Archive for January, 2009

Yahoo posts higher profit but outlook weak (Reuters)

Tuesday, January 27th, 2009 | Finance News

NEW YORK (Reuters) –
Yahoo Inc (YHOO.O) posted a stronger-than-expected fourth-quarter profit on Tuesday, after several months of cost-cutting initiatives in the face of a weak advertising market, sending its shares up 3 percent.

Analysts said investors were relieved that the Internet company managed to beat their low expectations for the fourth quarter. However, its forecast for operating income in the current quarter was below Wall Street estimates.

"They didn't bleed to death as much as some of the bear scenarios," said Martin Pyykkonen, analyst at Wunderlich Securities.

Fourth-quarter profit, excluding write-downs and one-time charges associated with its restructuring efforts, rose to $238 million, or 17 cents per share, from $205.7 million, or 15 cents per share, a year earlier.

That beat analysts' average forecast for profit of 13 cents per share, according to Reuters Estimates.

But including the write-downs and charges, the company had a net loss of 22 cents.

Gross revenue, including payments to affiliated websites that carry Yahoo ads, fell 1 percent to $1.81 billion. Net revenue was $1.375 billion, in line with the average Wall Street forecast of $1.371 billion.

Yahoo said it expects income from operations of $75 million to $85 million in the first quarter, about half the average analyst forecast of $165 million, according to Reuters Estimates.

It forecast operating income before interest, taxes, depreciation and amortization of $365 million to $415 million, compared with the average Street estimate of $485 million.

The company also estimated revenue of $1.525 billion to $1.725 billion.

Several analysts were concerned that the company did not give full-year outlook.

"The market place is extremely difficult right now, we're still seeing strong growth in the search business and display has slowed down and I have no idea how advertisers will react over the next two or three quarters," Chief Financial Officer Blake Jorgensen said in an interview.

"We're only giving one quarter of guidance because of some of that uncertainty."

Yahoo, the leading provider of online display advertising, has been under pressure for nearly 12 months as it held fruitless merger or partnership talks with Microsoft Corp (MSFT.O), Google Inc (GOOG.O) and Time Warner Inc's (TWX.N) AOL.

During that time Yahoo has lost market share in search advertising, while display ad sales have been badly hit industrywide by the U.S. recession.

Carol Bartz replaced Yahoo co-founder Jerry Yang as chief executive earlier this month. Yang had been CEO for 18 months.

Yahoo shares rose to $11.69 in after-hours trading from their close on Nasdaq of $11.34.

(Reporting by Yinka Adegoke; editing by Richard Chang)

(Click on http://blogs.reuters.com/category/themes/mediafile/ to see Reuters MediaFile blog)

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Wall St. rises as AmEx, other results reassure (Reuters)

Tuesday, January 27th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. stocks climbed on Tuesday, with the S&P 500 and the Nasdaq up for a third straight day as a rare bit of encouraging news on the earnings front from companies, including American Express (AXP.N), offset fresh signs that consumers remain glum.

American Express jumped nearly 10 percent and gave the biggest boost to the Dow after the credit card company posted a quarterly profit that surpassed analysts' forecasts.

Chip maker Texas Instruments (TXN.N) , up 3.7 percent, gave the technology sector a welcome reprieve after its quarterly profit fell less than feared. The Philadelphia Semiconductor Index (.SOXX) rose 3.5 percent, capping its first three-day run-up of 2009.

Analysts said investors were beginning to look beyond some of the gloomy news amid hopes about efforts to stabilize the economy.

"You've had such a fierce down market that when the news flow is OK, you're getting some sort of bounces," said David Katz, chief investment officer at Matrix Asset Advisors in New York. "In terms of American Express, people had braced themselves for a disaster. Although the numbers were poor, they weren't a disaster."

The Dow Jones industrial average (.DJI) rose 58.70 points, or 0.72 percent, to 8,174.73. The Standard & Poor's 500 Index (.SPX) gained 9.14 points, or 1.09 percent, to 845.71. The Nasdaq Composite Index (.IXIC) advanced 15.44 points, or 1.04 percent, to 1,504.90.

After the closing bell, Moody's Investors Service said it may cut its top ratings on General Electric Co (GE.N) and its finance arm, citing increased uncertainty about outlook. The stock fell 4.6 percent to $12.46 in after-hours trading.

During the regular session, American Express shares rose 9.7 percent to $16.68. Shares of Citigroup (C.N) jumped 6.6 percent to $3.55 after its chief executive reiterated his plan to cut costs.

