(MarketWatch) -- With longtime Republican Sen. Arlen Specter switching to the Democratic Party, all of Washington is abuzz with news that the Democrats will have a filibuster-proof majority in the Senate.
President Barack Obama's agenda might get a small boost from Specter's change, but the biggest beneficiary is likely to be Specter, who changed parties to protect himself, not Obama. See full story.
With 60 sure votes, the Democrats would be able to advance much of Obama's agenda, especially the transformations in the health-care and energy sectors. Under Senate rules, a minority of 41 senators can block almost any legislation or nomination.
The problem is that the 60 votes aren't sure. There is no guarantee that all 60 will consistently vote to end filibusters mounted by the Republicans. Every issue, every bill is different. The Democratic leaders still have to get the votes of a few moderates of either party, including Pennsylvania's Specter, Democrat Ben Nelson of Nebraska, or Maine Republicans Susan Collins and Olympia Snowe.
Specter said he would not be an automatic 60th vote.
The current lineup in the Senate is 56 Democrats, 41 Republicans and two independents who vote with the Democrats. Democrat Al Franken leads in the Minnesota race, now locked in the courts following a recount.
Read more here
Tuesday, April 28, 2009
Monday, April 27, 2009
London Bankers Look for Exits After ‘Last Straw’ Tax Increase
(Bloomberg) -- Demetris Efstathiou, a hedge-fund trader and a Londoner for two decades, listened last week to Chancellor of the Exchequer Alistair Darling outline a plan to raise taxes on high earners. Then he decided to leave Britain.
“There is no reason for me to stay here anymore,” said Efstathiou, a 38-year-old Cypriot who moved to London in 1990. “This tax increase is the last straw. This government is no longer interested in the City.”
Prime Minister Gordon Brown’s proposal to boost the tax rate to 50 percent from 40 percent on income above 150,000 pounds ($220,000) pushed headlines about “class warfare” onto the front pages of the capital’s newspapers. It also prompted predictions from business groups that it would undermine the U.K.’s competitiveness and lead to an exodus of financial talent. Brown was portrayed as Vladimir Lenin in a cartoon on Page One of the Daily Telegraph.
The income-tax change, set to take effect next year, would give the U.K. a higher top rate than Spain, Italy, Germany, France and the U.S., according to KPMG, the accounting firm. Among the 30 members of the Organization for Economic Co- operation and Development, the country would jump to seventh from 19th in the rankings of tax rates, accounting firm Ernst & Young said.
The initiative is part of the government’s efforts to contain a planned budget deficit of 12.4 percent of gross domestic product, Britain’s biggest in peacetime. The Treasury expects the tax to raise about 2.2 billion pounds next year when government borrowing will be 173 billion pounds. Darling’s budget calls for 703 billion pounds of deficits in the five years through April 2014.
How Increase Works
Under the new rates, a banker making 350,000 pounds would pay 160,000 pounds in income-tax and national-insurance contributions, according to a government online tax calculator. That’s 22,600 pounds more than the current amount and doesn’t include the elimination of tax relief on the first 6,000 pounds of earnings and the reduction of breaks for pension contributions that Darling is also introducing.
About 350,000 people in the U.K. earn more than 150,000 pounds annually, according to the London-based Institute for Fiscal Studies. About 750,000 make more than 100,000 pounds, and their taxes will also increase after the government scrapped a personal tax-free allowance.
“There is a populist side to this message: Let’s over-tax the rich,” said French-born Philippe Houchois, 45, an analyst in London for Zurich-based UBS AG. The state is encouraging this anger “against banks, against the financial sector.”
Poll Shows Support
The proposal, part of the 2010 budget, is likely to go ahead after Conservative Party leader David Cameron said April 24 that reversing the 50 percent rate wasn’t a priority. About 57 percent of Britons have a “positive view” of the plan, a Populus Ltd. poll published the same day showed. Populus surveyed 518 adults after the April 22 budget speech.
Brown isn’t without supporters in the finance industry.
“We do have a major crisis,” said Bill Blain, a bond broker at KNG Securities LLP in London. “Taxes do need to rise. People in that bracket do need to pay.”
Fleeing bankers may find that taxes are also going up elsewhere. President Barack Obama wants to let the top two U.S. tax brackets increase to 36 percent and 39.6 percent from 33 percent and 35 percent. The top U.S. rate kicks in at $372,950.
