Caterpillar posts record 1Q
Peoria, IL, United States (AHN) – The world’s largest manufacturer of construction equipment posted first quarter profit on Friday that beat expectations and rising material costs.
Caterpillar said net income for the period was $1.23 billion, or $1.84 a share, an increase of 426 percent from $233 million, or 36 cents a share, in the same quarter a year ago.
Revenue grew 57 percent to $12.95 billion from $8.24 billion.
The record results pushed Caterpillar shares up 3.5 percent.
The Illinois-based company said a $4.07 billion higher sales volume and a $94 billion positive impact from currency led to the strong performance.
The manufacturer performed well in all geographic segments, including in developing countries, where despite a low level of construction activity sales rose as customers replaced fleets of equipment.
Caterpillar said manufacturing costs, particularly the price of steel, rose $219 million. Selling and administrative expenses also rose $219 million.
The company raised its full-year outlook from revenue of more than $50 billion, to &52 billion to $54 billion. It expects an annual profit of $6.25 to $6.75 per share, up from a previous forecast of near $6.
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Oil companies Shell and Exxon rack up billions in profits on soaring oil prices
New York, NY, United States (AHN) – Royal Dutch Shell and Exxon Mobile oil companies both reported robust first quarter profits because of higher global prices.
Those higher prices amounted to $113.70 per barrel for US crude oil futures, the highest level in 2.5 years, and $125.71 per barrel for Brent crude.
That helped Anglo-Dutch firm Shell to record $6.9 billion in profits for the first three months of 2011, up a hefty 41 percent from the same period in 2010.
Texas-based Exxon group did even better reporting profits of $10.7 billion, up a whopping 69 percent from the same time last year.
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Asian markets slip as US data disappoint
Asian shares retreated as weak US output growth fuelled uncertainty about the outlook for corporate earnings while a strong Australian dollar weighed on the Sydney market
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Ivory Coast upsets hit banana growers too
Plantations group Sipef reveals “severeandquot; disruption to its banana trade, with lower rubber and tea output too. But high prices will lift profits
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HSBC suspends retail banking in Russia
Moscow, Russian Federation (AHN) – Hong Kong and Shanghai Banking Corporation pulled out of retail banking in Russia. HSBC said it will focus on making available global lending services to industrial and corporation clients.
With the announcement, HSBC will close five retail units in Moscow and St. Petersburg.
Husein Ozkaya, manager of HSBC’s Russian operations, said Europe’s largest bank decided to stop retail banking after a review revealed that corporate banking offered it the strongest opportunity in the country.
With the announcement, HSBC became the latest foreign bank to leave retail banking in Russia after another leading British bank Barclays also pulled out recently from Russia as the retail banking sector becomes dominated by local banks.
Only one in four Russians have a bank account, making Russia one of the lowest banking penetration rates. But the potential yield is vast because of the country’s population of 142 million which resulted in the retail banking business doubling in size every two years prior to the 2008 financial crisis.
Barclays paid in 2008 $560 million (GBP 373 million) for Expobank, which was six times the book value to be able to offer retail banking services in Russia. But after barely two years, Barclays sought a buyer for its retail business in Russia and instead decided to focus on investment banking.
Banco Santander of Spain is also leaving retail banking in Russia.
The foreign banks attracted depositors with new services such as Internet banking, linked investment accounts and online bill payments. It helped foreign banks that Russians had a distrust of their own financial institutions due to a series of scandals and ruble devaluations, which wiped out savings of Russians in the 1990s.
But the anticipated decline of Russian state banks’ share of the retail market did not take place because of a matching of similar services by Sherbank – a former Soviet retail bank – to those offered by foreign banks. To further attract local depositors, Sberbank emphasized that it is a state-backed institution, while many western banks were on the brink of collapse.
HSBC advised account holders to close their accounts by June 30, while their credit cards could no longer be used after May 31. To help clients move their savings to other banks, HSBC said it would waive fees for cash withdrawals and outbound transfers.
