While you were sleeping: Morgan Stanley loss, Boeing profit; US house prices

Thursday 23rd July 2009

Morgan Stanley posted a larger-than-expected quarterly loss on disappointing returns from fixed income and asset management, losses of US$700 million on commercial real estate and the costs of repaying government aid.

The loss in the second quarter applicable to ordinary shareholders of US$1.26 billion, or US$1.10 per share, came after a profit of US$1.1 billion a year earlier.

Chief financial officer Colm Kelleher said real estate losses should "decelerate" over time The shares slipped 0.1% to US$27.54.

Boeing Co. reported a 17% jump in quarterly profit, beating estimates, though it failed to give an update on the schedule for its long-delayed 787 Dreamliner after delaying a test flight in June. The shares declined 2.4% to US$42.00.

Second-quarter earnings rose to US$998 million, or $1.41 per share, beating analysts’ expectations of $1.21 per share.

PepsiCo Inc. reported a bigger-than-expected second quarter profit on global sales, with weaker results in North America.

Net income fell to US$1.66 billion, amounting to US$1.02 a share before one-time items, beating estimates. The stock fell 0.9% to US$55.89.

PepsiCo's net revenue fell 3% to US$10.59 billion, less than expected. The results mirror those of rival Coca-Cola Co., which beat estimates on earnings while sales were weaker.

Per-share earnings in the US are beating forecasts by 11% on average, based on the 11% of the 105 companies in the Standard & Poor’s 500 Index that reported earnings since July 8, Bloomberg reported.

Pfizer Inc., the world’s largest drugmaker, reported a 19% drop in second-quarter earnings, as the revenue from eroded by a strong US dollar.

Profit was US$2.26 billion, or 34 cents per share, from US$2.78 billion, or 41 cents per share, in the year-earlier period.

Its shares gained 1.1% to US$15.87.

Sales of Pfizer's Lipitor cholesterol drug fell 10% to US$2.7 billion, under pressure from generic versions of the treatment.

The drug company raised its full-year forecast for earnings before items to between US$1.90 and US$2.00 per share.

Goldman Sachs Group agreed to a US Treasury request for US$1.1 billion to redeem warrants the government received when it invested US$10 billion in the financial company. Adding in US$318 million paid on preferred dividends, the government’s total return amounted to an annualised 23%, Goldman said today.

The US Securities and Exchange Commission said it may ban investment advisers from giving money to placement agents and or making campaign donations to politicians in a crackdown on abuses at public pension funds.

Under a proposal from SEC commissioners, investment companies would be barred from managing a fund’s assets for two years if executives gave money to elected official responsible for awarding contracts.

“There should be no place for such practices in an investment-advisory industry comprised of fiduciaries that are subject to high standards of ethical conduct,” SEC Chairman Mary Schapiro said at a meeting in Washington, according to Bloomberg.

“Pay-to-play practices can result in public plans and their beneficiaries receiving sub-par advisory services at an inflated price.”

Wells Fargo & Co., SunTrust Banks Inc. and KeyCorp led banks in lifting reserves for losses after bad loans rose in the second quarter, Bloomberg reported.

The three firms reported loans that weren’t collected rose at least 18% in the second quarter, a sign that borrowers are getting further behind in payments.

Figures from the Federal Housing Finance Agency showed the average price of a US home rose 0.9% in May, surprising economists who had expected a decline.

Prices fell 5.6% from a year earlier, the smallest annual decline in 10 months, suggesting the slide in property prices is slowing.

The dollar traded at $1.4219 versus the euro from $1.4226 and slipped to 93.44 yen from 93.60. The yen was at 132.89 per euro from 133.36.

Gold rose as the prospects of a weaker dollar lifted the appeal of the precious metal as an alternative investment.

Gold futures for August delivery rose 0.7% to US$953.30 an ounce on the New York Mercantile Exchange.

Copper rose in New York after a mining disruption in Chile, the world’s biggest producer. Part of the Collahuasi copper mine was out of action, Reuters reported.

Copper futures for September delivery rose 1.9% to US$2.4965 a pound on the New York Mercantile Exchange.

Stocks weakened on Wall Street. The Dow Jones Industrial Average declined .04% to 8,881.26 and the Standard & Poor’s 500 slipped 0.1% to 954.07. The Nasdaq Composite rose 0.5% to 1,926.38.

Coca-Cola Co. fell 2.4% to US$49.13, leading the Dow lower.

Starbucks was the biggest gainer on the S&P 500, surging 18% to US$17.39 after Deutsche Bank upgraded its rating on the shares to "hold" from "sell."

Lennar Corp., the home builder and financial services company, rose 7.7% to US$10.62 after the better-than-expected house price data.

European stocks advanced for the eighth straight day, helped by the US housing figures and after car navigation device maker TomTom NV posted better-than-expected earnings, helping the shares climb 12%.

The Dow Jones Stoxx 600 climbed 0.3% to 215.65, an eight-month high.

Barclays Plc fell 3.1% as Morgan Stanley’s bigger-than-expected second quarter loss weighed on bank shares.

The UK’s FTSE 100 rose 0.3% to 4,493.73, France’s CAC 40 gained 0.1% to 3,305.07 and Germany’s DAX 30 strengthened 0.5% to 5,121.56.

Businesswire.co.nz

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