, hot news, news tagged campaign, events, people, reviews, writing at 3:54 am by carydalton
MIAMI (Reuters) – A key informant in the U.S. tax evasion case against Swiss bank UBS AG (UBSN.VX) (UBS.N) has asked a Florida court to postpone the scheduled January 8 start of his prison term, saying he is ready to cooperate further with the U.S. government in the case.
Former UBS banker Bradley Birkenfeld, who was sentenced in August to three years and four months in prison for helping a billionaire hide assets from U.S. tax authorities, made the postponement request in a filing this weekend by his lawyer to a U business card.S. district court in Florida.
The filing also requested a hearing to reconsider the 4O-month sentence imposed on Birkenfeld by federal Judge William Zloch on August 21.
(Reporting by Pascal Fletcher; Editing by Leslie Adler)
UBS case whistleblower requests prison postponement
Permalink
12.25.09
Posted in hot news, online, shortly, top, world of money tagged campaign, events, life, marketing, people at 8:48 pm by carydalton
CHICAGO (MarketWatch) — Mortgage rates rose for a third straight week as the 30-year loan climbed back above the 5% level for the first time since Oct. 29, Freddie Mac said Thursday.
The mortgage agency’s weekly rate survey showed the national average on the 30-year mortgage at 5.05%, up from 4.94% a week ago but below its year-ago average of 5.14%. The 15-year loan, a popular refinancing choice, also jumped, to 4.45% from 4.38%. A year ago the 15-year loan was at 4.91%.
Mortgage fix elusive for many
Recent evidence suggests housing is rebounding, but many mortgage holders who face financial problems because of the recession have a tough climb to modify their loans and keep their homes out of foreclosure. (Dec. 16)
Adjustable-rate mortgages rose as well, but only slightly. The five-year Treasury-indexed hybrid ARM averaged 4.40%, up from 4.37%. The hybrid was at 5.49% a year ago. One-year Treasury-indexed ARMS averaged 4.38%, up from 4.34%. Last year at this time the ARM was at 4.95%.
To achieve the rates, the 30-year loan required the payment of an average 0.7 point; the other three loans needed 0 low cost payday loans.6 point. A point is 1% of the loan amount, charged as prepaid interest.
“Although interest rates for 30-year fixed-rate mortgages are above 5% this week for the first time since the end of October, they are still around 0.5 percentage points below this year’s peak set in mid-June,” said Frank Nothaft, Freddie Mac chief economist. “ARM rates increased by a lesser amount as the market consensus calls for no rate hikes by the Federal Reserve in the immediate future.”
Nothaft pointed out that the low rates have helped the housing market continue to show improvement. “Total existing home sales jumped 7.4% in November to an annualized pace of 6.54 million units, which was the most since February 2007. Moreover, the number of unsold existing homes was the lowest since December 2006 and the number of unsold new homes was the least since April 1971, which may leave future room for new construction.”
Mortgages: 30-year motgage jumps back over 5%
Permalink
12.19.09
Posted in money, news, shortly, top, world of money tagged campaign, finance, marketing, political, work at 1:48 pm by carydalton
When ConocoPhillips bet big on gas with the $36 billion purchase of Burlington Resources in 2005, it was widely expected to cause copycat deals. Instead the deal became a cautionary tale in the oil patch. Investors are clearly concerned about a repeat performance. They’ve wiped almost $20 billion off Exxon Mobil’s market capitalization since the oil giant agreed to buy XTO Energy for $31 billion this week. But they should give Exxon more credit for learning from its rival’s blunders.
Rex Tillerson, Exxon’s chief executive, appears already to have side-stepped Conoco’s pivotal error: timing. Just a day after the Burlington deal was announced, gas prices hit a record $15.78 per thousand cubic feet. Consequently, by the time Conoco pounced, Burlington shares had already gained 90 percent that year, making them the sixth best performer in the Standard & Poor’s 500-stock index.
Fast forward a few years and natural gas trades at roughly a third of its peak price in 2005. Saddled with debt taken on to buy Burlington, Conoco is now trying to dispose of $10 billion of assets in what appears to be a buyer’s market. The deal ultimately led to more than $30 billion in write-downs for Conoco, by Deutsche Bank’s tally.
