Fickle Finance

Archive for the ‘Business News’ Category

A weaker than-projected outlook for fiscal 2012 is set for Estee Lauder. Estee Lauder (EL) expects their net sales for 2012 will increase between 11% and 13%. This would sum up from $2.18 billion to $2.22 billion. On an adjusted basis, the forecast for a full-year profits ranges between $4 and $4.40 per share.

The forecasts are stridently lower than what the analyst projected. This means the cosmetics company should book a full year sales of $9.44 billion.

With the company’s outlook estimates, investors are clearly unhappy. Investors bid Estee Lauder shares lower while stock closes at 2.7% higher at a cost of $100.85.

A forecast adjusted between $1.10 billion and $1.20 billion on a revenue of $2.04 billion and $2.08 billion.

Estee Lauder’s recent fourth quarter reserved a net profit of $41.1 million. It had an increase of $0.08 per share from $0.12 to $0.20 cents per share.

Earnings for fourth-quarter approached to $49.7 million or $0.25 cents per share. It beats the analysts’ estimates of $46.7 million or $0.24 per share. Typically, one-time items are excluded when forecasting earning estimates.

By the end of 2013, Boeing Co. would close its plant located in Wichita. The plant currently employs more than 2,160 workers. These workers maintain and convert planes for the military. But the move is part of its plan of cost-cutting as the US defense tightens their budget.

Boeing Co. announced their decision which gained bitter reaction from Kansas politicians. Politicians felt that the company betrayed their commitments to the state. They played a big role in helping out the company win the big refueling contract with the US Air Force.

Their plant in Wichita is the quarters for the company’s business on global transport and executive systems. This business supports the US Air Force executive fleet, 767 and B-52 based aerial tanker programs.

The first batch of job cuts will take effect in the third quarter of 2012. But Boeing said they still expect to have billions of dollars of purchases with Kansas-based suppliers.

Last year, the 767-based KC-46 tankers was chosen as the new refueling aircraft for US Air Force. Air Force will be transferred to a new location to Puget Sound, Washington. Other works on maintenance and engineering will be moved to Oklahoma and Texas.

Governor Sam Brownback of Kansas said the news was disappointing. He recalled how he and other Kansas officials worked very hard to extend their support to Boeing in its 10-year battle just to win the contract.

Corollary, Malaysia Airlines (MAS) will also discontinue its Newark operations. Aviation experts and travel agents see this loss as a gain to Emirates. Many may not understand if the move was made because of economic reasons, but it sure was not strategic. Malaysia-bound passengers are directing tickets to Emirates and no longer at MAS.

In 2012, Medicare said they will cut payment rates on nursing facilities by 11.1%. The decision affected the Centers for Medicare and Medicaid Services. It will unexpectedly spear down the nursing home payments for this fiscal year and will disallow another option which may provide an increase in their funds by 1.5 percent.

On the second quarter of 2011, Humana’s earning rose 35% than expected which was aided by its acquisition of Concentra and increase in its membership for managed care provider. Over the year, its per share earnings rose above estimate and expectations of lower ratios of benefit for its retail and employer group businesses. It was partially offset by a higher projection of spending in Medicare sales and marketing. Their shares went up by 6.5% or $79.46.

HSBC, on the other hand, says they will be cutting down 30,000 jobs to revamp their business. The banking giant strictly follows a plan created last May 2011 to withdraw on other countries and will refocus their operation on high-growing market. Their shares gained 4% or $50.80.

On second quarter, Boardwalk Pipeline Partners’ profit went down by 72% on an asset-impairment charge which masked a continued revenue growth in their gas-transportation industry. Their units fell by 1.2 percent as revenue has missed expectations

The third biggest fast food chain in US has a new addition to its menu. Wendy’s has added goose liver pate and truffles to their burgers. Wendy’s also invested 200 million dollars on their return to Japan after leaving two years ago.

At Wendy’s Omotesando Tokyo, the Japan premium sandwich is sold at 1,280 yen or $16. The store is located at Japan’s luxury shopping district which is one of its first targeted shops.  CEO of Wendy’s Japan LLC Ernest Higa said they believe that Japan’s fast-food market is now ready to taste something different.

At the restaurant’s opening, Mr. Higa said they are reentering Japan in its plan to expand their market. In 2010, it got 92 percent of revenue after losing in six out of eight quarters.

