MARKET REPORT: Google in with a shout for Yell

By Geoff FosterLast updated at 10:32 PM on 2nd September 2010

Yellow pages publisher Yell screamed 13 per cent, or 2.2p, higher to 17.84p on gossip that corporate activity is just around the corner.
Almost 56million shares changed hands as dealers heard that Google could be lining up a £708million, or 30p a share cash offer.
The shares reacted from the high 19.92p after analysts said they would be flabbergasted if any bidder made a move for an accident prone group that is sitting on a mammoth debt mountain of £3billion.

Market report

Yell said in late-July when reporting lower quarterly profits of £16.6million, down from £18.5million, that it was feeling the effects of a ‘challenging’ trading environment and the anticipated economic recovery was ‘proving slower than expected’.
Analysts at Prime Markets then advised clients to sell, saying that the recent history of Yell was a series of trading statements punctuated with the odd bright spot, but with an overall impression of a company in terminal decline.
 

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Gloomy US industrial data rattle worldwide markets

The flurry of data turned trading screens red, with shares in transport companies singled out with the Dow Jones 20 Transportation average falling by 2.9pc, while investors fretted about the state of the global personal computer market with Hewlett-Packard and Dell because of quarterly profits reports due after the bell in New York last night.
Asian markets followed the US and European markets lower on Friday. Japan’s Nikkei 225 fell 1.4pc, Australia’s S&P/ASX 200 dropped 1.1pc and China’s Shanghai Composite slid 1.3pc.
European stocks dipped in early trade on Friday as fears of a double-dip recession remained at the forefront of investors‘ minds. In London, the FTSE 100 was down 0.1pc after dropping 1.73pc on Thursday. Germany’s DAX fell 0.3pc and the CAC-40 lost 0.2pc after sliding 1.8pc and 2pc respectively yesterday.
The main cause of the prevailing gloom was the Philadelphia Federal Reserve’s monthly report on Thursday on the state of the manufacturing industry in Pennsylvania, New Jersey and Delaware – part of the US’s industrial heartland.
The Philly Fed said its index of current activity – in which a reading above zero is positive – showed contraction for the first time since July 2009, with a reading of –7.7, from +5.1 in July.
The data came at the same time as the number of people claiming unemployment benefit for the first time last week rose to the half-million mark for the first time since November 2009.
Economists had expected the number of jobless claims to fall rather than rise as it did by 12,000. Jeremy Cook, at currency broker World First, said: “This will further heighten fears that the US economy is careering into the dreaded double-dip recession.”
Investors were also given pause for thought by the Conference Board’s index of leading indicators, which showed a rise of 0.1pc in July. Nevertheless, Ataman Ozyildirim, economist at The Conference Board, admitted the index is “growing at its slowest pace since mid-2009 and it has been essentially flat since March.”
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Transocean profit hit by BP spill

4 August 2010 Last updated at 17:39 ET

Offshore drilling firm Transocean has seen quarterly profits drop due to legal costs and reduced income after the BP Deepwater Horizon oil spill.
It lost its rig in the April blowout, which also resulted in a reduction in drilling in the Gulf of Mexico, where Transocean had 14 other deepwater rigs.
Second-quarter net profit fell to $715m (£450m) from $806m a year earlier.
The profit includes $267m resulting from insurance recoveries associated with the loss of Deepwater Horizon.
That has helped towards costs of $69m associated with the well blow-out, and another $18m of expenses in other legal costs.
Leaving these items aside, Transocean earned $535m in the quarter.
Shares in Transocean and in Anadarko Petroleum, two firms which may face legal liabilities related to the Gulf of Mexico oil spill, rallied on Wednesday.
That came after the US government said almost three-quarters of the oil spilled in the Gulf of Mexico has been cleaned up or broken down and that efforts to cap the ruptured well showed promise.
Transocean is the world’s largest offshore drilling contractor with a fleet of 139 mobile offshore drilling units.
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News Corp’s quarterly profits up

