Archive for April, 2009

Companies restrict travel, advise staff on flu (Reuters)

Tuesday, April 28th, 2009 | Finance News

LONDON/NEW YORK (Reuters) –
Companies began restricting employee travel in response to a potential flu pandemic that has claimed at least 149 lives in Mexico and weighed stronger measures, while an unconfirmed case at Ernst & Young led the firm to close a portion of its New York office.

With up to 1,600 suspected cases of the new strain in Mexico and confirmed or suspected cases in a dozen other countries as far apart as the United States, Spain and Australia, world health experts are moving closer to declaring the first flu pandemic in 40 years.

In New York, Ernst & Young said it could no longer confirm an employee has a verified case of the swine flu -- underscoring the fast-changing nature of events.

The accounting firm earlier told staff in its Times Square tower they could work from home after a female staff member was initially said to be diagnosed with swine flu. It also told employees on assignment or holiday in Mexico to consider returning home and avoid travel if ill.

"Out of an abundance of caution, we have taken appropriate steps to protect the health of our employees," Ernst & Youngspokesman Charles Perkins said in a statement.

U.S. Internet giant Google Inc also cited an abundance of caution in closing its Mexico City office, the only one it has in the country. Google did not specify how many staff were affected or how long the closure would last.

Microsoft Corp encouraged Mexico employees to work from home but said offices are operating normally.

AVOIDING CONTAGION

Xerox Corp said it is investigating a possible case among its 800 employees in Mexico but has no confirmation. It told employees who visited Mexico not to come to work for three days or visit customers, since the flu has a 72-hour incubation period before symptoms appear.

Chemicals maker DuPont Co has suspended travel to and from Mexico until May 6th.

"Travel within Mexico is business critical only, and only if the employee is willing to travel," spokesman Anthony Farina told Reuters.

Qualcomm Inc, EMC Corp and Electrolux were among those considering travel restrictions.

"A general travel ban is being considered at the moment," said Electrolux spokesman Anders Edholm.

Electrolux, with around 3,400 employees at two plants in Juarez, Mexico, set up an employee hotline to answer medical questions. It stepped up cleaning of facilities to help counter any spread of the disease while setting contingency plans for how an outbreak among company staff would be handled.

Earlier, companies in Europe and Asia detailed responses that ranged from postponing trips to asking expatriate staff to return home.

"We gave new travel instructions because of the swine flu," said Finland's Nokia, the world's largest mobile handset maker, which has a plant at Reynosa in Mexico. "The new guidance is that all nonessential travel from and to Mexico should be postponed for the time being."

GLOBAL RESPONSE

In Germany, consumer goods maker Henkel is asking employees to postpone trips to Mexico and Henkel's health service is providing information on symptoms and preventative measures. Sporting goods maker Puma asked employees to travel to Mexico only if it is really urgent.

German airline Lufthansa has not taken concrete measures, but executive board member Stefan Lauer said the company had prepared plans in close coordination with health officials in readiness for any worsening in the situation.

German airport operator Fraport said it was looking at tightening checks at Frankfurt Airport, but there were no special precautions for passengers arriving from Mexico.

Denso Corp, the world's biggest listed auto-parts maker, said it had recommended families of its expatriate staff in Mexico temporarily return to Japan.

Honda Motor Co is considering sending Japanese families of expatriate workers home, although production was continuing as normal. Japan's No. 2 automaker, which also has production facilities in Mexico, has suspended global business travel until at least May 6.

South Korean electronics companies Samsung Electronics and LG Electronics, which both have units in Mexico, said they were limiting travel to the country.

A spokeswoman for Australian supermarkets group Woolworths initially asked staff to cancel nonessential overseas business travel but was rethinking that "because now all the advice is you can't contain it through lack of travel."

Asian companies in particular have traveled this road before. Most cases of bird flu, the most recent virus with pandemic potential, occurred in Asia, as did the SARS pandemic in 2003, which killed almost 800 people.

During the height of the SARS outbreak, many major multinational companies imposed severe restrictions on people entering and leaving their Asian manufacturing compounds, affecting thousands of workers.

(Additional reporting by Franklin Paul, Bill Rigby, Alexei Oreskovic, Hezron Selvi, Jim Finkle, Sinead Carew, Lisa Baertlein, Eva Kuehnen, Dani Backteg and bureaus worldwide; Editing by John Stonestreet, Brian Moss and Bernard Orr)

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Pfizer and Bristol beat forecasts, but sales disappoint (Reuters)

Tuesday, April 28th, 2009 | Finance News

NEW YORK (Reuters) –
Pfizer Inc (PFE.N) and Bristol-Myers Squibb (BMY.N) reported lower earnings that beat expectations on Tuesday, but the U.S. drugmakers relied on aggressive cost cuts to make up for disappointing sales.

Pfizer cholesterol fighter Lipitor, the company's biggest product, lost ground to cheaper generic forms of Merck & Co's (MRK.N) Zocor. And Chantix, a new smoking-cessation drug Pfizer had hoped would become a blockbuster, crumbled on concerns that it causes suicidal thoughts.

Although many Bristol drugs scored revenue gains, sales of its Erbitux colon cancer medicine fell sharply on continued confusion about which patients it is most likely to help.

"Pfizer and Bristol-Myers, in the face of a very challenging environment, continue to beat expectations and to maintain growing cash flows," said Deutsche Bank analyst Barbara Ryan.

She noted that they, like U.S. rivals that have already reported quarterly earnings, had cut costs sharply and were therefore able to beat forecasts despite the strengthening dollar, which hurts the value of overseas sales.