Lower Taxes Elsewhere
Countries such as Singapore, where the top rate is 20 percent, and Switzerland have lower taxes. A single banker living in London and earning 350,000 pounds would pay about 40,000 pounds more under the new system than he would in Zurich, according to British and Swiss government figures.
“People are questioning their operations in London,” said Steven Bell, chief economist at the GLC Ltd. hedge fund in London. He was a U.K. Treasury official the last time a Labour government decided to raise taxes on high earners in 1976. The numbers leaving “will be significant,” Bell said.
The move reverses policies dating from former Prime Minister Tony Blair’s election in 1997 that rejected income-tax increases and encouraged wealth creation.
When the Labour Party was previously in power in the late 1970s under Prime Minister James Callaghan, the top tax rate was 83 percent on earned income and 98 percent on unearned income. These were cut to 60 percent and 75 percent when Margaret Thatcher took office in 1979. Blair said his party, re-branded as New Labour, wouldn’t return to the past.
Read more here
“There is no reason for me to stay here anymore,” said Efstathiou, a 38-year-old Cypriot who moved to London in 1990. “This tax increase is the last straw. This government is no longer interested in the City.”
Prime Minister Gordon Brown’s proposal to boost the tax rate to 50 percent from 40 percent on income above 150,000 pounds ($220,000) pushed headlines about “class warfare” onto the front pages of the capital’s newspapers. It also prompted predictions from business groups that it would undermine the U.K.’s competitiveness and lead to an exodus of financial talent. Brown was portrayed as Vladimir Lenin in a cartoon on Page One of the Daily Telegraph.
The income-tax change, set to take effect next year, would give the U.K. a higher top rate than Spain, Italy, Germany, France and the U.S., according to KPMG, the accounting firm. Among the 30 members of the Organization for Economic Co- operation and Development, the country would jump to seventh from 19th in the rankings of tax rates, accounting firm Ernst & Young said.
The initiative is part of the government’s efforts to contain a planned budget deficit of 12.4 percent of gross domestic product, Britain’s biggest in peacetime. The Treasury expects the tax to raise about 2.2 billion pounds next year when government borrowing will be 173 billion pounds. Darling’s budget calls for 703 billion pounds of deficits in the five years through April 2014.
How Increase Works
Under the new rates, a banker making 350,000 pounds would pay 160,000 pounds in income-tax and national-insurance contributions, according to a government online tax calculator. That’s 22,600 pounds more than the current amount and doesn’t include the elimination of tax relief on the first 6,000 pounds of earnings and the reduction of breaks for pension contributions that Darling is also introducing.
About 350,000 people in the U.K. earn more than 150,000 pounds annually, according to the London-based Institute for Fiscal Studies. About 750,000 make more than 100,000 pounds, and their taxes will also increase after the government scrapped a personal tax-free allowance.
“There is a populist side to this message: Let’s over-tax the rich,” said French-born Philippe Houchois, 45, an analyst in London for Zurich-based UBS AG. The state is encouraging this anger “against banks, against the financial sector.”
Poll Shows Support
The proposal, part of the 2010 budget, is likely to go ahead after Conservative Party leader David Cameron said April 24 that reversing the 50 percent rate wasn’t a priority. About 57 percent of Britons have a “positive view” of the plan, a Populus Ltd. poll published the same day showed. Populus surveyed 518 adults after the April 22 budget speech.
Brown isn’t without supporters in the finance industry.
“We do have a major crisis,” said Bill Blain, a bond broker at KNG Securities LLP in London. “Taxes do need to rise. People in that bracket do need to pay.”
Fleeing bankers may find that taxes are also going up elsewhere. President Barack Obama wants to let the top two U.S. tax brackets increase to 36 percent and 39.6 percent from 33 percent and 35 percent. The top U.S. rate kicks in at $372,950.
Lower Taxes Elsewhere
Countries such as Singapore, where the top rate is 20 percent, and Switzerland have lower taxes. A single banker living in London and earning 350,000 pounds would pay about 40,000 pounds more under the new system than he would in Zurich, according to British and Swiss government figures.
“People are questioning their operations in London,” said Steven Bell, chief economist at the GLC Ltd. hedge fund in London. He was a U.K. Treasury official the last time a Labour government decided to raise taxes on high earners in 1976. The numbers leaving “will be significant,” Bell said.