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Dutch telecom KPN to cut 25 percent of workforce amid competition, falling demand
The Hague, Netherlands (AHN) – Dutch telecom firm KPN has announced plans to cut up to 25 percent of its workforce over the next four years because of increased global competition and slumping demand.
KPN’s announcement on Thursday comes on the heels of Chinese telecom giant Huawei announcing Monday that its sales outside China had increased by 33.8 percent. Huawei has become one of the largest telecom manufacturers in the world, operating in more than 140 countries amid complaints of unfair trade practices.
KPN employs 30,599 people. It announced that it would cut from 4,000 to 5,000 jobs in The Netherlands between now and 2015.
Citing problems in both its mobile and fixed-line business, KPN also issued a profits warning, which sent its share price down by 7.7 percent resulting in a brief suspension of trading. The company will issue its first quarter earnings report on April 28.
In the meantime, KPN has revised its forecast of its gross operating income for 2011 downward from $7.7 billion to $5.3 billion.
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Finding A Path Through The ‘Gobbledygook’ Of The Insurance Market
Washington, DC, United States (KaiserHealth) – My ZIP code is a black hole for individual health insurance.
That’s what I recently discovered when I tried to find the coverage I want at an affordable price. What hubris I had.
My story started in 2009, when my position as a journalism professor at a small college was eliminated, and I lost my health benefits along with the job. In the ensuing months, as the clock ticked on my COBRA extension, I began to focus on finding a new health plan. I thought it would be a matter of dealing with mild sticker shock and doing comparative shopping. I was wrong.
As an experienced writer and researcher, I am used to making calls, asking questions and digging through hard-to-understand details. But it never occurred to me that the answers I uncovered about Tompkins County, N.Y. — a paradise of farmland, lakes and waterfalls close to the cultural attractions of Ithaca, home for me and Cornell University — would be so frustrating. It turns out it’s one of the state’s worst places to find good individual health coverage.
When I tell people about my dilemma, they get curious — even participatory. “Did you try a professional group?” they ask. “Did you try an online broker?” (Yes and yes.) Maybe they get caught up in my story because, unlike many people with tales of insurance woes, I’m in my fifties and healthy. My story doesn’t involve a medical condition that’s unsolvable or hard to talk about. Or maybe it’s just that my experience lights a path, however convoluted, through the insurance gobbledygook.
I started my quest with Aetna, my COBRA insurer. Under New York state law, I thought I had “conversion rights” — meaning I could convert my former employer’s group coverage, the basis for my COBRA plan, to individual coverage. Though the full monthly cost was already $565, and I worried I wouldn’t be able to afford any increases that kicked in when it became an individual plan, it was great insurance — providing excellent benefits and the ability to choose my own doctors. But it turned out my cost concerns were not even relevant. There is a caveat in the law: self-insured employers are subject to federal, not state, regulation. And because my former employer is self insured — meaning Aetna administers the plan but the college assumes all the financial risk — the conversion option did not exist.
After this idea evaporated, I explored possibilities on the website of The Freelancers Union, a professional association that offers its own health insurance in New York. Five plan choices popped up. Great, I thought. Then I clicked further to read about the plans’ residency requirements and up came a map. The right side of the state — covering 34 counties that share borders with New Jersey, Pennsylvania, Connecticut, Massachusetts, Vermont and Canada — was colored in blue. These counties are the lucky ones. Those on the left — 28 counties that border more of Pennsylvania and Canada, extending all the way to Lake Erie and Lake Ontario — were white, meaning no Freelancers Union health insurance. That’s where Tompkins County is.
This development was crushing. Somewhere along the way, the notion had lodged in my head that if I ever turned to freelance writing as my full-time job, I could get benefits through this type of organization. But — at least as far as I could tell — there are no such groups with health plans in my area.
I felt stupid. I also was getting curious, which happens whenever I feel stupid. The reporter in me wanted to know what the heck was going on. But the consumer in me needed a health plan. So I kept looking.