The chain which is based in Dublin, Ohio is focused in the second-biggest fast food area as it eventually looks for possibilities in other big countries like Brazil and China. As of now, Japan seems to be the most important among the three since burgers are sold in the market.  The company is expected to expand to about 700 restaurants in Japan competing against McDonald’s 3,300 chains.

On the other hand, McDonald’s China is planning to double its chain stores to 500 for the next three years.

The American-based chain is partnered with two other franchisees in India, Vikram Bakshi-led and Hardcastle Restaurant. The two franchisees operate 250 McDonald’s in the country at present.  Vice chair Mr. Amit Jatia is eager to double the number of the outlets over the next three years at the north and south area of India.

Vizio Inc. is planning to implement rock-bottom prices to their personal-computer market. The television maker used the same tactics to drive higher-cost rivals out of the television industry.

The company will unveil their new additions to their computer business. Matt McRae, chief technology officer of Vizio Inc. said that there will be three notebooks and two desktop PCs to be revealed at the Consumer Electronics Show to be held in Las Vegas.

The said machines will be out for sale by June.  While the laptop specifications were not revealed, Mr. McRae said the Windows-based machines will be out at a price which seems impossible.

The push from the company will probably put pressure on PC makers like Hewlett-Packard Co. which have experienced narrow profit margins.

Vizio has already put the squeeze in the TV market on Royal Philips Electronics NV and Pioneer Corp. The two companies were veterans on consumer-electronics.

Further, McRae is firm to do the same in the computer business. “We want to get in there and disrupt it,” he said.

Meanwhile,  PC maker Lenovo announced their new ThinkPad X1 Hybrid laptop powered by a second processor and operating system. The laptop comes in a thin display with higher light and performance benefits. Compared to its predecessor, X1, its battery life is doubled and can last up to 10 hours when set in an Instant Media Mode.

The company also declared a new Ultrabook named ThinkPad T43ou which is their first business Ultrabook especially made for professionals with a new light design and thin display. Lenovo is certain that they have successfully created the Ultrabook without forgoing quality performance and productivity.

For the fourth quarter of 2011, China’s economy unexpectedly grew faster than expected. This is despite the tighter home credit and weak export markets. In fact, China’s annual growth in gross domestic product was at its weakest in the last three years with 8.9 percent.

According to Michael Spencer, chief economist, the activities in December are part of a seasonal effect. He expects a weaker China GDP in the first quarter of 2012.

Although, people may see that the economy is getting better, it is not safe to assume that it will have a long-term effect or if it was just a statistical season.

Another chief economist Yao Wei also see China’s areas for concern. The property investment has slowed down while the property slowdown gained some speed which puts the overall growth to 12% in December. This indicates weaker numbers in the first quarter of 2012.

But Kevin Lai of Daiwa sees the slowdown as orderly. Retail sales have been strong and the overall growth momentum may continue to be strong. He said there is nothing to be scared about the slowdown. People should not expect interest rate cuts but more RRR cuts at 50 points.

Meanwhile, a United Nations study says that the global economy will only grow 0.5 percent in 2012. This will effectively shrink on a per capita basis. This may change if jobs are created rapidly and sovereign debt distress are prevented along with shoring up fragile banks.

The report forecast by the annual UN World Economic Situation shows an average economic growth by 2.6 percent by this year and probably 3.2 percent in 2013. This is possible if a set of optimistic conditions help the economy recover.

Fuel prices will be extremely volatile in year 2012 as geopolitical tensions and global demand for energy increases. The statement was released by a petroleum observer group.  The median price for regular gasoline is expected to reach $4 by May. Other cities like Chicago may experience prices at least $4.60 per gallon as Memorial Day nears.

Greg Laskoski, GasBuddy Senior Petroleum Analyst, said dangers of closing the Strait of Hormuz in Iran is adding up to the increase of fuel prices. It is also making investor bid more for the price of the commodity.

The strait is the corridor between Oman and Iran. It is where more than 20% of oil is imported worldwide. The standard crude for delivery in February increased by $1.88 to $100.58 per barrel during trading in New York Mercantile Exchange.

Laskoski said it will create a whole lot of nervousness especially in financial markets. Prices are also expected to rise again in spring and summer. The rise is of course caused by increase of demand and the switch of refiners to burning fuel blends.

For the past seven years, the average price movement has been $0.93 from the beginning of the year until the next 12 months.