4 August 2010 Last updated at 17:05 ET

Rupert Murdoch’s News Corporation has reported fourth quarter net income of $875m (£551m), against a $203m loss in the same period in 2009.
News Corp was helped by the sale of a Bulgarian TV station, cash from a BSkyB legal settlement, and some tax credits.
It owns TV stations, film studios, book firms, cable networks and newspapers.
“Despite the volatility of world economies, News Corporation continues to thrive on a truly global scale,” said boss Rupert Murdoch.
‘Superior results’
“These results underscore just how well positioned we are - fiscally, operationally and strategically - for further growth across all of our markets,” Mr Murdoch added.
He said that looking ahead he was “confident in our businesses and in our people to deliver superior results”.
News Corp reported full year profits of $2.5bn.
The firm’s management said increased sales of advertising at its television and cable movie operations had helped its return to profitability.
News Corp includes Fox broadcast and cable networks, 20th Century Fox film studios, Harper Collins book publisher, and newspapers such as the Wall Street Journal and the Times.
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Oil firms’ profits almost double

29 July 2010 Last updated at 11:56 ET

Second-quarter profits at oil giant Royal Dutch Shell have almost doubled after the firm completed a year-long corporate restructuring programme.
The firm reported profits of $4.5bn (£2.9bn) on a current cost of supplies basis, up from $2.3bn a year ago.
Chief executive Peter Voser also defended deep sea oil drilling in the wake of rival BP’s massive oil spill in the Gulf of Mexico.
Meanwhile, US oil giant Exxon Mobil reported quarterly profits of $7.6bn.
This was a rise of 85% on the $4.1bn it posted a year earlier. Revenue rose to $92.5bn, 23% higher than the $72.5bn it made a year ago.

The profits are in sharp contrast to crisis hit rival BP who earlier this week reported a record $17bn second-quarter loss. This included a provision of $32bn to cover the costs of the oil spill in the Gulf of Mexico.
Shell’s chief executive said the explosion on BP’s Deepwater Horizon oil rig in April and the subsequent oil spill had been a tragedy.
However, he added: “Worldwide deep water production has an important role to play in the global energy supply equation, with potential for production growth with supply diversity and sustained investment in technology, jobs and services.”
Revamp
In contrast to BP, who suspended dividends for the rest of the year, Shell said it would pay a second quarter dividend of $0.42 per share.
Excluding one-off items, Shell’s profit was $4.2bn, compared with $3.1bn last year.
Shell said that its restructuring programme had achieved cost savings of $3.5bn, beating its target by about 15% and some six months ahead of schedule.
It added that as a result of the changes, 7,000 employees would leave the company 18 months earlier than planned.
Shell also said it expected to sell $7bn-$8bn of assets in 2010-11 as it refocuses its portfolio on projects with higher growth potential.
“We continue to see mixed signals in the global economy,” Mr Voser said.
“Oil prices have remained firm so far this year, but refining margins, oil products demand and natural gas spot prices all remain under pressure.
“Our earnings and cashflow have rallied from 2009’s lows, but the outlook remains uncertain.”
The price Shell received for its oil was 41% higher than the same period a year ago, while gas prices were 15% higher.
‘Focused strategy’
Richard Hunter, head of UK equities at stockbrokers Hargreaves Lansdown, said Shell’s update underlined the “stark difference in fortunes of the UK’s two oil majors”.
“Whereas its fierce rival BP has been the subject of forced introspection, Shell has continued to drive its own prospects forward,” he commented.
“Refining margins are improving, the restructuring programme continues apace and the proposed sale of assets will enable a more focused strategy in the future.”
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JP Morgan quarterly profits jump

