EU Brings Fat Up-Front; Citigroup Swaps for Nikko Cordial; Merrill Bails on Future CDOs; Foreign Sales Help Merck; UBS Writes Down $18 Billion in 2007; Honda Profit Rolls Over Expectations; U.S. Employers Add 130,000 Jobs; Google Taps South Korea Market Share
- In the face of fierce industry pressure from companies such as Nestle SA (PINK:NSRGF), Kraft Foods Inc. (KFT) and The Coca-Cola Co. (KO), European Union Health Commissioner Markos Kyprianou has persisted with plans that would call for food and drink labels to provide energy, sugar, salt, fat and saturates information on the front of the packages, Reuters reported. "Today's proposal aims to ensure that food labels carry the essential information in a clear and legible way, so that EU citizens are empowered to make balanced dietary choices," Kyprianou told a news conference. The proposed changes come in response to recent statistics from the World Health Organization, which show obesity has increased more than three-fold in most EU countries since the 1980s with the number of obese or overweight children rising over 50% in the past two years.
- Citigroup Inc. (C) completed its purchase of Japan's third-largest brokerage through a share swap, the companies announced yesterday (Wednesday) in a joint statement, Forbes reported. Citi swapped 175.7 million shares of its stock for 290.1 million shares of Nikko Cordial Corp., a ratio of 0.602 Citigroup stock for each Nikko Cordial share. The swap completed an acquisition that began in April 2007. The purchase gives Citi access to Nikko's 100 branches throughout Japan and will strengthen Citi's presence in the world's second-largest economy.
- Merrill Lynch & Co. (MER) Chief Executive Officer John Thain, while speaking at a New York investor conference, said his firm, the world's largest brokerage, would no longer "be in the CDO and structured-credit types of businesses," Bloomberg News reported. The New York-based bank reported a record high loss last year due to the write down of more than $24 billion in subprime-related assets. Merrill was one of the largest underwriters of CDOs and, therefore, one of the hardest hit when investor appetite for the investments waned as the subprime crisis unfolded.
- Pharmaceutical powerhouse, Merck & Co. Inc. (MRK) posted a fourth quarter loss due to special charges related to legal settlements. Merck's sales rose 3 percent to $6.24 billion, but failed to meet expectations. Sales would have fallen 1 percent if not for a favorable exchange rate boost from overseas sales. Despite the lackluster results, Merck did not cut their forecast for 2008. "It looks to me that the [earnings] beat is more a cost-containment issue than a top-line beat," Damien Conover, an analyst at Morningstar, told Reuters.
- UBS AG (UBS) reported yesterday (Wednesday) that total write-downs for 2007 would exceed $18 billion. The company said its mortgage-related losses were $4 billion more than expected in the last three months of the year. The company said it would write down $14 billion in the fourth quarter, with $12 billion related to subprime losses and $2 billion related to other residential mortgage positions.
- Honda Motor Co. (HMC) posted a stronger-than-expected 38% rise in quarterly profit yesterday (Wednesday) Reuters reported. Japan's second-biggest automaker raised its profit forecasts by 5%-8% above consensus market projections, despite lowering its revenue outlook. Citing the yen's fall against currencies other than the U.S. dollar, bigger cost cuts and smaller R&D outlays than first thought, it now expects operating profit to climb to $8.6 billion (920 billion yen) for the fiscal year ending March 31, up from an earlier estimate of 8.2 billion (880 billion).
- ADP Employer Services (ADP) reported that U.S. private employers added 130,000 jobs in January, about three times the number most analysts predicted, Reuters reported. ADP Employer Services, also revised the number of jobs created in December down from the 40,000 originally reported, to 37,000. The ADP numbers could inspire analysts to upwardly revise their expectations for the U.S. government's report on January non-farm payrolls, set for release tomorrow (Friday).
- Google Inc. (GOOG) said yesterday (Wednesday) that it has overhauled its Korean-language search engine to broaden its appeal in South Korea, BusinessWeek reported. Korea is home to one of the world's fastest growing economies and one of the few countries in which Google lacks dominance. "The interface change will distinguish us from other search engines in Korea, where growth potential is huge given its broad base of Internet users," Lee Won-jin, managing director of Google Korea said at a news conference. "We're not setting any domestic market share target, but we expect the new services will help."