The move reverses policies dating from former Prime Minister Tony Blair’s election in 1997 that rejected income-tax increases and encouraged wealth creation.
When the Labour Party was previously in power in the late 1970s under Prime Minister James Callaghan, the top tax rate was 83 percent on earned income and 98 percent on unearned income. These were cut to 60 percent and 75 percent when Margaret Thatcher took office in 1979. Blair said his party, re-branded as New Labour, wouldn’t return to the past.
Read more here
Thursday, April 23, 2009
AutoNation CEO: Gas is too cheap
(Fortune) -- For most Americans, Topic A in the auto industry right now is the fate of GM. Mike Jackson, 60, the outspoken CEO of the nation's largest auto retailer, AutoNation, has some definite opinions about that subject--and we'll spell them out below. But his own Topic A today is the level of gas prices, which he thinks intolerably low. Here is the conversation that he and FORTUNE senior editor at large Carol Loomis had a few days ago.
Tell me your opinions about the price of gas and what might be done to influence it.
I think we need a revenue-neutral gas tax that puts a floor under the price of gasoline at around $3.50 to $4. The price of gas totally determines the types of vehicles that people buy and how they use them. The fact that America has ignored this reality is the reason why our energy policies have failed for 50 years. With gas now around $2 per gallon, it won't be possible to sell fuel-efficient vehicles. Already, another great migration away from them is underway. I've seen this movie three times in my career.
How would you establish a price floor?
Through taxation. But it doesn't need to happen by next month. If you simply announce that taxes will be put in after the economy recovers, in 2011 or 2012, people will start now to factor that into their decisions.
And how about your revenue-neutral point?
This would be a very painful, regressive tax, which needs to be rebated quickly--maybe through the payroll tax. If there's a rebate, I think the political backlash can be handled.
Read more here
Tell me your opinions about the price of gas and what might be done to influence it.
I think we need a revenue-neutral gas tax that puts a floor under the price of gasoline at around $3.50 to $4. The price of gas totally determines the types of vehicles that people buy and how they use them. The fact that America has ignored this reality is the reason why our energy policies have failed for 50 years. With gas now around $2 per gallon, it won't be possible to sell fuel-efficient vehicles. Already, another great migration away from them is underway. I've seen this movie three times in my career.
How would you establish a price floor?
Through taxation. But it doesn't need to happen by next month. If you simply announce that taxes will be put in after the economy recovers, in 2011 or 2012, people will start now to factor that into their decisions.
And how about your revenue-neutral point?
This would be a very painful, regressive tax, which needs to be rebated quickly--maybe through the payroll tax. If there's a rebate, I think the political backlash can be handled.
Read more here
Wednesday, April 22, 2009
Glaxo Compares Sex Virus Shots, Delay Raises Eyebrows
(Bloomberg) -- GlaxoSmithKline Plc will release the first study to compare its cervical cancer vaccine with Merck & Co.’s blockbuster Gardasil, more than a year after completing the research.
Sales for Glaxo’s Cervarix amount to less than 10 percent of those garnered by Merck’s similar vaccine. The comparison study may influence which product doctors use and insurers pay for. It will be presented for the first time at a medical meeting in Malmoe, Sweden, on May 10, according to a draft of the program obtained by Bloomberg News.
The study also will help governments determine which of the vaccines to select for immunizing women, influencing a global market that Glaxo estimated at more than $10 billion last year. Glaxo’s shot, used less often than Gardasil in Europe, hasn’t won approval in the U.S., where Merck began selling its version three years ago.
Glaxo’s decision to wait 14 months to release the data and pick a little-known medical meeting as the venue “certainly has both my eyebrows up,” said Arthur Caplan, director of the University of Pennsylvania’s Center for Bioethics, in Philadelphia.
“Half the world is waiting to see which vaccine is the better one,” Caplan said. “You have a huge ethical obligation to get information out quickly. I’m never a fan of releasing key findings on a highly contentious issue, such as who’s got the better vaccine, at a relatively unknown meeting.”
The study concluded in March 2008, according to its listing on the U.S. government database that tracks clinical trials.
Two Studies
Cervarix and Gardasil protect women against the sexually transmitted human papillomavirus. The virus can lead to cervical cancer, which kills 250,000 women each year.
