Shares of JDS Uniphase Corp. climbed Thursday after the communications equipment maker posted a smaller-than-expected loss for its fiscal fourth quarter.
The company posted a wider loss than the year-ago period, and its revenue fell slightly below expectations. But it said it has "successfully navigated through the global economic turbulence that took place in fiscal 2009" and it's in a good position to grow when the economy rebounds.
RBC Capital Markets analyst Mark Sue said JDS Uniphase is "is the latest company to point to stabilizing trends, as evidenced by its improved order rates."
Improving trends in North America, offset by challenges in Europe led to the company's revenue guidance $283 million to $300 million for the current quarter, Sue added. This compares with analysts expectations of $287.7 million, according to a Thomson Reuters poll.
"Notably, through the first seven weeks of (the fiscal first quarter), JDSU saw a sequential increase in demand across all businesses," the analyst wrote. Sue rates the company "sector perform."
Shares of the Milpitas, Calif.-based company rose 45 cents, or 8 percent, to $6.24 in late trading. The stock has traded in the 52-week range of $2.01 and $11.98.
Las Vegas Sands shares in the US rose on Thursday after the cash-strapped company announced it had applied for a possible listing in Hong Kong that is estimated would raise as much as $2bn this year.
The casino operator, controlled by tycoon Sheldon Adelson, said it had filed an application with the Hong Kong stock exchange but no decisions had been made regarding the timing or terms of any such offering, according to a filing to the Securities and Exchange Commission.
Las Vegas Sands has been considering a Hong Kong public offering of its Macao assets for some months as the company aims to raise funds to complete its partially built projects in the world’s biggest casino market.
The spin-off had been made possible after its bankers agreed to amend a $3.3bn credit facility last week, which allowed the company to sell a minority interest of its Asian businesses, while $500m of the proceeds must be used to repay debts.
Las Vegas Sands, which has been struggling to service its debts, also said its lenders had agreed to give it six quarters of relief from its covenants and the option of issuing up to $1.5bn in bonds.
While the company did not say how much it planned to raise in Hong Kong, JPMorgan analysts said the size of the listing, which could take place in late November or early December, was likely to be from $1bn to $2bn.
“We believe this moves LVS one step closer to a clearer path of much-needed improving liquidity and balance sheet de-levering,” said the analysts, who estimated that the company could sell 25 per cent to 30 per cent of the operations.
The share sale would be an important boost to the company’s balance sheet. Las Vegas Sands, which has opened two of the world’s largest casinos in Macao, has been forced to halt construction on some projects and slash thousands of jobs because of its financial problems.
Macao casino companies are experiencing a tough operating environment as the global financial crisis and Beijing’s visa policies dissuaded people from gambling. First-half gaming revenues dropped 12.4 per cent year on year to $6.4bn.
Las Vegas Sands shares rose 3.5 per cent to $13.19 on Thursday after earlier reaching a high of $13.47. The stock has jumped about 40 per cent this month.
Long-suffering Sirius XM investors who’ve held onto the stock despite its troubles are being rewarded for their perseverance. Sirius (SIRI) shares are up over 13 percent today at 68 cents. And they’re up about 26 percent for the week.
Why? A few reasons. First, there’s the government’s “cash for clunkers” program, which will likely stimulate new car sales and new Sirius subscriptions thanks to the satellite radio trials often packaged with new cars.
Then there are rumors of new iPod-related hardware that may or may not debut at the company’s holiday gift-guide event next week. Scheduled for Wednesday, that gathering promises “a new line-up of accessories…for the home, office, vehicle and beyond.” This has led some folks to speculate that we’ll soon see a Sirius dock for the iPod/iPhone.
SINGAPORE, Aug 4 - Computer hard disk maker Seagate Technology said it will lay off 2,000 workers in Singapore, or more than 4 percent of its global workforce, as it closes manufacturing facilities in the city-state in a bid to cut costs by $40 million a year.
The move, which Seagate said would result in restructuring charges of $80 million, follows a slide in electronics exports from Singapore this year due to weaker consumer demand in the economic downturn.
"We are moving our hard disk operation at Ang Mo Kio (in Singapore) to other Seagate sites in other countries," company spokeswoman Lotus Tan told Reuters but did not provide further details.
She said Seagate employed a total of 8,000 workers in Singapore and would keep Seagate's Asia headquarters, media operation as well as a product development and design center there. According to Seagate's website it has about 45,000 employees around the world.
Seagate said the Ang Mo Kio hard drive factory would be closed by the end of 2010 but would not meaningfully change its production capacity as it will move manufacturing to other locations, which include Thailand, China and Malaysia.
Seagate said in a filing with U.S. regulators that total restructuring charges of approximately $80 million would include about $60 million for severance payments and about $10 million for the relocation of manufacturing equipment.