Contrast that with Exxon’s swoop on XTO. Even including Exxon’s healthy premium, XTO shares are still more than 30 percent below their June 2008 high. Meanwhile, XTO’s shrewd hedging will shield Exxon from the grim outlook for gas prices at least until 2011, by which time demand may have picked up.
Infelicitous timing isn’t the only factor that sabotaged the Burlington deal. Conoco failed to keep key managers like Randy Limbacher, the highly regarded chief operating officer, and the heads of production in the United States and Canada. Many of them drifted back to independent explorers.
By setting up a separate unconventional gas unit at XTO’s home base in Fort Worth, Tex., Exxon seems determined not to squeeze out talent. In any event, given Exxon’s track record in the industry, it seems odd that investors are not giving its management the benefit of the doubt. At the very least, they can thank Conoco for handing them some valuable lessons in what not to do.
A Lehman Ruling
Lehman Brothers’ creditors are being sorted into haves and have-nots auto loans for bad credit. Fifteen months after the investment bank collapsed, London’s High Court has ruled that cash held on behalf of clients can be returned only if it was properly segregated from Lehman’s own money. Clients whose money should have been separated, but wasn’t, have been left out in the cold.
PricewaterhouseCoopers, the firm administering the bankruptcy of Lehman’s British arm, has identified $2.1 billion of cash that was definitely ring-fenced. But former clients and affiliates of Lehman argued that a further $3 billion should have been segregated under the British financial regulator’s rules. That claim has been dismissed. A collection of hedge funds that lost out will appeal. If they fail, they will have to join the queue of unsecured creditors.
Goldman Sachs and the hedge fund firm GLG Partners are among the winners from the ruling. It is not clear whether that was a result of luck or shrewd renegotiation of their agreements with Lehman as it got into trouble. The fact that two of Europe’s most powerful fund managers have ended up on the right side of the judgment suggests the latter.
But even clients whose money was properly segregated may not be repaid in full. PricewaterhouseCoopers has warned of a $1 billion shortfall if German administrators refuse to release funds transferred to Lehman’s German subsidiary shortly before its demise.
The Financial Services Authority, the British regulator, does not emerge well from this episode. It had rules in place that should have protected client money, but they were not properly enforced.
Still, there are encouraging signs that the British authorities have learned from the Lehman events. The government’s new paper on dealing with failing investment banks includes a whole chapter on safeguarding client assets. That may be scant consolation for funds left on the wrong side of the High Court judgment. They have learned their lesson the hard way.
CHRISTOPHER SWANN and NICHOLAS PAISNER
For more independent financial commentary and analysis, visit www.breakingviews.com.
Reuters BreakingViews: Merger Lessons In the Oil Patch
Hot News: Nike earnings beat St, stands by Tiger Woods
Permalink
12.18.09
Posted in .com, Free blog Tips, business, top, world of money tagged campaign, financial, people, reviews, world at 8:18 am by carydalton
HONG KONG (Reuters) – The euro recovered from early losses on Friday after Pakistan dismissed rumors of a coup while Asian stocks fell as investors fretted about the outlook for corporate earnings.
European shares were set to open steady, according to financial spreadbetters, while U.S. equity futures were up 0.4 percent.
The dollar (.DXY) eased 0.2 percent against a basket of major currencies, pulling back from an overnight rally as investors unwound long dollar positions ahead of the year-end.
Greece's fiscal woes continued to weigh on the euro but the currency found support after Pakistan dashed rumors of a coup, which in early trade had sent it skidding to a nine-month low against the safe-haven Swiss franc.
By the afternoon the euro was up 0.3 percent at $1.4380, rebounding from a three-month low of $1.4304 on Thursday.
Pakistani President Asif Ali Zardari said there was no coup, dousing rumors that started after a government minister suspected of corruption was barred from leaving the country.
Asian stocks slipped as investors became cautious about companies' earnings prospects and shares of resources companies were sold in reaction to an overnight drop in the price of gold.