Stephen Rea, a spokesman for Glaxo in London, said the company chose the International Papillomavirus conference in Malmoe because it’s “internationally renowned and has a reputation for scientific rigor.”
Glaxo also plans to release another key Cervarix study, known as HPV-008, which tracks the effect of the vaccine on more than 18,600 women, at the meeting. U.S. regulators will use the findings to determine whether to clear the shot later this year. The company wanted to present the two studies “as a package,” Rea said. “Attendees will be able to see presentations on the efficacy study and the head-to-head study” together, he said.
Glaxo needs Cervarix to help offset cheaper generics that eroded U.S. sales of four medicines last year. Profit fell in the past two quarters at the London-based company.
‘Long Delay’
Glaxo shares have dropped 21 percent so far this year, the second-worst performance in a Bloomberg index of 18 European pharmaceutical companies. They fell 31.5 pence, 3 percent, to 1,019.5 pence in London trading, the biggest drop in a month.
Glaxo’s head-to-head study, dubbed HPV-010, measures which vaccine sparked a greater immune system response in more than 1,000 women seven months after the shot.
That means the results won’t say which product works best to keep cancer at bay, though it’s the first indication of the body’s ability to defend itself, said Aaron S. Kesselheim, an expert in pharmaceutical epidemiology and economics at Harvard Medical School and Brigham and Women’s Hospital in Boston. As such, it will help governments decide which product to pick, Caplan said.
“I can’t explain the long delay,” Kesselheim said. “If you have positive results, wouldn’t you want to get it out? If it’s negative, people should know that soon. It’s concerning to me that the turnaround time for getting the data out there is so slow.”
Spitzer Settlement
Glaxo may have taken longer to analyze the research to see whether women were protected against other strains of the virus than the ones contained in the shot, according to Nick Turner, an analyst at Mirabaud Securities in London.
The company has won exclusive contracts to provide Cervarix to young girls and women in the Netherlands and the U.K. since the study was completed. A spokesman at the U.K. Department of Health did not return calls seeking comment. Saskia Hommes, a spokeswoman for the Dutch Ministry of Health, said Cervarix was “cost effective.”
One dose of Cervarix costs about 112 euros ($145) in Europe, compared with about 124 euros for Gardasil. Women need three injections to be protected.
Glaxo, Europe’s fifth-largest drugmaker, has come under fire before for not promptly disclosing study results. When the company found that its Avandia diabetes medicine raised the risk of heart attacks in 2005, it submitted the findings to regulators and posted them on its Web site. It didn’t notify doctors or patients.
Read more here
Sales for Glaxo’s Cervarix amount to less than 10 percent of those garnered by Merck’s similar vaccine. The comparison study may influence which product doctors use and insurers pay for. It will be presented for the first time at a medical meeting in Malmoe, Sweden, on May 10, according to a draft of the program obtained by Bloomberg News.
The study also will help governments determine which of the vaccines to select for immunizing women, influencing a global market that Glaxo estimated at more than $10 billion last year. Glaxo’s shot, used less often than Gardasil in Europe, hasn’t won approval in the U.S., where Merck began selling its version three years ago.
Glaxo’s decision to wait 14 months to release the data and pick a little-known medical meeting as the venue “certainly has both my eyebrows up,” said Arthur Caplan, director of the University of Pennsylvania’s Center for Bioethics, in Philadelphia.
“Half the world is waiting to see which vaccine is the better one,” Caplan said. “You have a huge ethical obligation to get information out quickly. I’m never a fan of releasing key findings on a highly contentious issue, such as who’s got the better vaccine, at a relatively unknown meeting.”
The study concluded in March 2008, according to its listing on the U.S. government database that tracks clinical trials.
Two Studies
Cervarix and Gardasil protect women against the sexually transmitted human papillomavirus. The virus can lead to cervical cancer, which kills 250,000 women each year.
Stephen Rea, a spokesman for Glaxo in London, said the company chose the International Papillomavirus conference in Malmoe because it’s “internationally renowned and has a reputation for scientific rigor.”
Glaxo also plans to release another key Cervarix study, known as HPV-008, which tracks the effect of the vaccine on more than 18,600 women, at the meeting. U.S. regulators will use the findings to determine whether to clear the shot later this year. The company wanted to present the two studies “as a package,” Rea said. “Attendees will be able to see presentations on the efficacy study and the head-to-head study” together, he said.