It plans to record the severance charges of up to $60 million in the current quarter, with the remainder of the charges to be incurred throughout the calendar year of 2010. Seagate's fiscal year 2009 ended on July 3.
The company expects the move to generate annual savings of $40 million when the closure is completed.
Singapore's overall unemployment rate stood at 3.3 percent in the second quarter but the number of people employed in Singapore fell by 12,400 in April-June, twice as much as in the first quarter
How's the economy, you ask? I have the proverbial good news and bad news, but in this case, they're exactly the same: The U.S. economy appears to be hitting bottom.
First, the good news. Right now, it looks like second-quarter GDP growth will come in only slightly negative, and third-quarter growth will finally turn positive. Compared to the catastrophic decline we recently experienced -- with GDP dropping at roughly a 6% annual rate in the fourth quarter of last year and the first quarter of this year -- that would be a gigantic improvement.
Furthermore, there is a reasonable chance -- not a certainty, mind you, but a reasonable chance -- that the second half of 2009 will surprise us on the upside. (Can anyone remember what an upside surprise feels like?) Three-percent growth is eminently doable. Four percent is even possible. Surprised? How, with all our economic travails, could we possibly mount such a boom? The answer is that this seemingly high growth scenario isn't a boom at all. Rather, it follows directly from the arithmetic of hitting bottom.
Bear with me for two paragraphs while I do some numbers. In recent quarters, several critical components of GDP have declined at truly astounding annual rates -- like minus 30% and minus 40%. You know the culprits: housing, automobiles and business investment. (Also inventories, about which more later.) Eventually, those huge negative numbers must turn into (at least) zeroes. Notice that the move to zero doesn't constitute a boom, not even a dead cat bounce, but merely the cessation of catastrophic decline. In fact, hitting zero growth and staying there would be a disaster scenario. We'll almost certainly do better.
But watch what happens when -- and remember, it's when not if -- the arithmetic of bottoming out takes hold. Housing, which is down to 2.6% of GDP, will serve as an example. In the first quarter, spending on new homes declined at a stunning 39% annual rate. If that minus 39% number turned into a zero in a single quarter, that change alone would add a full percentage point to that quarter's GDP growth (because 2.6% of 39% is about 1%). If the move to zero were to happen over two quarters, it would add about a half point to each. Many people think housing may in fact bottom out in the third or fourth quarter. Autos may already have passed their low point. And business investment will follow suit.
Now back to inventories. Recent quarters have seen an almost unprecedented liquidation of inventory stocks, which means that American businesses were producing even less than the paltry amounts they were selling. That, too, must come to an end. As inventory change turns from a large negative number into just zero, GDP will get another a big boost.
Now the key point: None of these events are probabilities; they are all certainties. The only issue is timing, about which we can only guess. But if several of these GDP components happen to bottom out at roughly the same time, we could be in for a big quarter or two.
Feeling a little better? There's more.
Remember the fiscal stimulus that everyone seems to be complaining about? One of the critics' complaints is that little of the stimulus money has been spent to date. OK. But that means that most of the spending is in our future.
And remember all those interest-rate cuts the Federal Reserve engineered in 2008, in a futile effort to stem the slide? The Fed's efforts were futile largely because widening risk and liquidity spreads negated any impacts on the interest rates real people and real businesses pay to borrow. Now those spreads are narrowing, which allows the Fed's rate cuts to start showing through to consumer loan rates, business loan rates, corporate bond rates, and the like. In short, monetary stimulus is in the pipeline -- a pipeline that was formerly blocked.
So why, then, is everyone feeling so blue? That brings me to the bad news: The U.S. economy is hitting bottom.
If things feel terrible to you, you're not hallucinating. Economic conditions are dreadful at the bottom of a deep recession. Jobs are scarce. Layoffs abound. Businesses scramble for penurious customers. Companies go bankrupt. Banks suffer loan losses. Tax receipts plunge, ballooning government budget deficits. All this and more is happening right now, in what looks to be this country's worst recession since 1938. At such a deep bottom, few people have reason to smile. (Bankruptcy lawyers maybe?)
What's more, GDP is not terribly meaningful to most people. Jobs are -- but they will take longer, maybe much longer, to revive. The last two recessions, while shallow, illustrated painfully that job growth may not resume for months after GDP bottoms out. And the unemployment rate won't fall until job growth rises "above trend" (say, 130,000 net new jobs per month). That's a long way from where we are today. So, even though the economy may be making a GDP bottom about now, the unemployment rate will probably keep rising for months -- which is bad news for most Americans.
One last, obvious, but unhappy, point: The bottom of a deep recession leaves the nation in a deep hole. Our economy now has massive unemployment and vast swaths of unused industrial capacity. It will take years of strong growth to return to full employment.