I tried other websites, starting with AARP. The site directs consumers to an AARP-branded Aetna plan. I entered my ZIP code and got the same response: the plan was “not available in your area.” Next, at a top-rated insurance broker site, my ZIP code brought up one result. The $561-a-month GHI policy covered annual physical and gynecologic exams, prescription drugs with a co-pay, hospitalization and outpatient surgery. But it did not cover, among other things, any other office visits; inpatient physical therapy; ER professional charges; diagnostic admissions; and diagnostic lab tests. To me, that seems like too much money to spend for what amounts to catastrophic coverage.
Curiosity was getting the better of me, so I did some random comparisons on the same website. Zip codes in the District of Columbia; Seattle; Fairbanks, Alaska; and New York City offered 80, 45, 56 and 16 insurance choices, respectively. I also tried random rural areas. Residents of Aladdin, Wyo., had 27 plan choices, starting at $380 a month. Residents of Amelia, Neb., had 87, starting at $133.05.
In search of clarity, I visited the New York state insurance website and discovered a whole new possibility: Healthy NY, a subsidized program for low-income people. Several different insurers offer the same basic menu of coverage through different regional HMOs, which charge different rates.
At first I ruled it out because I wouldn’t be able to choose my own doctors, which has always been very important to me. But I was starting to feel desperate. And I qualified for the plan because it just so happens that in January, I made less than $2,269. I never imagined I would be glad to have a dry spell with my freelancing.
I was not surprised to discover that, although New Yorkers in many other parts of the state can choose a Healthy NY insurer from several options, I only had one: Excellus BlueCross BlueShield. I was just glad to learn that I could get insurance. A phone call led to an additional choice, through the same insurer, that would let me see my own doctors. But it would have cost around $1,400 a month, which is the same as my mortgage. There was also a plan for sole proprietors, but I didn’t qualify.
At this point I went into full reporter mode. I called Troy Oechsner, New York state deputy superintendent for health, and asked him about my scarcity of coverage options and the high costs associated with them. He told me that some other rural areas in the state are in a similar fix, and he said, “For an insurer to get into the area of Tompkins County, where Excellus has such a large hold on the commercial market, is really difficult.”
Ah. That rings a bell. I remembered reading a very similar conclusion in a 2009 United Hospital Fund report: “Entering Central New York is entering the Excellus zone” — a 15-county region where “the region’s nonprofit BCBS plans vigorously defend their turf.” Who do they defend it against? Mostly for-profit insurers, which have a much stronger foothold in downstate areas, including greater New York City. Nonprofits have historically claimed upstate markets (which include Central New York). In my region, Excellus in particular dominates, with a strong record of well-established health-provider relationships.
Not only am I in the Excellus zone, said Oechsner, but I’ve stumbled into “the plight of the individual market in New York.” It’s a decades-long saga in which the state “traded the problem of a group of people who can’t get insurance at any price for another problem, which is that our individual rates are out-of-control expensive,” he said. In other words, the state gave up some of its power to regulate rate increases in exchange for guarantees of access to quality coverage for everyone — although as recently enacted legislation is phased in, the state is regaining more control over the increases.
I still didn’t get why the Freelancers Union insurance isn’t available to me. So I called Chief Operating Officer Ann Boger, who explained that the group’s plan in New York is linked to the service area of Empire BlueCross BlueShield. I knew from my other research that Empire can’t operate in Excellus territory without giving up the BlueCross BlueShield brand. Boger also said that offering insurance in rural areas is a challenge. “The nature of insurance is that it works best organized is around large numbers,” she added.
What about those rural areas I randomly sampled on the broker website? My answer came from Peter Newell, director of the United Hospital Fund’s Health Insurance Project. It’s simple: I didn’t compare the coverage. He talked of plans that have limited benefits, ratings for gender and age that push costs much higher than advertised, and exclusions for people with preexisting conditions. Broker websites, for all their ease of use, don’t instantly compare apples to apples. “If you compare my neighborhood to someone else’s neighborhood, you’ve got to think about those things,” said Newell.
Newell told me the federal health care reform should help me eventually — particularly with the establishment of health insurance exchanges that should yield more choices.
But for now, time has run out. I have signed up for the high deductible option in Healthy NY, with a drug benefit, for $296.48 a month. The deductible is $1,200 a year. I’m approaching this choice as a stop-gap measure, although, as I told Oechsner, I now have a strong incentive for limiting my income.