Glaxo needs Cervarix to help offset cheaper generics that eroded U.S. sales of four medicines last year. Profit fell in the past two quarters at the London-based company.
‘Long Delay’
Glaxo shares have dropped 21 percent so far this year, the second-worst performance in a Bloomberg index of 18 European pharmaceutical companies. They fell 31.5 pence, 3 percent, to 1,019.5 pence in London trading, the biggest drop in a month.
Glaxo’s head-to-head study, dubbed HPV-010, measures which vaccine sparked a greater immune system response in more than 1,000 women seven months after the shot.
That means the results won’t say which product works best to keep cancer at bay, though it’s the first indication of the body’s ability to defend itself, said Aaron S. Kesselheim, an expert in pharmaceutical epidemiology and economics at Harvard Medical School and Brigham and Women’s Hospital in Boston. As such, it will help governments decide which product to pick, Caplan said.
“I can’t explain the long delay,” Kesselheim said. “If you have positive results, wouldn’t you want to get it out? If it’s negative, people should know that soon. It’s concerning to me that the turnaround time for getting the data out there is so slow.”
Spitzer Settlement
Glaxo may have taken longer to analyze the research to see whether women were protected against other strains of the virus than the ones contained in the shot, according to Nick Turner, an analyst at Mirabaud Securities in London.
The company has won exclusive contracts to provide Cervarix to young girls and women in the Netherlands and the U.K. since the study was completed. A spokesman at the U.K. Department of Health did not return calls seeking comment. Saskia Hommes, a spokeswoman for the Dutch Ministry of Health, said Cervarix was “cost effective.”
One dose of Cervarix costs about 112 euros ($145) in Europe, compared with about 124 euros for Gardasil. Women need three injections to be protected.
Glaxo, Europe’s fifth-largest drugmaker, has come under fire before for not promptly disclosing study results. When the company found that its Avandia diabetes medicine raised the risk of heart attacks in 2005, it submitted the findings to regulators and posted them on its Web site. It didn’t notify doctors or patients.
Read more here
Monday, April 20, 2009
Dalton to Urge Japanese Companies to Hire Outside Directors
(Bloomberg) -- Dalton Investments LLC, the Los Angeles-based hedge fund with 80 billion yen ($818 million) in assets, will urge the 70 Japanese companies it invests in to introduce outside directors to bolster corporate governance.
The fund, which invests 70 percent of its assets in Japan, will also ask the companies to boost shareholder returns by conducting share buybacks, Akihiko Miyata, managing director of Dalton’s local unit, said in an interview in Tokyo yesterday. The U.S. fund will send letters this month to nearly all of the companies in which it’s a shareholder, he said.
The move by Dalton, co-founded by James Rosenwald and Steven D. Persky in 1998, comes at a time when the Japanese government is trying to enhance the nation’s corporate governance standards to attract capital after the global credit crisis crimped corporate earnings, sending stock prices lower. The benchmark Nikkei 225 Stock Average has lost more than a third of its value in the past year amid the worst market rout since the Great Depression.
“I’m hoping that the letter will lead to increased opportunities for discussions with Japanese companies so that they can better understand what overseas investors are thinking,” said Miyata. “This isn’t about presenting a shareholder proposal,” he said, adding that taking a less- confrontational approach is more effective in bringing about change in Japan.
A panel led by Japan’s Ministry of Economy, Trade and Industry aims to unveil a report in June that will urge changes to corporate law or listing rules to improve governance, Hiroaki Niihara, director of the trade ministry’s Corporate System Division, said in an interview last month. The Ministry of Justice and the nation’s stock exchanges are prepared to take action to enforce the recommendations once the report is completed, he said.
Read more here
The fund, which invests 70 percent of its assets in Japan, will also ask the companies to boost shareholder returns by conducting share buybacks, Akihiko Miyata, managing director of Dalton’s local unit, said in an interview in Tokyo yesterday. The U.S. fund will send letters this month to nearly all of the companies in which it’s a shareholder, he said.
