Airlines Lose to High Fuel; Valero Cuts Back as California Goes Green; Sales Slump for Second Largest Railroad; Excel Snaps Up Quintana; Foreclosures Up 75%; Toshiba Profits Despite Flash Drive Drop; NEC Corp. Takes Quarterly Loss; Countrywide's Quicksand Deepens
Northwest Airlines Corp. (NWA), JetBlue Airways Corp. (JBLU) and AirTran Holdings Inc. (AAI) released fourth-quarter earnings yesterday (Tuesday). All three posted losses, as increased fare prices could not offset rising fuel costs. Jet-fuel prices were 43 percent higher, on average, than for the same period in the year prior. "[Fuel is] the principal culprit," Dave Swierenga, president of Texas-based consulting firm AeroEcon told Bloomberg News. "The softening economy is clearly also having a negative effect."
Valero Energy Corp. (VLO) reduced operations at its San Francisco Bay-area refinery in Benicia, California, Reuters reported. Throughput was cut at the 144,000-barrel-per-day (bpd) refinery, due to declining refining margins. "We have actually seen a decline in gasoline demand in California," Valero Chairman and Chief Executive Bill Klesse said. "As we await spring and summer demands we have reduced operating rates at our Benicia refinery to contain inventories," the company said in a statement. The company will also cut throughput at its 295,000 bpd Port Arthur, Texas, refinery for a coker unit overhaul.
The United State's second-largest railroad, Burlington Northern Santa Fe Corp. (BNI) reported yesterday (Tuesday) that high fuel costs and soft sales in its industrial and consumer products divisions caused fourth-quarter profits to shrink. Fourth-quarter net income fell to $517 million [$1.46 per share], from $519 million [$1.42 per share], for the same quarter a year prior. The higher per-share results are the result of fewer shares outstanding in the most recent quarter. Revenue rose 9.4% to $4.24 billion from $3.88 billion, fueled by strong growth in the agricultural-products division, where sales jumped 24%.
Excel Maritime Carriers Ltd. (EXM) has agreed to purchase rival Quintana Maritime Ltd. (QMAR) for $2.45 billion, including debt. After the acquisition, Excel will be the largest U.S.-listed dry-bulk shipper. "From a strategic standpoint, we like it," Doug Mavrinac, a Houston-based Jeffries & Co. analyst who has a "buy" rating on both companies, told Bloomberg News. "It increases the size of Excel's fleet significantly, lowers its average age, and it increases time-charter coverage, and therefore their cash flow visibility."
Foreclosures soared in 2007, with the loss of 405,000 homes, according to a report released yesterday (Tuesday). That's up 51% from the 268,532 homes that were repossessed in 2006, according to RealtyTrac. Also according to the agency, total foreclosure filings soared 97% in December alone compared with December of 2006. For the year, total filings - which include default notices, auction sale notices and bank repossessions - grew 75%.
Japanese electronics group Toshiba Corp. (TOSBF) posted a worse-than-expected 25% drop in quarterly operating profit in the third quarter. The company said that the falling price of flash drives and memory chips [used in many small electronics] ate into margins. Prices of NAND flash memory chips, a vital part of electronic devices such as Apple's iPod portable music player, "have fallen by more then we predicted," said executive vice president Tomio Muraoka. According to MarketWatch, the electronics and nuclear power giant still posted a rise in net profit for the period, helped by the sale of fixed assets.
NEC Corp. (NIPNY) posted a net loss of $48.7 million (5.2 billion yen) in the latest quarter as weakness in the market for semiconductors continued to weigh on its chip-making unit, the company said yesterday (Tuesday). Quarterly sales fell 4% to $9.87 billion. The company's chip unit, whose clients include Nintendo Co. and Toyota Motor Corp., said that it will reach its goal for operating profit this year through March as it steps up efforts to cut costs at its production lines.
Countrywide Financial Corp. (CFC) has reported a loss of $422 million in the fourth quarter and revealed that one-third of its investment portfolio's sub-prime mortgage loans are delinquent. Borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, Reuters reported. This came as a surprise to at least one person, Chief Operating Officer Steve Sambol, who said in October, "We view the third quarter of 2007 as an earnings trough, and anticipate that the company will be profitable in the fourth quarter and in 2008." Countrywide's fourth-quarter quarter loss compares to a $621 million profit in the same quarter a year ago.