His response: “There’s no way to sugar coat it: You’re right. If you make too much money, individual health insurance in New York gets very expensive.”
I also have one foot out the door as I weigh my professional prospects. If I move, especially if I’m making a living as a freelancer, my first criterion in choosing a location will be something I’ve never before considered: the availability of good health insurance.
– Provided by Kaiser Health News.
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Morning markets: grain prices jump as prayers go unanswered
Grain prices jump again as US farmers’ hopes of better weather look like being dashed. Russian growers are well behind in spring sowings too
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Halliburton shareholders seek class action lawsuit for stock price losses
Washington, DC, United States (AHN) – The Supreme Court is set to hear arguments Monday in a case that could make it easier for corporations to get rid of lawsuits by shareholders angered when their stocks lose money.
The business community is intensely interested in the outcome, as evidenced by a large number of amicus, or friend-of-the-court, briefs filed in the case of Erica P. John Fund Inc. v. Halliburton Co.
It involves a lawsuit by shareholders of construction giant Halliburton. They accuse the company of securities fraud by misrepresenting its assets and liabilities in financial statements.
When the truth was disclosed later, Halliburton’s stock value dropped, making shareholders lose investment value.
Afterward, the shareholders got together to ask a federal court in the Northern District of Texas for class action status to sue Halliburton. Class action refers to a single lawsuit that represents the interests of many people.
They say Halliburton violated the Securities Exchange Act of 1934 and Securities Exchange Commission Rule 10-b5.
The shareholders reasoned it would be easier for them to prove they suffered damages in a joint lawsuit than as individuals.
The proof of damages has become the key issue in the lawsuit before the Supreme Court.
The Court must decide whether shareholders must prove misguided actions of the corporate directors caused their losses before they can sue in a class action.
Under current law, a jury decides at trial whether corporate bungling made shareholders lose money.
If the Supreme Court rules damages must be proved before shareholders get authorization for a class action, the number of lawsuits proceeding to trial is likely to plummet, according to securities lawyers.
Legal experts say fewer shareholders would try to sue if they know their chances of reaching trial are small.
Halliburton comes to the Supreme Court with a history of recent controversy.
Oil giant BP accuses Halliburton of shoddy work in construction of the Deepwater Horizon oil rig that exploded in the Gulf of Mexico last year, leaking millions of barrels of oil into the water.
Former Vice President Dick Cheney was the company’s president until 2000.
Suspicions followed him into the White House about whether he used his political influence to improperly steer defense contracts to the company. Halliburton has played a big support role for troops in Iraq and Afghanistan.
Shareholders are alleging similar behind-the-scenes moves in the financial statements that led to their lawsuit.
They say the company’s directors downplayed their liability for asbestos claims. They also say the directors misrepresented Halliburton’s likelihood of collecting revenue from construction contracts and exaggerated the benefits from a merger with Dresser Industries.
Later audits revealed what the shareholders say were misrepresentations. Wall Street responded immediately with a sharp drop in the company’s stock value.
Halliburton argues in its Supreme Court briefs there is no benefit to leaving decisions on evidence for a class action lawsuit to a jury.
Instead, a judge should resolve any class action authorization issues before trial, thereby eliminating costly, drawn-out and often frivolous lawsuits, Halliburton says.
The company’s brief also argued shareholders should not be granted a class action lawsuit because the evidence was too weak they lost money from the company’s incorrect financial statements, thereby “sever[ing] the link between Halliburton’s alleged misrepresentations and that market price.”
So far, Halliburton has won at the lower court level.
The Fifth Circuit U.S. Court of Appeals ruled that before the shareholders can sue for securities fraud, they must prove a stock price decline “resulted directly because of the correction to a prior misleading statement.”
The Erica P. John Fund has not proved Halliburton’s “misleading” statements made shareholders lose money, the court said.
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Hands trims fundraising hopes after EMI saga
Guy Hands, the private equity investor, plays down Terra Firma’s expectations after losing £1.75bn on its doomed bet on the UK music company
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