The move by Dalton, co-founded by James Rosenwald and Steven D. Persky in 1998, comes at a time when the Japanese government is trying to enhance the nation’s corporate governance standards to attract capital after the global credit crisis crimped corporate earnings, sending stock prices lower. The benchmark Nikkei 225 Stock Average has lost more than a third of its value in the past year amid the worst market rout since the Great Depression.
“I’m hoping that the letter will lead to increased opportunities for discussions with Japanese companies so that they can better understand what overseas investors are thinking,” said Miyata. “This isn’t about presenting a shareholder proposal,” he said, adding that taking a less- confrontational approach is more effective in bringing about change in Japan.
A panel led by Japan’s Ministry of Economy, Trade and Industry aims to unveil a report in June that will urge changes to corporate law or listing rules to improve governance, Hiroaki Niihara, director of the trade ministry’s Corporate System Division, said in an interview last month. The Ministry of Justice and the nation’s stock exchanges are prepared to take action to enforce the recommendations once the report is completed, he said.
Read more here
Thursday, April 16, 2009
Toshiba forecasts 2008 net loss of $3.5 billion
(MarketWatch) -- Toshiba Corp. said Friday it may have lost more money in the recently ended fiscal year than it had thought previously, raising its net loss estimate to 350 billion yen ($3.5 billion) from an earlier forecast of 280 billion yen.
However, Toshiba also lowered its operating loss, which doesn't include one-time charges and other special items. It now forecasts a 250 billion yen operating loss, compared to its previous projection of 280 billion yen. The disclosures were made by the company during the Tokyo Stock Exchange's midday recess Friday.
Expectation are for Toshiba to report a 269 billion yen net loss for the fiscal year that ended March 31, according to a consensus estimate of 15 analysts surveyed by Reuters.
The announcement followed a Nikkei newspaper report earlier in the day that said Toshiba was likely to revise down its operating loss estimate, owing to stabilizing prices for flash memory chips and other products, as well as strong contributions from its nuclear-power unit.
The Nikkei report was credited with helping boost Toshiba shares, which ended the morning session 4.4% higher.
Toshiba's cost cutting likely helped contain losses, while production cutbacks at its chip-making unit and by its rivals may have helped arrest declines in key product areas, including flash memory commonly used in digital music players, the report said.
Read more here
However, Toshiba also lowered its operating loss, which doesn't include one-time charges and other special items. It now forecasts a 250 billion yen operating loss, compared to its previous projection of 280 billion yen. The disclosures were made by the company during the Tokyo Stock Exchange's midday recess Friday.
Expectation are for Toshiba to report a 269 billion yen net loss for the fiscal year that ended March 31, according to a consensus estimate of 15 analysts surveyed by Reuters.
The announcement followed a Nikkei newspaper report earlier in the day that said Toshiba was likely to revise down its operating loss estimate, owing to stabilizing prices for flash memory chips and other products, as well as strong contributions from its nuclear-power unit.
The Nikkei report was credited with helping boost Toshiba shares, which ended the morning session 4.4% higher.
Toshiba's cost cutting likely helped contain losses, while production cutbacks at its chip-making unit and by its rivals may have helped arrest declines in key product areas, including flash memory commonly used in digital music players, the report said.
Read more here
Wednesday, April 15, 2009
Abbott loses sales momentum; shares fall
(Reuters) - Abbott Laboratories Inc Wednesday reported lower-than-expected quarterly sales, hurt by generic competition for its Depakote anti-seizure drug, but one-time gains and demand for stents drove profit higher.
Abbott's traditionally strong sales momentum came to a standstill in the first quarter, as the stronger dollar battered overseas sales and compelled the company to temper its full-year revenue forecast for arthritis drug Humira.
"We're now seeing for the first time the real impact of the economic downturn (on) healthcare," Abbott Chief Executive Miles White told investors in a conference call. But White said Abbott was being "dented" rather than "hammered" by the downturn.
The drugmaker, whose shares fell 4.6 percent, said net income rose to $1.44 billion, or 92 cents per share, from $938 million, or 60 cents per share, a year earlier.
The results included a gain of $797 million after it was released from an obligation to make a payment to longtime partner Takeda Pharmaceutical Co Ltd.
Excluding special items, the company earned 73 cents per shares. Analysts on average expected 70 cents, according to Reuters Estimates.
Global sales fell slightly to $6.72 billion, below the Reuters Estimates forecast of $7.07 billion.