Financials by far contributed the greatest boost to the broader market, sending the S&P financial index (.GSPF) up 3.7 percent.

Worries about the financial sector's health have been the biggest hurdle for the market, fueling unease about stocks' performance in January, which is traditionally seen as a guide to the year's prospects.

Year to date, the benchmark S&P 500 (.SPX) is down 6.4 percent. After starting 2009 up more than 20 percent from its November 21 bear-market low, the index is now up 12.4 percent.

U.S. Steel Corp (X.N) added 6.9 percent to $31.49 after the steelmaker posted a more than eight-fold jump in quarterly profit.

On Nasdaq, shares of BlackBerry maker Research In Motion (RIM.TO)(RIMM.O) ranked as the top advancer, up 6.3 percent at $53.91, while shares of iPod and iPhone maker Apple Inc (AAPL.O) climbed 1.2 percent to $90.73.

The day's trading, however, was marked by a skittish tone as investors still had to contend with more signs of a weakening consumer. The Conference Board reported that its index of consumer confidence fell to a record low in January.

Additionally, home prices dropped at a record pace in November, according to data from an S&P/Case-Shiller.

Drags among consumer-oriented plays included Home Depot Inc (HD.N) , down 2.7 percent at $22.12, and rival home improvement chain Lowe's Cos (LOW.N), down 3.4 percent at $19.94.

The S&P retail index (.RLX) fell 1.3 percent, while the Dow Jones home construction index (.DJUSHB) lost 2.4 percent.

The largest drag on the Dow came from Verizon Communications Inc (VZ.N), after the No. 2 U.S. phone company reported fewer-than-expected wireless subscribers for the fourth quarter and warned that pension costs would hurt 2009 earnings. Verizon slid 3.3 percent to $29.96, while rival AT&T (T.N) fell 3.4 percent to $25.93.

Delta Air Lines (DAL.N) , down 20.1 percent at $7.93, was the NYSE's worst percentage decliner after the world's largest air carrier posted a quarterly loss.

The Federal Reserve's monetary policy-setting Federal Open Market Committee began a two-day policy meeting on Tuesday. Investors will watch for signals of any nonconventional methods of fighting the credit crisis at the meeting's conclusion on Wednesday.

Volume was moderate on the New York Stock Exchange, where about 1.17 billion shares changed hands, below last year's estimated daily average volume of 1.49 billion shares, while on the Nasdaq, about 1.82 billion shares traded, below last year's daily average of 2.28 billion.

Advancers outnumbered decliners on the NYSE by a ratio of about 7 to 3, while on the Nasdaq, about eight stocks rose for every five that fell.

(Editing by Jan Paschal)

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TSX closes higher in anticipation of budget (Reuters)

Tuesday, January 27th, 2009 | Finance News

TORONTO (Reuters) –
Toronto's main stock index finished more than 1 percent higher on Tuesday as optimism ahead of Canada's budget boosted financial shares and overcame a drag from commodities groups.

Banks and insurers dominated the gainers. Royal Bank of Canada was up 3.9 percent at C$30.66, while Manulife gained 6 percent to C$21.40.

The sector rose 3.88 percent, partly on hopes that the federal budget, released after market close, would contain measures to ensure stability in the financial system.

In the event, the government said it would seek to bolster the financial system and improve access to financing by committing C$50 billion more to a program that buys insured mortgages. It also will give itself the authority to inject capital into banks and financial firms that need support.

Looking ahead, analysts expect the budget to have a limited impact on stocks because the government had leaked an unprecedented amount of detail about the package in the days leading up to Tuesday's release.

The plan is expected to meet with the approval of the opposition Liberals, which would ensure the survival of the minority Conservative government.

"The big issue is not so much the budget itself, it's more is it good enough to allow the government to survive here," said Levente Mady, a broker at MF Global Canada, in Vancouver.

The S&P/TSX composite index closed up 1.2 percent, or 103.12 points, at 8,759.63. Eight of the index's 10 main groups advanced.

The resource sectors, which account for about 40 percent of the index's weighting, fell on weakness in underlying commodity prices. The price of oil fell 9 percent to under $42 a barrel, while gold held below $900 an ounce as investors took profits after the last session's gains.

The energy group fell 0.75 percent and materials dropped 1.54 percent.

(Reporting by Ka Yan Ng; Editing by Frank McGurty)

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