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The Morning Ledger: Firms Counsel Patience as Growth Remains Slow [Cihan News Agency (Turkey)]
[October 29, 2014]

The Morning Ledger: Firms Counsel Patience as Growth Remains Slow [Cihan News Agency (Turkey)]


(Cihan News Agency (Turkey) Via Acquire Media NewsEdge) American businesses are signaling that weak growth should not obscure the potential for better times ahead. The largest U.S. firms are reporting better third-quarter earnings, mostly on increased demand at home, the WSJ's Theo Francis reports. But there are also small pockets of growth around the world, troubled as it is, and they say that market panic is not merited.



Third-quarter earnings are expected to rise 8.1% from the same period a year ago for the 500 largest U.S. companies by stock-market value. It would be the strongest third-quarter growth in three years, though slower than this year's second quarter.

Executives have also pointed to signs of rising demand in the U.S. such as improved employment, a rebounding housing market, and even indications that consumer confidence is returning. That momentum is expected to continue into the fourth quarter, boosting earnings again even as revenue growth slows a bit.


THE DAY AHEAD Following the Fed's dotted line. Quantitative easing seems almost certain to end soon, but the timing of rate increases still has investors guessing, Ahead of the Tape's Spencer Jakab reports. If the "considerable time" phrase is left out of the Fed's statement today, where in the past the statement has read that rate increases will come "a considerable time after the asset purchase ends," stock and bond traders may react badly.

CORPORATE NEWS Business PAC dollars move to GOP Senate candidates in key races. In a significant shift, business groups gave more money in aggregate to Republican candidates than to Democrats in seven of the most competitive Senate races in recent months, in some cases taking the unusual step of betting against sitting senators.

Twitter's CFO takes change as CEO steps back on call. Twitter Inc. Chief Financial Officer Anthony Noto dominated most of the company's hourlong earnings call Tuesday, delivering 20 of the 26 answers to analyst questions, Bloomberg reports. Chief Executive Dick Costolo said he welcomed Mr. Noto's can-do spirit. Mr. Noto was hired in July, after having led Twitter's IPO while at Goldman Sachs Group Inc.

Movie chains reel after a summer of few hits. More empty seats at the movies this past summer depressed earnings at the country's largest theater companies, with one chain of cinemas, Regal Entertainment Group, surprising investors by announcing it was exploring a possible sale.

Facebook to ramp up spending. Facebook Inc. chief Mark Zuckerberg vowed to continue spending abundantly on new technologies in the coming years, explaining away a quarterly profit that took a hit from megadeals such as WhatsApp. CFO David Wehner said he expects Facebook to incur higher expenses than normal in the quarters to come, in the wake of big investments in both engineering talent and acquisitions. He expects costs to rise as much as 75% for the year.

Apple Pay tussle presages long fight over mobile payments. The decision by CVS Health Corp. and Rite Aid Corp. to block Apple Inc.'s mobile-payments technology portends a lengthy war over the fees and customer data collected when people pay for things with their phones, Bloomberg reports. Along with companies including Wal-Mart Stores Inc. and Best Buy Co., the pharmacy chains are holding out for a retailer-developed mobile-payment system known as CurrentC that will debut next year.

Fast traders are getting data from SEC seconds early. Hedge funds and other rapid-fire investors can get access to market-moving documents ahead of other users of the Securities and Exchange Commission's system for distributing company filings, giving them a potential edge on the rest of the market.

Jefferies expected to book loss on Toms Shoes debt. Jefferies Group LLC could lose as much as $15 million on the debt backing Bain Capital LLC's purchase of 50% of Toms Shoes as it struggles to sell the loans to investors. Demand for leveraged loans has been robust in recent years, but market volatility earlier this month put a damper on new deals.

Slip-up cost RBC role in Alibaba IPO. RBC Capital Markets relinquished a coveted role underwriting the record-breaking initial public offering of Alibaba Group Holding Ltd. last month because of public comments by one of its executives. The slip-up will cost the Royal Bank of Canada unit $2.5 million, the fee it was expected to take home for its role in the $25 billion offering. Meanwhile the Financial Times reports that Alibaba briefly muscled ahead of Wal-Mart Stores Inc. in market value on Tuesday.

HBO to lay off 7% of employees. HBO is laying off about 7% of its 2,400 employees, the latest division at Time Warner Inc. to endure cost cutting in the wake of the media company's rejection of a takeover approach from 21st Century Fox. The cost-cutting plans come as part of planned headcount reductions across Time Warner.