15 July 2010
Last updated at 11:59 ET

JP Morgan experienced strong growth in profits in the second quarter, thanks largely to falling loan losses.
The US bank booked net income of $4.8bn (£3.1bn), up from $2.7bn in the same period last year, a rise of more than 75%.
The bulk of the $2.1bn improvement came courtesy of a $1.5bn reduction in the amount of money the bank must set aside for possible loan losses.
JP Morgan’s share price fell 1.9% in early trading, in spite of the profits.
Bank stocks were hit by poor economic news from the US.
The Manhattan-based bank also said it incurred a charge of $550m for the quarter, to cover the UK’s new 50% bonus tax.
Traditional banking



















JP Morgan’s investment bank raked in $1.4bn, slightly down on 2009, as revenues fell 13%.
Last year, most of the US lender’s profits were brought in by its the capital markets business in its investment banking unit, which includes trading in shares and bonds.
However, the second quarter proved more challenging, as markets fell heavily for the first time since the financial crisis on fears over European sovereign debt and a possible double-dip recession.
Now it appears that the Wall Street firm’s retail services business, which does traditional deposit-taking and mortgage lending, is taking the lead.
It swung into a $1bn profit during the quarter, up from about zero a year ago, and comparable with the kind of money made by JP Morgan’s investment bank.
The bank’s credit card business also began turning a healthy profit, of $343m, versus a loss of nearly $700m a year ago - a $1bn turnaround.
Loan repayments
However, in both units underlying revenues actually fell slightly, indicative of JP Morgan scaling back its consumer lending business.
All of the improvement in profits instead came from the fact that, with the economy improving, the bank no longer needed to set so much of its revenues on one side to cover losses on bad loans.
JP Morgan reported that the rate at which it had to write down loans because of non-payments had fallen sharply.
On sub-prime loans - the riskiest home loans - this loss rate stood at 8.6%, down from 13.4% only three months earlier.
‘Not satisfactory’
But despite this turnaround, the bank thinks that the two units still have some way to go.
“Although we are gratified to see consumer lending net charge-offs and delinquencies decline, they remain at extremely high levels,” said JP Morgan’s chief executive, Jamie Dimon.
“As a result, these businesses did not meet expectations nor generate satisfactory returns on capital for our shareholders,” he added. “It is too early to say how much improvement we will see from here.”
In total, the reduction in credit losses across the entire bank improved its bottom line by $6.3bn compared with a year ago.
That figure includes the $1.5bn gain from the bank’s decision to reduce the amount of money it holds in provision against losses.
However, most of this $6.3bn gain from lower credit losses was offset by falling revenues and higher staff and administration costs, meaning profits actually only rose by $2.1bn.

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Uncertainty and fear overwhelm the good news

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Economists call them exogenous shocks. Harold Macmillan, prime minister from
1957 to 1963, called them “Events, dear boy, events”. Donald Rumsfeld,
former US defence secretary, called them “unknown unknowns”. Investors care
less about the precise label and more that the world seems a scary place.

Never mind that almost all the economic news in America is good: the economy
is growing again; company profits are up and mortgage rates down; retailers’
first-quarter profits are 26% above last year’s level, and bankers are
concealing their glee at the best quarterly profits in two years; home
building is up and property developers are snapping up land that already has
infrastructure in place; inflation is at a 44-year low; and the Chinese are
again buying US government IOUs.

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BP board set for big shake-up as quarterly profit reahces $4.7bn$

Carl-Henric Svanberg, BP’s new chairman, has embarked on a boardroom shake-up at the oil group as it prepares to announce an expected 80 per cent surge in quarterly profits to $4.7 billion (£2.9 billion) next week.
The company’s board met this week for the first time under the leadership of Mr Svanberg, who took up the role on January 1, to approve a replacement for Sir Tom McKillop, the former chairman of RBS who was forced to step down as a non-executive director of BP last year. His successor could be named as early as today, marking the first of many new board appointments at BP this year. Three other non-executive directors are set to retire either this year or early in 2011.
The announcement comes as BP prepares to unveil a sharp rise in profits at its fourth-quarter results on Tuesday.
City analysts expect the company, Britain’s second biggest by market value, to record profits of about $4.7 billion for the final three months of 2009 — equivalent to about $51 million every day.