Aside from crude, the same goes for prices of orange juice. Stores will likely increase their prices in the coming weeks. This comes as a reaction to the potential chemical contamination in juice which happened in Brazil.

The alarm began after Coca-Cola Co. and Minute Maid juice warned about tests discovered low levels of carbendazim in Brazil’s juice shipments. The low level of amount is said to cause health concern. As of this writing, federal regulators are confirming these reports.

Gossips were spreading that BestBuy.com has changed the release dates for their Diablo 3 product pages to February 12, 2012. These were followed by reports saying one Best Buy store has posted a promotional Diablo III which was accompanied by a countdown timer to February 1.

Since the post was seen by many and was talked about on Diablo III forums, the news needed to be verified through a phone call to Rochester, Minnesota. The Best Buy store confirmed that the Diablo III promotional ad really exists. The employee revealed that their store would be launching Diablo III on midnight of February 1, 2012.

This decision has also been reached out to other store systems in California and San Francisco. They say they have been updated with the new release date for Diablo III. However, the promotional materials which was captured in photo has not been put up in other stores yet.

Meanwhile, BestBuy CEO Brian Dunn has replied to a post written by a Forbes contributor Larry Downes. The piece was entitled “Why Best Buy Is Going Out of Business….Gradually.” The skeptical post was an indication that Downes sees BestBuy exiting the industry.

Downes wrote, “I can’t say when exactly, but my guess is that it’s only a matter of time, maybe a few more years,” 

The piece received 927 comments and more than 2 million views since it was published online on January 2, 2012. The post was also trending in Twitter, hitting the nerves of BestBuy CEO which made him write his direct reply to Downes’ post.

In Dunn’s statement, he addressed all points in Downes’ piece. In some areas, Dunn has admitted that some mistakes have been made but they are continuously improving for the betterment of the company. He assures that as  a profitable and big company, BestBuy is far from making their exit from the industry.

Fiat SpA group’s new sports car brand Alfa Romeo postponed the unveiling of the three new models. The launch will be postponed for almost two years which includes the Giulia sedan. The model is said to be of help in marking the return of the company to the US.

Furthermore, it has canceled their plans in coming up with a huge sport utility vehicle or an SUV. Instead, they will be having a large sedan which could be assembled by their US partner Chrysler Group LLC. All models were intended for the US market.

Sergio Marchionne, Fiat’s chief executive has told the public last April about the possibility of Giulia’s launch to be postponed since he was not that happy with the overall design. Alfa Romeo declares a new date for its launch, 2014—two years later than what was originally planned.

The other two models which are also due for launch in the US is 4C GTA and an SUV.  The said model is a two-seater from Alfa Romeo which will be available in 2012.  The SUV will roll out in 2013, which will be built together with an SUV model for Chrysler’s new Jeep brand. Yet, the launch will also be delayed to give time to decide on what models to be manufactured.

The proclaimed dates were given by Harald Wester, the brand’s head. It was first announced at the conference hosted by UBS and was later confirmed in the firm’s official website.

The fourth-quarter profit of Citigroup Inc. fell 11% which missed the estimates done by Wall Street. The drop was due to the debt crisis experienced by Europe capital markets. It affected the trading revenue and hindered clients from closing deals.

The results clearly show that banking units investments have dragged down profit for huge Wall Street firms. This may also signify a tough fourth quarter for other firms like Morgan Stanley ad Goldman Sachs Group Inc which will report their results by the end of the month.

On the contrary, business and consumer lending banks are doing better which show some signs of recovery in the US economy. Wells Fargo & Co outdid analysts’ estimates with their improved credit quality and loan growth. The same results were reflected by JP Morgan Chase & Co.

According to Citigroup chief executive Vikram Pandit, the macro environment has made an impacted to the capital markets. Citigroup is trying to adjust their business to suit the environment.

After the trading, Citigroup’s shares dropped by 3% after presenting the results. The third largest bank in the US has reported a net income of $1.16 billion, down from $1.31 billion in 2010.

Also, Hasbro’s full-year earnings growth reported are below Wall Street’s expectations.  The toy giant showed their weaker fourth-quarter performance in Canada and US.  The company includes toy franchises like GI Joe and Transformers. It admitted that they expected a growth of 2-4% in earnings per share for 2011, a little over than what they have recorded in 2010.  Wall Street expected earnings of $2.87, or $2.96 per share under a revenue of  $4.4 billion.