After the last big recession bottomed out at the end of 1982, the U.S. economy rebounded sharply, with a remarkable six-quarter spurt in which annual GDP growth averaged 7.7%. That spurt induced President Ronald Reagan, running for reelection in 1984, to declare "It's morning again in America." Nobody thinks we can repeat that today, hampered as we are by a damaged financial system, decimated household wealth, rising foreclosures, and traumatized consumers who have suddenly learned the virtues of thrift.
So, yes, the good news is also the bad news. The economy is hitting bottom, but it's a long, uphill climb to get out.
Mr. Blinder, a professor of economics and public affairs at Princeton University and vice chairman of the Promontory Interfinancial Network, is a former vice chairman of the Federal Reserve Board.
A group of Hong Kong banks said Wednesday they had agreed to refund partially thousands of investors who bought complex financial products at the centre of a mis-selling scandal.
The deal covers around 29,000 investors who were sold so-called mini-bonds backed by US investment bank Lehman Brothers, according to a joint statement issued by the Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA) and the banks.
The deal was brokered by the two regulators and the banks. The refunds could cost the 16 institutions who agreed to the deal up to 6.3 billion Hong Kong dollars (S$1.17 billion).
Martin Wheatley, chairman of the SFC, said the settlement was "a watershed" in the regulation of financial services.
"The scale of the settlement is unprecedented in Hong Kong, if not in other jurisdictions," he told a news conference.
Under the deal, the banks will repurchase from each eligible customer aged below 65 all outstanding mini-bonds at 60 percent of their nominal value.
Those aged 65 or above will be able to recoup at least 70 percent of their investment in the products.
The ultimate payout to investors may be higher if the banks are able to sell the underlying collateral linked to the minibonds, the regulators said.
Wheatley said the total amount the investors could receive would be equal to or greater than what they could otherwise recover at today's current market value.
He said although the deal concluded the SFC's investigation into the mis-selling cases, investors still dissatisfied with the terms could seek redress through legal channels.
He nevertheless pledged to continue the SFC?s investigation in unresolved claims.
"In no way are we giving up our right or ability to investigate unresolved cases," he said.
In January, leading Hong Kong brokerage Sun Hung Kai Investments agreed to repay around 85 million dollars to 300 investors in a full refund after the SFC reprimanded its sale of the minibonds.
Asked why the banks could not follow the brokerage's example, Wheatley said Sun Hung Kai's case was different as it involved fewer investors and a smaller amount of money.
Some investors were nevertheless angry that they could not get a full refund and Wednesday protested in the lobby of the SFC office in Central district, where dozens of police officers and security guards tried to maintain order.
Peter Chan, chairman of the Alliance of Lehman Brothers Victims, told AFP: "Although some elderly investors will be able to recover most of their investment, I am very disappointed because the SFC has indicated it will not investigate these cases any more after the settlement."
The value of the products, which were sold as safe investments, collapsed when Lehman went failed last September.
The scandal has rocked Hong Kong's financial centre and led to a string of protests by disgruntled investors, many of whom were elderly and said they did not understand what they were being sold.
In May, the SFC won another victory when a Hong Kong court supported the regulator's request to block the privatisation of telecom giant PCCW amid allegations of vote-rigging.
WASHINGTON: The Federal Reserve is likely to maintain its easy money policy for some time despite signs of improvement in the economy and financial markets, chairman Ben Bernanke said on Tuesday. Bernanke, delivering his semi-annual economic report to Congress, cited "notable improvements" in financial markets and a somewhat brighter economic outlook but considerable risks led by high unemployment. "In light of the substantial economic slack and limited inflation pressures, monetary policy remains focused on fostering economic recovery," Bernanke told the House of Representatives Financial Services Committee. He added that "a highly accommodative stance of monetary policy will be appropriate for an extended period," suggesting that the Fed is in no hurry to end its near-zero interest rate policy or special programs to pump money into the financial system. But Bernanke also maintained the Fed was working on a so-called exit strategy to unwind the trillion-dollar effort once a recovery takes root. He said the the vast effort "can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation." The policymaking Federal Open Market Committee "has been devoting considerable attention to issues relating to its exit strategy, and we are confident that we have the necessary tools to implement that strategy when appropriate," he added. He said some of these tools "will unwind automatically as the economy recovers and financial strains ease" because of the premium charged by the Fed for its programs. In an effort to address concerns that the Fed could create a new financial bubble, Bernanke said the central bank was prepared to act. "Should economic conditions warrant a tightening of monetary policy before this process of unwinding is complete, we have a number of tools that will enable us to raise market interest rates as needed," he said. The Fed noted that the it is preparing for a recovery taking root: "When this process has advanced sufficiently, the stance of