Productivity Ramps Up; Adidas Sales Jump, But Reebok Lags; ADP Says Payrolls Slashed; AT&T Pumps $1 Billion Into Worldwide Projects; Costco and BJ's Wholesale Post Solid Earnings; Amazon Pours Itself Into Wine Business; Ambac Continues to Struggle; Gold Rallies to Record High
The Labor Department announced yesterday (Wednesday) that productivity increased 1.9% in the fourth quarter of 2007 after an increase of 6.3% in the third quarter. A weakening U.S. economy and rising commodity costs have forced companies to seek higher efficiencies, boosting productivity. "Productivity growth is still OK,'' Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts, told Bloomberg News. "Companies are facing all sorts of problems with commodity costs, but they seem to be doing pretty well in holding down labor costs."
German sports apparel and equipment maker Adidas AG (PINK: ADDYY) reported strong fourth quarter earnings of $32 million (21 million euros), a 63% increase on the strength of an 8% increase in sales to 2.42 billion euros. "Our focus on performance and executional excellence was a big contributor to our success," said Herbert Hainer, chairman and chief executive, MarketWatch reported. But shares slumped on disappointing sales for its subsidiary unit, Reebok, which it acquired in 2006.
ADP Employer Services (ADP) announced yesterday (Wednesday) that payrolls decreased by 23,000 jobs in February after an 119,000 gain in January. ''The labor market is clearly deteriorating and a sustained run of declines is just a matter of time,'' Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, told Bloomberg News.
AT&T Inc. (T) will invest $1 billion to expand network services and build undersea cables around the world, Reuters reported. The majority of the investment will be outside the United States, with major projects to take place in Japan and India. The phone company's Asia-Pacific operations posted an annual growth of 22% last year.
Costco Wholesale Corp. (COST) said that profit for its second-fiscal quarter ended Dec. 31 rose 31%. Net income rose to $327.9 million, or 74 cents a share. Revenue moved up 12% to 16.6 billion, Bloomberg reported. Meanwhile, rival BJ's Wholesale Club Inc. (BJ) said fourth-quarter net income spiked to $50.2 million, or 80 cents a share, a more than fourfold increase.
Online retailing giant Amazon.com Inc. (AMZN) will start selling wine in the U.S., entering a risky business plagued with regulatory complexities, the Financial Times reported Tuesday. Amazon said it is looking to recruit a senior wine buyer who will be responsible for "the acquisition of a massive new product selection" for its site, according to the FT report.
Bond insurer Ambac Financial Group Inc. (ABK) said yesterday (Wednesday) that it plans to sell at least $1.5 billion of stock and convertible securities, in an effort to preserve its top-tier credit ratings. New capital would give the second-largest U.S. bond insurer more funds to cover the billions of dollars of claims it could face after insuring subprime mortgage bonds and other risky debt, Reuters reported.
Gold prices surged to a record yesterday (Wednesday), closing to within $5 of the $1,000 milestone, as the continued devaluation of the dollar brought buyers back into the market after Tuesday's sell-off, CNN reported.