That would represent a more than 80 per cent increase from $2.6 billion during the same period a year ago and would be vindication of a stringent cost-cutting programme led by Tony Hayward, the chief executive.
Andrew Whittock, oil and gas analyst at Oriel Securities, said BP’s results were likely to have been boosted by higher oil prices, strong growth in crude production and big improvements in efficiency.
He said: “The general picture is that BP has all its main plants and fields operating now and is benefiting from a higher oil price.”
Benchmark crude prices have risen from an average $55.50 in the final quarter of 2008 to $74.50 during the fourth quarter of last year.
Peter Hitchens, oil and gas analyst at Panmure Gordon, said: “Tony Hayward is gradually asserting himself. He is starting to turn things around … it is all looking pretty good.”
He cautioned that BP and the other oil majors are still struggling to cope with weak refining margins, which across the industry remain mired at the lowest level in 20 years.
Average profit margins for refining a barrel of crude oil have fallen from about $5 in 2008 to about $1.50.
The headline results are also expected to be little changed from the previous quarter.
The new appointments at BP will follow the retirement of deputy chairman Sir Ian Prosser, DeAnne Julius, chairman of BP’s remuneration committee, and Erroll Davis, who serves on the group’s safety committee.
Tony Hayward, chief executive, and Mr Svanberg are expected to use the appointments as an opportunity to tighten their grip on the company’s leadership.
“There are quite a few changes coming up … so this is an opportunity for Tony to stamp his mark on the boardroom,” one insider said.
Mr Svanberg, the former chief executive of Ericsson, the Swedish telecoms group, started at BP on January 1 and has replaced Peter Sutherland.
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From Tiny acorns … Lonrho hopes for giant growth

Lonrho, the conglomerate once led by Tiny Rowland, and which was nearly wound up four years ago, is seeking to restore some of the wealth and power it enjoyed during its heyday in the 1980s.
It is building an African business empire of plantations, airlines, ports and agribusiness, and has raised £25 million with two share placings in the past fortnight.
The money will be used to buy out the minority interests in two Lonrho businesses — Rollex, the South African fresh produce distributor, which supplies Marks & Spencer and Tesco in Britain, and Kwikbuild, a construction company that makes prefabricated buildings.
David Lenigas, chairman of Lonrho, has said that he wants to increase the size of the group quickly, doubling its revenues every year, by transforming it into a leading African food exporter, taking fresh produce from company-owned farms in Angola to supermarket shelves in South Africa, Europe and the United States. He said: “Africa has land, water and cheap labour; it will be the bread basket of the world.”