"We have already suggested that investors may be setting up for portfolio readjustments heading into the new year, and still believe we could see gold tumble considerably further before the year is done," Investec Bank (Australia) Ltd said in a research note.
The MSCI index of Asia Pacific stocks traded outside Japan (.MIAPJ0000PUS), which has rallied more than 60 percent this year, was 0.6 percent lower.
In Japan, the Nikkei share index (.N225) dipped 0.2 percent, paring most early losses and the five-year government bond yield slid to a four-year low after the Bank of Japan said it would not tolerate deflation, suggesting further monetary easing was possible.
TELSTRA TUMBLES
Asian resources stocks were hit after gold fell 3 percent in New York while banking shares, including HSBC (0005 no fax payday advance.HK), lost ground after international regulators proposed tough new capital protection rules from 2012.
HSBC shares in Hong Kong fell 1 percent, extending a 3.5 percent slide in London.
The gold price stabilized, rising to $1,105 an ounce from a New York close at $1,097.80, but is about 10 percent below a record high of $1,226.10 reached on December 3.
Oil meanwhile edged up 0.4 percent to $72.96 a barrel, supported by positive U.S. factory activity data.
Asian equity investors are likely to remain cautious next week as they seek to hold onto stellar gains this year.
Nouriel Roubini, one of the few economists to have accurately predicted the magnitude of the global financial crisis, warned that global markets have rallied "too much, too soon, too fast."
However, he said an imminent correction was unlikely because a cheap dollar would continue to encourage investors to seek higher-yielding assets for a few months. Roubini sees a dollar rebound in 6-12 months.
In Australia, shares of phone company Telstra (TLS.AX) tumbled 3.4 percent after the company cut its sales revenue forecast.
The country's biggest brewer, Foster's Group (FGL.AX), saw its shares drop nearly 2 percent after warning that a strong Australian dollar and weak U.S. demand would cut profits at its wine business.
Some analysts have warned that investors of Australian equities have not sufficiently priced in the impact of the Aussie dollar's 40 percent surge this year.
"It's been pushed to the back of people's minds, but the currency is certainly coming home to roost. It is adding to the nervousness in our market," said Daniel Manley, a dealer at Burrell & Co in Australia.
(Additional reporting by Victoria Thieberger in MELBOURNE and Miho Yoshikawa in TOKYO; editing by Kazunori Takada)
Euro recovers, shares fall on earnings jitters
Permalink
12.15.09
Posted in economic, money, news, online, top tagged business, campaign, news, political, writing at 7:12 am by carydalton
SYDNEY — How can a company give away millions of products, help poor people, address climate change and turn a profit? A boutique energy company run by the unlikely partnership of an Anglican priest and a handful of business executives thinks it has the key.
The Melbourne company, Cool nrg International, is handing 30 million energy-efficient light bulbs out to poor and middle-income families in Mexico in a bid to capture a previously untapped corner of the carbon offset trading market and to nudge the developing world toward cleaner energy.
Cool nrg is one of a growing number of businesses trying to cash in on the multibillion-dollar market for carbon offsets approved by the United Nations under its Clean Development Mechanism, a program created by the 1997 Kyoto Protocol to fight emissions of greenhouse gases. The program allows wealthy countries that have binding greenhouse gas targets to offset their emissions by investing in clean technology in developing countries, which have no targets.
The Mexican venture, called Cuidemos Mexico, or Let’s Take Care of Mexico, is the first C.D.M. project to focus on reducing energy demand by improving efficiency at the household, rather than the industrial, level. It is also the first project to receive “programmatic” status, meaning that it can be introduced at multiple sites without needing U.N. approval each time.
The company’s executive director is Nic Frances, 48, a charismatic former stockbroker turned Anglican priest who has been given a seat at the World Economic Forum in recognition of his success in setting up socially responsible enterprises.
Before moving to Australia in 1998, Mr. Frances ran two large projects in his native Britain that trained unemployed people to restore castoff furniture and electrical appliances that were then sold to low-income households. He also ran a Christian charity in Australia before turning his sights on the environment. At Cool nrg, his partners include executives drawn from Ernst & Young and BP Asia.