Abbott said a stronger dollar, which reduces the value of overseas sales, crimped total revenue by 6.1 percentage points.
"Most of the sales shortfall came from U.S. pharmaceuticals, led by Humira, reflecting not only weaker markets, but a drawdown in inventories at the wholesaler and pharmacy level," JPMorgan analyst Michael Weinstein said in a research note.
Revenue from one-time blockbuster Depakote plunged by almost two thirds as U.S. doctors began opting for cheaper copycats. Sales of Abbott's Kaletra treatment for HIV were also significantly lower, hurt by new competition.
The revenue trend represents at least a temporary reversal of fortune for Abbott, whose sales jumped 10 percent in the fourth quarter and made the company an industry standout in terms of profit growth.
Despite the new challenges, Abbott said it still expects full-year earnings of $3.65 to $3.70 per share, excluding special items. That would represent profit growth of as much as 11.4 percent over last year.
The suburban Chicago company forecast earnings of 87 cents to 89 cents per share for the second quarter.
Abbott does not need to make major acquisitions to prop up its revenue and profits, White said.
"I don't feel the need to run out and do a deal to sustain what we've promised to shareholders," said White, who noted Abbott will remain "opportunistic" about small and mid-sized deals. Recent reports that Abbott had competed to acquire U.S. drugmaker Wyeth were false, White said.
Read more at CNNMoney
Abbott's traditionally strong sales momentum came to a standstill in the first quarter, as the stronger dollar battered overseas sales and compelled the company to temper its full-year revenue forecast for arthritis drug Humira.
"We're now seeing for the first time the real impact of the economic downturn (on) healthcare," Abbott Chief Executive Miles White told investors in a conference call. But White said Abbott was being "dented" rather than "hammered" by the downturn.
The drugmaker, whose shares fell 4.6 percent, said net income rose to $1.44 billion, or 92 cents per share, from $938 million, or 60 cents per share, a year earlier.
The results included a gain of $797 million after it was released from an obligation to make a payment to longtime partner Takeda Pharmaceutical Co Ltd.
Excluding special items, the company earned 73 cents per shares. Analysts on average expected 70 cents, according to Reuters Estimates.
Global sales fell slightly to $6.72 billion, below the Reuters Estimates forecast of $7.07 billion.
Abbott said a stronger dollar, which reduces the value of overseas sales, crimped total revenue by 6.1 percentage points.
"Most of the sales shortfall came from U.S. pharmaceuticals, led by Humira, reflecting not only weaker markets, but a drawdown in inventories at the wholesaler and pharmacy level," JPMorgan analyst Michael Weinstein said in a research note.
Revenue from one-time blockbuster Depakote plunged by almost two thirds as U.S. doctors began opting for cheaper copycats. Sales of Abbott's Kaletra treatment for HIV were also significantly lower, hurt by new competition.
The revenue trend represents at least a temporary reversal of fortune for Abbott, whose sales jumped 10 percent in the fourth quarter and made the company an industry standout in terms of profit growth.
Despite the new challenges, Abbott said it still expects full-year earnings of $3.65 to $3.70 per share, excluding special items. That would represent profit growth of as much as 11.4 percent over last year.
The suburban Chicago company forecast earnings of 87 cents to 89 cents per share for the second quarter.
Abbott does not need to make major acquisitions to prop up its revenue and profits, White said.
"I don't feel the need to run out and do a deal to sustain what we've promised to shareholders," said White, who noted Abbott will remain "opportunistic" about small and mid-sized deals. Recent reports that Abbott had competed to acquire U.S. drugmaker Wyeth
Read more at CNNMoney
U.S. stock futures slip after Intel's outlook
(MarketWatch) -- U.S. stock futures edged lower on Wednesday, with Intel's cautious outlook giving further ammunition for bears after two straight losses.
S&P 500 futures fell nine-tenths of a point to 839.20 and Nasdaq 100 futures fell 9.5 points to 1,314.50. Futures on the Dow Jones Industrial Average climbed 23 points.
U.S. stocks dropped on Tuesday after a surprising retail sales drop and as traders sold Goldman Sachs shares after a $5 billion stock offering. The Dow Jones Industrial Average fell 137 points, the S&P 500 dropped 17 points and the Nasdaq Composite lost 27 points.