Shell pipelines raise $920 million in IPO. Shell Midstream Partners LP drew heavy demand for the initial public offering of its collection of energy pipelines, raising $920 million in a deal that highlighted the appeal of income-generating investments. Shares were priced at $23, above their expected range, and the firm sold 40 million shares, more than it planned.

DuPont CEO defends diverse portfolio. DuPont Co. Chief Executive Ellen Kullman defended the company's diverse portfolio of businesses Tuesday, pushing back against activist investor Trian Fund Management LP's public drive to break the company in two. Ms. Kullman said DuPont gains unique competitive advantages by developing seeds for farmers, plastics for car makers and a host of other products.

YouTube mulls ad-free offerings. Google Inc.'s YouTube is considering offering paid, advertisement-free subscriptions as it seeks to generate more revenue and profit from the world's largest online video website. The change is being led by Susan Wojcicki, a veteran Google executive who spent years on the advertising side of the company. She said at a mobile conference that a paid, ad-free subscription version of YouTube, in addition to the current version, would give users more choice and work well in a world where viewers increasingly watch videos on mobile devices.

SoftBank invests in Indian Internet firms. Japan's SoftBank Corp. became the latest company to bet on India's nascent Internet market, unveiling more than $800 million of investments in two Indian startups and pledging to sink more into the country. The target firms are Jasper Infotech Pvt. Ltd., an e-commerce provider in which SoftBank is now the largest shareholder, and ANI Technologies Pvt. Ltd.'s Ola Cabs, which runs a digital taxi-hailing service.

Gilead's hepatitis drug sees sales slow. Gilead Sciences Inc. said sales of its blockbuster hepatitis-C treatment Sovaldi fell 20% in the third quarter from the June period, hurt by the looming arrival of the company's latest treatment option. Gilead shares, up about 50% in 2014 on the strength of Sovaldi, rose 0.76% to $113.45 on Nasdaq.

REGULATION Insider-trading probe focuses on Medicare agency. Three Securities and Exchange Commission investigations are exploring whether employees of Centers for Medicare and Medicaid Services, the agency that oversees health spending, leaked news that ended up with Wall Street traders. The probes come after shares of Dendreon Corp., the maker of a costly new prostate-cancer treatment, plunged the same day that Medicare officials began discussing whether to set new coverage limits for the regimen.

FTC sues AT&T over unlimited data plans. The Federal Trade Commission filed a lawsuit alleging AT&T Inc.'s wireless unit misled millions of consumers about its unlimited-data plans, bringing its first case against a wireless carrier for data throttling. The suit, which follows a warning to Verizon Communications Inc. by the Federal Communications Commission, shows growing regulatory unease with what the carriers have described as network-management practices.

EARNINGS UBS hit by legal charge. Swiss bank UBS AG reported a weaker-than-expected rise in third-quarter profit, hurt by $1.9 billion of legal provisions. UBS had sought to expand its wealth-management business while pulling bigger returns from a slimmed-down investment bank, but has run into significant legal and regulatory issues.

Electronic Arts swings to profit. Electronic Arts Inc. swung to a profit in the September quarter as consumers continued to snap up videogames for the latest generation of consoles. Mobile-game sales and digital downloads for computers and consoles provided an added boost to the company's bottom line.

BP hurt by weaker oil prices. BP PLC reported that earnings dropped 25%, becoming the first global integrated oil company to show the results of declining oil prices. The drop brought to $2.39 billion BP's replacement-cost profit, a figure that strips out inventory changes and is similar to the net income that U.S. companies report.

Standard Chartered shares plunge on poor earnings. Standard Chartered PLC sought to reassure investors that its battered business doesn't need a major overhaul after worse-than-expected third-quarter earnings sent its shares down as much as 10%. Chief Executive Peter Sands said the bank will keep "refreshing" its strategy, but it doesn't plan to make any major disposals or to raise new capital.

ECONOMY Fed set to end QE3, but not QE3 concept. Federal Reserve officials meeting Tuesday and Wednesday are virtually certain to end their latest bond-buying program, but they won't be retiring the policy for good. Their recent comments show bond purchases are now an established part of the Fed's policy tool kit that they could employ again in times of deep economic trouble.

Weak durable-goods orders stir concerns on growth. Orders for big-ticket manufactured goods fell for the second consecutive month in September, the latest sign of uneven improvement in the economy. The slowdown comes as faltering growth in China and Europe threatens to dent (c) 2014 Cihan News Agency. All right reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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