policy will need to be tightened to prevent inflation from rising above levels consistent with price stability and to keep economic activity near its maximum sustainable level." Kathy Lien at Global Forex Trading said Bernanke's comments failed to ease financial market jitters, leading to a rise in the dollar. "Although the Fed chairman talked about exit strategies, his emphasis was on economic risks and this cautiousness did not sit well with currency traders," she said. Bernanke also delivered the Fed's latest economic projections, which were made public last week, which called for a resumption of growth in the second half of 2009 after a brutal recession. He commented that financial markets, which had been severely strained at the the time of his last report in February "remain stressed," with credit sometimes difficult to obtain, but that "on net, the past few months have seen some notable improvements." He added that better conditions in financial markets "have been accompanied by some improvement in economic prospects" including stabilisation of consumer spending and moderation in the housing slump. But he argued that the Fed would remain focused on adding stimulus to avert a relapse. "Despite these positive signs, the rate of job loss remains high and the unemployment rate has continued its steep rise," he said. "Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending. The possibility that the recent stabilisation in household spending will prove transient is an important downside risk to the outlook." The Fed chief also repeated his concerns about a ballooning federal budget deficit that could threaten financial stability. "Maintaining the confidence of the public and financial markets requires that policymakers begin planning now for the restoration of fiscal balance," he said. "Agreeing on a sustainable long-run fiscal path now could yield considerable near-term economic benefits in the form of lower long-term interest rates and increased consumer and business confidence. Unless we demonstrate a strong commitment to fiscal sustainability, we risk having neither financial stability nor durable economic growth.
Apple Inc., the closest thing the tech industry has to a luxury brand, said Tuesday its profit jumped 15 percent in the most recent quarter despite the recession. IPhone revenue surged and reduced prices pushed laptop sales higher, even as the rest of the PC industry shrank.
The company, which recently welcomed CEO and co-founder Steve Jobs back from medical leave, said earnings in the quarter that ended June 27 rose to $1.23 billion, or $1.35 per share. Apple's profit was $1.07 billion, or $1.19 per share, in the same period last year.
Sales increased 12 percent to $8.34 billion from $7.46 billion in the year-ago quarter, which is the third in Apple's fiscal calendar.
Apple beat Wall Street's forecast on both counts, which helped send its stock higher in extended trading. Analysts were expecting Apple to earn $1.17 per share on $8.20 billion in revenue, according to a Thomson Reuters survey.
"In a better economy I think we would have sold even more," Apple Chief Financial Officer Peter Oppenheimer said in an interview.
Apple said it sold more than 5.2 million iPhones in the quarter, more than seven times what it sold in the 2008 quarter, thanks in part to a newly released version of the device.
Apple also sold 4 percent more Mac computers than a year ago, with a 13 percent rise in laptop unit sales more than making up for a 10 percent drop in desktops. Meanwhile, researchers recently reported a 3 percent to 5 percent decline for the overall worldwide PC market in the same period.
"Times are tough. Apple continues to post pretty strong numbers," said Shaw Wu, an analyst for Kaufman Bros. "It's pretty incredible. It truly is."
Apple's decision to cut laptop prices during the quarter helped it buck the industry trend, even though the move dragged laptop revenue down 2 percent. Tim Cook, Apple's chief operating officer, said Mac sales picked up after the company announced the cuts, its first major price reductions in the recession.
Cook said Mac revenue was also hurt as businesses that typically buy more expensive models continued to put off technology spending. Other computer makers, such as Dell Inc., have also said customers are holding on to their existing machines for longer than normal.
Wu noted that lowering prices didn't eat into Apple's gross margin, which improved from a year ago and beat his expectations. Apple said component costs weren't as high as anticipated, and Wu said he thinks the Mac remained one of Apple's most profitable businesses.
The main weak spot was Apple's iPod line. Even though iPod Touch unit sales more than doubled, total iPod unit sales fell 7 percent, hurt by declines in what Apple considers its traditional MP3 players -- iPod Classic, Nano and Shuffle. Oppenheimer told analysts on a conference call that such declines are to be expected as Apple "cannibalizes" iPod sales by offering similar features, plus access to thousands of third-party applications, on the $229-and-up iPod Touch and the iPhone -- the cheapest of which is now $99, plus a monthly service contract.
Apple's revenue increased in every region, including the U.S. and Europe. Average revenue in each of Apple's retail stores was $5.9 million, lower than the $6.8 million Apple reported at the same time last year.
Shares of Cupertino, Calif.-based Apple jumped $6.77, or 4.5 percent, to $158.28 in after-hours trading, after slipping $1.40 to close at $151.51.
For the current fourth quarter, Apple said it expects to earn $1.18 to $1.23 per share on $8.7 billion to $8.9 billion in sales. Analysts are looking for a stronger performance -- profit of $1.30 per share on revenue of $9.1 billion -- but Apple's guidance is typically conservative.
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