With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Exxon Profit Spills 58%; Motorola Posts Loss, Bleeding Cash; FTSE 100 Moves 8.1% in April; South Africa Cuts Interest Rate to 8.5%; Flu Scare Drops Demand for Continental Flights to Mexico; P&G Posts First Quarterly Loss in 7 years; “Cram-Down” Law Won’t Pass Senate; S&P Slashes Amex Credit Ratings
- The world’s largest company, Exxon Mobil Corp. (XOM), yesterday (Thursday) posted its lowest profit in more than five years, Bloomberg reported. Net income for the first quarter fell 58% to $4.55 billion, or 92 cents a share, from $10.9 billion, or $2.02 a share, a year ago – largely a result of sinking oil and gasoline prices.
- Cost-cutting measures helped cell phone maker Motorola Inc. (MOT) post a smaller-than-expected loss for the first quarter, despite a sharp drop in cell phone sales. However, the company also said that its cash position fell about $1 billion in the first quarter, Reuters reported.
- The United Kingdom’s benchmark index, the FTSE 100, gained 8.1% in April, marking its biggest monthly gain since April 2003, Reuters reported. For this year, the index is down 4.3%, and had fallen more than 31% last year.
- The central bank of South Africa, the continent’s largest economy, cut its benchmark interest rate by 1 percentage point to 8.5%, the lowest since October 2006, Bloomberg reported. The rate cut marks the fourth since December.
- Continental Airlines Inc. (CAL), the airline carrier with the most flights to Mexico, is suffering a “significant” drop in demand to the country’s beach destinations because of the swine flu virus. Continental is the first U.S. carrier to indicate it might cut flight schedules because of fading Mexico bookings. Canada’s two largest airlines and its biggest tour operator have suspended flights to Mexico, as have Argentina and Cuba. “We are closely monitoring demand in the Mexico market and will adjust flight schedules as necessary,” Julie King, a spokeswoman for the Houston-based airline told Bloomberg.
- Consumer products bellwether Procter & Gamble Co (PG) posted its first quarterly profit decline in more than seven years and slashed its fiscal 2009 outlook on Thursday, Reuters reported. At a time when investors are looking for clarity amid the recession, the company did not offer a forecast for fiscal 2010, which begins in July. P&G recently hiked prices and cut costs to help offset weaker demand and the impact of the stronger dollar, which reduces the value of international sales.
- “Cram-down” legislation to let bankruptcy judges cut mortgage terms to help borrowers appeared headed for defeat in the Senate as a half dozen Democrats were opposed or undecided and major U.S. banks broke off talks on a compromise. The sponsor of the legislation, Senator Richard Durbin (D-ILL), told Bloomberg “months and months of heroic efforts” with banks and his colleagues had failed to win enough support for the measure to pass. The House passed its version 234-191 on March 5.
- Standard & Poor's slashed its credit ratings on American Express Co (AXP) debt and preferred stock yesterday (Thursday), , Reuters reported. S&P lowered AmEx's counterparty credit rating by two notches to BBB-plus, or three notches above speculative or "junk" status. The agency cut the company's preferred stock rating by three notches to BB, or two notches into junk. The outlook is negative, meaning it could lower the ratings again in the next 12 to 18 months, the agency said in a report.