Intel fell 4% in Frankfurt as the company projected sales to be roughly flat from the first quarter and gross margins in the mid-40s, which were disappointing to some analysts who were expecting a bounce in the second quarter.
The company's first-quarter profit fell 55%, which wasn't as steep as forecast.
Also on the tech front, Infosys Technologies dropped in Bombay trade as the software giant said it expects its first-ever decline in annual earnings and revenue.
EBay rose 2% in Frankfurt as the online auctioneer said it would spin off its Skype unit via an initial public offering.
Elsewhere, UBS dropped 3.7% in Zurich after the Swiss bank said it would lose $1.8 billion in the first quarter and cut its workforce by 8,700 after seeing outflows.
Sanofi-Aventis said it's going to buy privately held cancer drug maker BiPar Sciences for as much as $500 million. Abbott Labs is among the firms reporting results on Wednesday.
On the economics calendar, traders will be watching the release of March consumer price inflation data at 8:30 a.m. Eastern. Economists surveyed by MarketWatch produced a consensus forecast of a 0.1% drop following a 0.4% rise in February.
Read more at MarketWatch
S&P 500 futures fell nine-tenths of a point to 839.20 and Nasdaq 100 futures fell 9.5 points to 1,314.50. Futures on the Dow Jones Industrial Average climbed 23 points.
U.S. stocks dropped on Tuesday after a surprising retail sales drop and as traders sold Goldman Sachs shares after a $5 billion stock offering. The Dow Jones Industrial Average fell 137 points, the S&P 500 dropped 17 points and the Nasdaq Composite lost 27 points.
Intel fell 4% in Frankfurt as the company projected sales to be roughly flat from the first quarter and gross margins in the mid-40s, which were disappointing to some analysts who were expecting a bounce in the second quarter.
The company's first-quarter profit fell 55%, which wasn't as steep as forecast.
Also on the tech front, Infosys Technologies dropped in Bombay trade as the software giant said it expects its first-ever decline in annual earnings and revenue.
EBay rose 2% in Frankfurt as the online auctioneer said it would spin off its Skype unit via an initial public offering.
Elsewhere, UBS dropped 3.7% in Zurich after the Swiss bank said it would lose $1.8 billion in the first quarter and cut its workforce by 8,700 after seeing outflows.
Sanofi-Aventis said it's going to buy privately held cancer drug maker BiPar Sciences for as much as $500 million. Abbott Labs is among the firms reporting results on Wednesday.
On the economics calendar, traders will be watching the release of March consumer price inflation data at 8:30 a.m. Eastern. Economists surveyed by MarketWatch produced a consensus forecast of a 0.1% drop following a 0.4% rise in February.
Read more at MarketWatch
Tuesday, April 14, 2009
Debswana to reopen some Botswana mines on Wednesday
(Reuters) - Debswana, the world's biggest diamond producing company by value, said on Tuesday it would resume production on Wednesday at three of its four mines in Botswana, after suspending output due to weak demand.
A global economic slowdown has slashed demand for diamonds, leading to output cuts in Botswana, and led to a large budget deficit for the country after revenue dried up.
Debswana, a 50/50 joint venture between the government of Botswana and De Beers, which is 45 percent owned by mining group Anglo American, said in February it would close its Orapa, Letlhakane and Jwaneng mines from February 25 to April 14.
On Tuesday, Debswana said in a statement production at the firm's fourth and smallest mine, Damtshaa and at Orapa No. 2 plant would remain suspended for the rest of the year because demand was expected to be depressed.
The closures had cut production costs and preserved jobs, and given the company a chance to sell off some of the diamonds that had piled up in its inventories, it said.
Read more at Reuters
A global economic slowdown has slashed demand for diamonds, leading to output cuts in Botswana, and led to a large budget deficit for the country after revenue dried up.
Debswana, a 50/50 joint venture between the government of Botswana and De Beers, which is 45 percent owned by mining group Anglo American, said in February it would close its Orapa, Letlhakane and Jwaneng mines from February 25 to April 14.
On Tuesday, Debswana said in a statement production at the firm's fourth and smallest mine, Damtshaa and at Orapa No. 2 plant would remain suspended for the rest of the year because demand was expected to be depressed.
The closures had cut production costs and preserved jobs, and given the company a chance to sell off some of the diamonds that had piled up in its inventories, it said.
Read more at Reuters
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