Archive for September, 2009

JPMorgan reshuffles leadership in succession clue (Reuters)

Tuesday, September 29th, 2009 | Finance News

NEW YORK (Reuters) –
JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon said on Tuesday he is starting to look for a successor, and he named Jes Staley, current head of the No. 2 U.S. bank's asset management unit, to the key post of investment bank CEO.

Dimon, 53, is not expected to leave any time soon. But as the easing of the financial crisis gives him time to think about the future, and as bank regulators step up scrutiny of banks' governance, he joins other Wall Street banks in firming up succession plans.

"The timing was right to begin the succession process," Dimon said in a statement.

JPMorgan stopped short of saying Staley had been selected to succeed Dimon. But the investment bank is one of the most profitable JPMorgan units, and Dimon's successor is likely to come from that operation, analysts said.

Staley, 53, is seen as a key candidate on any list of possible successors to Dimon, given his experience across various parts of the bank.

After joining JPMorgan in 1979 he spent 20 years in the investment bank and headed equity capital markets before doing stints at the private bank and asset management operation.

WINTERS OUT

As part of the shake-up, Bill Winters, 48, co-CEO of investment banking, is leaving JPMorgan. The other co-CEO, Steve Black, 57, becomes executive chairman of investment banking to oversee the transition to Staley as CEO.

Staley will report to Black during a transition period until the end of 2010, the bank said.

Mary Callahan Erdoes, 42, chief executive of JPMorgan's private bank, succeeds Staley as head of asset management.

Winters and Black were deeply involved in the acquisition and integration of Bear Stearns Cos. Both are long-time JPMorgan employees.

"For a long time, there's been a question about whether you needed two co-heads of investment banking. Clearly, you didn't," said Nancy Bush, analyst and founder of NAB Research.

Winters' plans were unclear, but two people who have worked with him said his strong background in management and his experience during some of the worst days of the financial crisis will stand him in good stead if he seeks a management job elsewhere.

SUCCESSORS

Dimon is regarded as a star on Wall Street who has led JPMorgan through face-changing acquisitions, including Bear Stearns and failed Seattle thrift Washington Mutual last year.

Investors said they would be surprised to see Dimon exit in the near term. But they said preparing a succession plan is a positive step for the bank.

As regulators scrutinize banks' boards and management teams in the wake of the financial crisis, other banks have recently laid out succession plans.

"I think for every large bank there clearly is an increased regulatory pressure to have some kind of succession plan in place," said Bush.

Morgan Stanley earlier this month said James Gorman, 51, will take over from John Mack as chief executive on Jan 1. At Bank of America Corp (BAC.N), Chief Executive Kenneth Lewis has lined up five possible successors.

"This is good management and good forward thinking on Jamie Dimon's part," said Richard Lipstein, managing director at Boyden Global Executive Search in New York.

JPMorgan shares were up 24 cents to $45.05 in morning trading on the New York Stock Exchange.

(Reporting by Elinor Comlay; Editing by John Wallace)

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Walgreen tops Wall Street view, drugstore shares rise (Reuters)

Tuesday, September 29th, 2009 | Finance News

CHICAGO (Reuters) –
Walgreen Co (WAG.N), the largest U.S. drugstore chain, reported a quarterly profit that topped expectations as it began to benefit from a make-over that includes sprucing up stores and cutting corporate jobs, sending its shares 11 percent higher.

Analysts have lauded Walgreen's efforts, such as cutting back on store openings, reducing clutter in stores and planning a loyalty program, though they expected it would take time for these measures to pay off.

In the latest quarter, the transformation cost 3 cents per share, but yielded 7 cents per share in savings.

The company also unveiled a new plan to promote 90-day prescriptions available at its stores as an alternative to the mail-order programs favored by many insurance programs.

Rival CVS Caremark Corp (CVS.N) has already benefited from its Maintenance Choice program, which allows customers to pick up 90-day prescriptions in CVS stores at the same lower price they would pay if getting the drugs through the mail.

Walgreen had missed analysts' estimates in three out of the four previous quarters and some analysts had lowered their expectations for the fourth quarter after a weak August sales report. Despite the sales slump, Walgreen kept a grip on spending and topped expectations by 5 cents per share.

"Many of the times when Walgreen has missed estimates it has not been because of sales but more because of onerous costs," said Sarah Henry, retail analyst at MFC Global Investment Management. "They seem to have gotten their cost structure more in line."

Shares of Walgreen shot up $3.71, or 10.85 percent, to $37.90 after jumping to $38.44, their highest level since April 2008. CVS, which is due to report quarterly results in early November, rose 3 percent and Rite Aid (RAD.N) gained 2 percent.

PROFIT SLIPS

Walgreen, which leads the drugstore industry with 7,042 stores across the United States, has seen increased prescription sales but weak demand for general merchandise. Last week, Rite Aid said customers were focused on buying items on sale and forecast a wider loss for its fiscal year, sending shares in the sector lower.

Walgreen's profit fell to $436 million, or 44 cents per share, in the fiscal fourth quarter ended August 31, from $443 million, or 45 cents per share, a year earlier.

Analysts, on average, had expected a profit of 39 cents per share, according to Reuters Estimates.

Sales rose 7.6 percent to $15.7 billion, while sales at stores open at least a year rose 2.4 percent. Same-store sales of general merchandise declined 1.4 percent, while pharmacy same-store sales rose 4.5 percent.

U.S. consumer confidence fell unexpectedly in September as people face the worst job prospects in 26 years, the Conference Board said on Tuesday.

"Consumers are concerned about rising unemployment, keeping their homes and paying down their credit cards. They're focused on value and are buying needs versus wants," Walgreen Chief Executive Greg Wasson said during a conference call.

Still, he has seen a bit of a shift in medication usage.

"In the heat of the economic downturn I think we saw people splitting pills and skipping doses, and I think we're beginning to see that soften a little," Wasson said.

Walgreen said it is on track to achieve $1 billion in pre-tax cost savings by 2011.

Wasson said the company would look at acquisitions that may come up in its core strategies. Those could range from "gap fillers" in healthcare to retail acquisitions stemming from expected industry consolidation, he said.

(Reporting by Jessica Wohl; Editing by Derek Caney, Gerald E. McCormick, Dave Zimmerman)

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Consumer confidence unexpectedly falls in Sept (Reuters)

Tuesday, September 29th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. consumer confidence fell unexpectedly in September as the worst job prospects in 26 years fueled worries over personal finances, according to a report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes fell to 53.1 in September from a revised 54.5 in August.

Analysts polled by Reuters had expected a rise to 57.0 from an originally reported 54.1.

Reflecting Americans' worries about employment prospects, the index measuring jobs "hard to get," rose to 47.0 from 44.3. At the other end of the scale, the gauge of "jobs plentiful" fell to 3.4 from 4.3. That was the lowest since February 1983.

The poor outlook overall led consumers to evaluate their present situation as the worst since March. The present situation gauge fell to 22.7 from 25.4.

In a bit of good news for the Federal Reserve, which has pumped easy money into the financial system in an effort to revive the economy, one-year inflation expectations fell to 5.2 percent from 5.4 percent in August.

September's inflation expectations were the lowest since October 2007.

(Reporting by Burton Frierson, Editing by Chizu Nomiyama)

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