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Global Investing Roundup
Bank Profits Fall but Shares Still Rise; Rosneft Drains Yukos; Emmar on the Move; Slim ASML Profit
- Earnings reports from JPMorgan Chase & Co. (JPM) Wells Fargo & Co. (WFC) weren’t as bad as investors’ estimated, Bloomberg reported, causing both companies’ shares to post gains yesterday (Wednesday). JPMorgan’s profits fell 34% to $2.97 billion [or 86 cents per share], the third-largest U.S. bank reported, but in a battered financial market that has seen far worse, this was still better news than expected and shares closed up 5.8% for the day. Wells Fargo’s net income dropped 38% to $2.18 billion [or 64 cents per share], the fifth-largest U.S. bank reported, but again, this better than expected report boosted shares 3.3% fro the day. More U.S. financial firms – Merrill Lynch & Co. Inc. (MER), PNC Financial Services (PNC) – will report earnings today (Thursday). Bank of America Corp. (BAC) is scheduled to report next week.
- The largest oil producer in Russia, state-controlled Rosneft NK OAO, reported third quarter earnings yesterday (Wednesday). Profits leapt 80%, reaching $1.89 billion compared to $1.05 billion in 2006, according to Reuters. Revenue was up 45% to $13.74 billion, from $8.95 billion a year ago. Company officials attributed the growth to increased organic production, larger refining margins and the addition of several large oil fields purchased from bankrupt former competitor, OAO Yukos. Vice President of Finance and Investment Peter O’Brien said the company was working on optimizing the number of employees and drilling operations, but it would take some time before they were in line with the company’s current operations. He also addressed plans to refinance most of the debt accrued in buying the Yukos assets. The company intends to pay the debt down by dipping into its extensive cash flow and refinancing the remainder.
- Emmar Investments & Real Estate Development, the largest property developer in the Middle East, reported yesterday (Wednesday) that earnings were better than expected, with annual profits of $1.78 billion on revenue of $3.69 billion. The company, which is 30% owned by the ruling family of Dubai, has benefited from a wide-scale construction boom in the region. Rapid infrastructure development has been fueled by rising oil prices and increased government interest. Emmar has a global property portfolio of more than $100 billion with properties and a home-building operation in the United Sates. It bought U.S. homebuilder John Laing Homes for $1.05 billion in 2006, and poor results from that operation were offset by gains in India and Morocco. Currently, 86% of revenues come from property sales in Dubai, but that number is expected to drop to 65% by 2010 as the company continues to expand international operations.
- Semiconductor equipment maker ASML Holding NV (ASML) reported a small increase in profits for the fourth quarter of 2007 in Amsterdam yesterday (Wednesday) the . The company reported that total profits were up a 0.03% to $303 million, as revenue for the period declined to $1.43 billion. ASML is the largest manufacturer of lithography systems that map out electronic circuits on silicon wafers. It’s also a major supplier to Intel Corporation (INTC) Samsung Company Ltd. (PINK: SSNNF) and Taiwan Semiconductor Corporation (TSM). Chief Executive Eric Maurice declined to give a forecast for 2008, saying that everyone is trying to assess the impact of a recession and he wanted to wait to see how economic conditions factored into his customers ordering habits. Earlier in the day, Intel, one of ASML’s largest customers reported disappointing results amidst a global slow down for semiconductor companies.