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.
IBM Announces Share Buyback, Ups Dividend; Adobe Freezes Pay; Private Jet Industry Hits the Skids; Big Pharma's Big Showing; CALPERS Votes to Oust BofA's Lewis; Chrysler Strikes Debt Deal; S&P Downgrades SunTrust
Adobe Inc. (ADBE) will freeze pay this year as the recession hurts sales, Chief Financial Officer Mark Garrett told Bloomberg. The world's biggest maker of graphic-design software has also cut about 8% of its workforce, curbed travel and reduced its use of contractors, Garrett said. Overseas sales, which account for almost 60% of revenue may still be dropping while U.S. demand is now stabilizing. "We have set ourselves up for what we think we need to do -- from a costs perspective -- for the rest of this year," he said.
The $22 billion business-jet industry is reeling from the global economic contraction and deliveries may fall 50% this year and next, according to UBS AG (UBS). With businesses shunning luxury planes costing up to $55 million apiece, manufacturers including Bombardier Inc. (TSE:BBD.B), General Dynamics Corp. (GD) and DassaultAviation SA are slashing output and shedding 15,000 jobs, Gulfstream maker General Dynamics will report the slowest profit growth in more than five years tomorrow and Cessna owner Textron Inc. (TXT) may say earnings fell 90%, according to analyst estimates compiled by Bloomberg.
Pfizer Inc. (PFE) and Bristol-Myers Squibb (BMY) reported earnings that beat expectations on Tuesday, as the U.S. drugmakers relied on deep cost cuts to make up for lagging sales, Reutersreported. "Pfizer and Bristol-Myers, in the face of a very challenging environment, continue to beat expectations and to maintain growing cash flows," said Deutsche Bank AG (DB) analyst Barbara Ryan. She noted that they, like U.S. rivals that have already reported quarterly earnings, had cut costs sharply and were therefore able to beat forecasts.
The California Public Employees' Retirement System, the largest U.S. public pension fund, said yesterday (Tuesday) that it will vote against re-electing all 18 Bank of America Corp.'s (BAC) board members, including Chairman and Chief Executive Ken Lewis, at today's shareholder meeting. Lewis has been on the hot seat at BofA for going ahead with the acquisition of failed investment bank Merrill Lynch.
The top lenders to Chrysler LLC reached a tentative agreement with the U.S. government to exchange $6.9 billion in secured debt for $2 billion in cash. A debt deal is key to Chrysler's ability to strike an alliance with Italy's Fiat SpA (OTC ADR: FIATY), and to avoid being forced into bankruptcy protection after April 30. The Auburn Hills, Mich.-based Chrysler is facing a government deadline to keep $4 billion in loans and get as much as $6 billion in additional federal aid. Even with this new deal, however, a Chrysler bankruptcy remains a possibility, since all 46 of the carmaker's lenders must ratify the terms of the deal - a development that's not likely, a source familiar with the private negotiations told Bloomberg News yesterday (Tuesday). A quick - possibly even a "pre-packaged" - type of bankruptcy might be required to induce any holdouts to join the agreement.
Credit ratings agency Standard & Poor's yesterday (Tuesday) lowered ratings on SunTrust Banks Inc. (STI) to "BBB+/A-2" from "A/A-1," citing weaker asset quality, The Associated Press reported. "We believe tangible capital is weak given our projection of continued high credit losses that the company will need to absorb with equity and reserves over the next two years, even though tangible capital appears adequate today," Standard & Poor's credit analyst Charles D. Rauch said in a statement.