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.
Fed: Recession Slowing; General Dynamics Earnings Take Off; Sprint Revenue Tumbles 10%; American Express Sheds TARP Albatross; Congressman: Manufacturers Should Keep Finance Divisions; CIT Investments Drag Aflac Profit Down; Cost-Cutting and Tight Credit Boost Visa Bottom Line; Oil Futures Down on Higher Inventory
In another sign that the recession may be getting closer to the end, most of the Federal Reserve's 12 regional banks saw a slowdown of the economic decline in their regions throughout June and July, according to its Beige Book business survey. "Economic activity continued to be weak," the Fed said yesterday (Wednesday). However, San Francisco, the district with the biggest economy, and three others "pointed to signs of stabilization," while Chicago and St. Louis showed a "moderating" pace of decline. "We are very close to the bottom," said Lyle Gramley, senior economic adviser with Soleil Securities Group Inc. and a former central bank governor told Bloomberg Newsin an interview. "The Beige Book is a little less upbeat than the numbers that have been coming in."
General Dynamics Corp. (NYSE: GD) yesterday (Wednesday) reported higher-than-expected earnings in the second quarter and raised its full-year forecast. General Dynamics' second-quarter revenue rose 11% to $8.10 billion, while net earnings fell 3.6% to $618 million, or $1.60 a share. The company said it expects full-year profit from continuing operations of $6.05 to $6.15 a share, compared with an April forecast of $6.00 to $6.10 a share.
Sprint Nextel Corp. (NYSE: S) said yesterday (Wednesday) that second-quarter revenue fell more than 10% to $8.1 billion from $9.05 billion a year earlier, as it shed 991,000 post-paid monthly bill-paying customers. The No. 3 U.S. mobile service lost a net $384 million, or 13 cents per share, steeper than the $344 million loss it posted in the second quarter of last year.
American Express Co. (NYSE: AXP) said yesterday (Wednesday) that it repurchased outstanding warrants issued to the government as part of the Troubled Asset Relief Program (TARP) for $340 million, The Associated Press reported. The warrants, which were issued last fall when credit markets seized up, could have been converted to common stock. American Express received $3.39 billion in funding from the government to help bolster its balance sheet last year. American Express paid $74.4 million in dividends to the government.
Investments in troubled commercial lender CIT Group Inc. (NYSE: CIT) resulted in a 35% profit drop for supplemental health insurance provider Aflac Inc. (NYSE: AFL). The company reported a net income of $314 million, or 67 cents a share for the quarter ended June 30, compared to $483 million, or $1 a share in the same period last year. Aflac said it suffered $249 million in investment losses, roughly 40% tied to CIT.
Visa Inc. (NYSE: V) saw its net income rise 73% after it saw credit-strapped consumers use their debit cards more and it cut expenses. The world's largest credit card network reported a profit of $729 million, or 97 cents a share for the quarter ended June 30. That compares to a net income of $422 million, or 51 cents a share for the same quarter last year.
Crude oil futures tumbled almost 6% yesterday (Wednesday) after the U.S. government reported a much larger-than-expected build in U.S. inventories. Delivery for September dropped $3.88 to end at $63.35 a barrel on the New York Mercantile Exchange. "The market was overdue for a pullback. The fundamentals don't support prices at these levels," Michael Fitzpatrick, an analyst at MF Global told MarketWatch.com.