Pfizer, the world's largest drugmaker, said net profit fell 2 percent to $2.73 billion, or 40 cents per share, from a year earlier, when the company took acquisition-related charges.

Excluding special items, Pfizer earned 54 cents per share. Analysts on average expected 49 cents, according to Reuters Estimates.

Global revenue fell 8 percent to $10.87 billion, about $180 million below expectations. It would have fallen only 3 percent if not for the stronger dollar.

Marketing and administrative expenses and the cost of goods fell significantly, bolstering results. But the tax rate rose 6 percentage points due to costs of financing Pfizer's planned purchase of Wyeth (WYE.N).

Pfizer's operating expenses were $1 billion lower than expected, according to Sanford Bernstein analyst Tim Anderson.

Lipitor sales fell 13 percent to $2.72 billion. Chantix sales dropped 36 percent to $177 million.

Sales of Pfizer oncology drugs fell 13 percent to $552 million, as colon cancer treatment Camptosar faced generic competition. The drug's sales fell 43 percent to $109 million.

One of the few important Pfizer drugs posting higher revenue was Lyrica. Sales of the neuropathic pain treatment rose 17 percent to $684 million.

Pfizer has been one of the most poorly performing drugmakers over the past decade, its sales and shares ravaged by an inability to develop big-selling new medicines despite costly mergers with U.S. rivals Warner-Lambert and Pharmacia.

The company is back on the megamerger trail, with plans later this year to scoop up Wyeth in a deal valued at $68 billion when announced in late January. It is hoping Wyeth's drugs will offset an anticipated drop in Lipitor sales when the product faces generic competition in 2011.

Bristol-Myers said its quarterly profit slipped 3 percent as the strong dollar and lower sales of Erbitux more than offset higher revenue from other medicines.

Earnings fell to $638 million, or 32 cents per share, from $661 million, or 33 cents per share, a year earlier. Excluding special items, profit was 48 cents per share, a tad better than the 47 cents analysts had forecast.

The company said sales rose 3 percent to $5.02 billion, about $125 million shy of Wall Street expectations.

Sales of blood clot preventer Plavix jumped 10 percent to $1.44 billion, while schizophrenia treatment Abilify soared 30 percent to $589 million.

But Erbitux revenue fell 12 percent to $164 million, hurt by confusion over whether patients should first take a genetic test to better predict whether the medicine would be effective.

Bristol-Myers shares were down 62 cents, or 3 percent, at $19.92 on the New York Stock Exchange, while Pfizer slipped 28 cents, or 2.1 percent, to $13.21.

(Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Derek Caney and Lisa Von Ahn)

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Consumers, home prices boost recovery hopes (Reuters)

Tuesday, April 28th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. consumer confidence posted its biggest jump in more than three years in April while the slump in home prices showed signs of slowing in February, adding to hopes that the recession may be waning.

The Conference Board said its sentiment index climbed to 39.2 this month from an upwardly revised 26.9 in March. The April reading, which was above economists' median expectation of a reading of 29.8, was the highest since November 2008.

It followed news showing U.S. house prices tumbled nearly 19 percent in February. But for the first time in 16 months, the fall did not set a new record, according to the Standard & Poor's/Case-Shiller Home Price Indices.

Together, the two reports support arguments that the U.S. economy is at least reaching bottom, even though huge problems in the financial sector and severe job losses mean growth may still be a distant prospect.

"It is encouraging that some forward-looking indicators are suggesting hints of stabilization. But we are probably still some way away from an economic turnaround," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

While hopes on the economy appear to be rising, sentiment faces tough obstacles in fears of a possible global flu crisis and renewed worries on the health of some U.S. banks.

U.S. stock indices erased early losses. U.S. government bonds, which generally benefit more from signs of economic weakness, extended their losses.

CONFIDENCE GAME

The increase in the consumer confidence index was the highest since November 2005, when sentiment began to recover from the aftermath of Hurricane Katrina.

The survey's expectations index jumped to 49.5 this month from 30.2 in March.

"The sharp increase in the expectations index suggests that consumers believe the economy is nearing a bottom, however this index remains well below levels associated with strong economic growth," said Lynn Franco, director of the industry group's Consumer Research Center.

Analysts attributed some of the confidence recovery to the rebound in stock prices, which staged an astounding rally of about 30 percent between mid-March and April.

U.S. home values extended their massive decline in February, even though there were signs that the slump was slowing.

U.S. house prices were down 18.6 percent in February from a year earlier. That was an improvement from the 19 percent decline recorded for the 12 months to January.

On a monthly basis, a composite index of 20 metropolitan areas fell 2.2 percent, more than expected but less than the 2.8 percent fall in January, raising hopes among some that the housing market might be approaching a bottom.

The U.S. housing market is in its worst crisis since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down prices.

Many potential home buyers have been staying sidelined, waiting for the precipitous drop in prices to mitigate and for the economy to stabilize.

"While the declines in residential real estate continued into February, we witnessed some deceleration in the rate of decline in some of the markets," David Blitzer, chairman of the Index Committee at Standard & Poor's, said in a statement.

If home prices are in fact nearing bottom, it has been slow to come and only after many earlier hopes of stabilization proved illusory.

The breakdown of the data remained grim. Of the 20 metro areas, all recorded price drops on a month-on-month and year-on-year basis. Ten areas showed record rates of annual decline.

Historically, compared with their peaks in mid-2006, the 10-city index is down 31.6 percent and the 20-city index is down 30.7 percent. As of February, average home prices across the United States were at levels similar to where they were in the third quarter of 2003.

(Additional reporting by Julie Haviv and Steven C. Johnson; Editing by Dan Grebler)

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