The company broke even with £40 million in turnover in the half-year to June, but Mr Lenigas said it was now making quarterly profits before interest and tax of £9 million on £30 million in revenues. He said: “Our mandate is to bring Lonrho back, creating a strong company in the African services sector. We want to bring it back to £1 billion in revenues within three to four years. Then we will be a significant business in Africa.”
Mr Lenigas, who took command at Lonrho in 2005, and Geoffrey White, his chief executive, see infrastructure as the key to rebuilding a Lonrho empire.
Instead of investing in resources or mining, Lonrho is piggybacking on the oil and minerals boom in sub-Saharan Africa. The company owns a majority share in Luba Freeport, a logistics and supply base in Equatorial Guinea, used by the oil multinationals for their West African drilling campaigns.
Lonrho also owns Fly540, an airline that runs domestic services in Kenya and which Mr Lenigas hopes to take into Angola and then into Ghana. The key to Lonrho’s rapid expansion will be food: a farming, processing and exporting business integrated through Rollex.
The logistics company owns a processing plant at Johannesburg airport. A fleet of refrigerated trucks bring produce from Zambia, Zimbabwe, Malawi and the Democratic Republic of Congo (DRC) to Johannesburg, where fresh fruit, vegetables and flowers are processed, washed and bagged, then airfreighted to Europe. The company will begin to export produce to the United States next year.
Lonrho moved into food production in January, acquiring 99-year leases on 25,000 hectares of paddy fields in Angola. Talks on a further 25,000 hectares on the shores of Lake Malawi are under way with the Malawi Government and in Mali, Lonrho hopes to secure 100,000 hectares to grow crops.
Mr Lenigas is keen to expand into farming to reduce supply risk. To keep volumes growing, the company must secure new sources of produce and the ideal balance, Mr Lenigas said, would be to source 40 per cent of its food supplies from company-owned farms, buying the rest from independent farmers. By sourcing food from a wide geographic canvas, from Mali to Zimbabwe, Mr Lenigas hopes to reduce the risk of supply interruptions from droughts and crop failures.
The three river systems that flow north in the DRC make Angola ideal for growing food, Mr Lenigas said. Lonrho will employ farm workers to grow the crops, mainly vegetables and fruit, rather than commodity crops such as grain. Additional processing plants will be built in Angola, Mali, Malawi and and Zimbabwe.
Fly540, the regional airline, is already being closely watched by international carriers. There have been general talks with potential partners, such as BA and Emirates.
A deal is probably three to four years away as the airline develops a sub-Saharan Africa route network. However, eventually, it will need a link to a big carrier.
“We can only take it so far,” Mr Lenigas said. “At some point, we will need a partner to hook it into long-haul routes.”

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No cash bonuses for top Goldman Sachs executives, but 31,000 other employees could still be rewarded

By
Daily Mail Reporter
Last updated at 9:52 AM on 11th December 2009

Changes: New York bank Goldman Sachs is not paying cash bonuses to its 30 top executives this year
Top executives at Goldman Sachs Group Inc. will not receive cash bonuses this year, as the Wall Street giant bows to sharp criticism over its pay practices.The 30 high-ranking executives will instead receive stock that cannot be sold for at least five years, the New York-based bank said today.But the restrictions won’t affect the more than 31,000 other employees, potentially including some of its top traders, who could be rewarded handsomely for helping the bank turn big profits this year.The bonus culture in banks has been a controversial political issue both in the USA and the UK this year. Especially since financial markets have recovered much faster than the broader economy which is still seeing unemployment rise. The surging financial markets have allowed companies like Goldman Sachs to rebound and start posting big quarterly profits, while setting aside billions of dollars to pay out year-end bonuses.Goldman has also been criticised for using $10 billion - £6 billion - in government bailout money to help ramp up its aggressive trading practices. Goldman received the money late last year as part of the $700 billion - £430 billion - bank rescue program similar to Gordon Brown’s bailout in the UK. But the bank paid back the money this summer, allowing it to escape restrictions on compensation.Trying to stem the negative publicity over the issue, Goldman has said in recent months it was reviewing its pay policies.’The measures that we are announcing today reflect the compensation principles that we articulated at our shareholders’ meeting in May,’ Goldman CEO Lloyd Blankfein said in a statement.Goldman had set aside about 47 per cent of its net revenue valued at $16.71 billion - around £9.9 billion - during the first nine months of the year for compensation. That includes not only bonuses, but also salaries and associated costs such as benefits and payroll taxes.The majority of compensation for Goldman’s senior management, which includes top managers across all its business units, has traditionally been paid out in year-end bonuses.Aside from not being able to sell the stock for five years, the 30 executives’ stock awards could be taken back by the bank in cases where the employees took too large a risk or failed to raise concerns about risk in the company, Goldman said.Politicians have chastised Wall Street bankers for taking excessive risk, which resulted in big bonuses but also helped lead to the credit crisis and recession.Shares of Goldman rose 41 cents to $166.85 in afternoon trading.

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