Mr. Frances and his backers believe their project will address some of the main criticisms that have been leveled against the C.D.M., which is being reviewed by international negotiators in Copenhagen as they try to develop out a successor to the Kyoto Protocol.
The idea is relatively simple: By the end of 2012, the company plans to distribute 30 million compact fluorescent light bulbs to 7.5 million households across Mexico — four bulbs per home. To receive the bulbs, each family must hand over four energy-gobbling incandescent bulbs and a power bill as proof of address. The details are recorded in a database to avoid duplication and to stop profiteers from stockpiling and reselling the bulbs.
For every ton of carbon saved by the lights — a large sample of which will be monitored using wireless devices — Cool nrg receives a U.N.-certified carbon credit that it can sell to a country or company seeking to meet its emissions targets.
Over 10 years, the average life of a compact fluorescent bulb, the company expects to generate about 7.5 million carbon credits. On the European Climate Exchange, credits for greenhouses gases that have already been saved — called certified emissions reductions — trade for about €13, or $19. But many entities, including Cool nrg, have chosen to sell their relatively riskier, not-yet-generated credits at fixed discounts that are not made public.
While Cool nrg makes money selling carbon credits, Mexican families can enjoy lower energy bills, since compact fluorescent bulbs consume as much as 80 percent less electricity than standard incandescents. And the Mexican government — which underwrites electricity costs for low-income families — is expected to reap a double windfall, paying fewer subsidies and deferring the need to build new power plants immediate payday loans online.
Cool nrg gave out the first million light bulbs in the Mexican state of Puebla in November, supported by a loan from the ING Group and a promise from a Dutch utility, Eneco Energie, to purchase all of the 240,000 credits that are expected to be created by the Puebla project in the next 10 years. It also has the right of first refusal for buying any credits generated by the remaining 29 million bulbs.
The lack of certainty around the future of the carbon market after the Kyoto accord expires is keeping the price of carbon credits relatively low, Mr. Frances said. Mexico is covering about 30 percent of the project’s costs — but the proportion could fall if the price of carbon credits rises.
The Puebla pilot is unlikely to turn a profit, “but we did it because we wanted to show, by Copenhagen, that it would work,” Mr. Frances said. “However, at a price of €18 a ton, projects like this suddenly become very profitable — and we don’t have to do the others until the price is right.”
In its submission to the United Nations, Cool nrg estimated that the project would save Mexican families about $165 million a year in electricity bills, while the government would save $200 million a year in subsidies.
“For the Mexican government, which owns the power companies, this is a really cheap way of effectively building a power station,” Mr. Frances said.
But Mr. Frances’s profit vehicle — the Clean Development Mechanism — has plenty of detractors.
Critics say that the mechanism has become distorted, despite its good intentions. The ratio of one credit per ton of greenhouse gases saved has given rapidly industrializing countries with large, emissions-intensive factories — China, in particular — a substantial edge over smaller rivals.
And the high cost of shepherding a project through the labyrinthine U.N. approval process has shut many poorer countries out. In 2006, more than 60 percent of approved projects were in China. India received 12 percent and Brazil, 6 percent. African countries all together received just 3 percent.
Cool nrg chose Mexico in part to show that it was possible to run a successful C.D.M. project outside China, India or Brazil. Also, Mexico’s relatively heavy use of fossil fuels for electricity translated into more carbon credits for every kilowatt hour of power saved, making the project potentially more profitable.
Many environmental groups say the C.D.M. undermines efforts to curb greenhouse gases because it gives rich countries leeway to continue polluting when they buy credits from projects in China and India, where emissions are also rising quickly.
“We’re putting ever more greenhouse gas into the air,” said William Whitesell, the director of policy research at the Center for Clean Air Policy, a private research organization in Washington. The group is one of many advocating that the mechanism be substantially reformed in the post-2012 climate framework.
“The current system is a good start, but it is not making enough progress to achieve global climate goals” like cutting overall emissions, he said. “The major developing countries need to move away from C.D.M. credits that are based on everything relative to business as usual.”
Australian Firm Hopes to Cash In by Giving Away Light Bulbs
Hot News: Popular Author Grants E-Book Rights to Amazon
Permalink
« Previous entries