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.
U.S. Markets Gain Most in Three Months on GDP Report; Weekly Jobless Claims Fall, But Less Than Expected; Obama Administration Promotes Housing Tax Credit Extension; Exxon Profit Drops 68%; Motorola Returns to Profitability; Price Cuts Help P&G’s Third Quarter; Sprint Posts Wider Loss, But Slows Subscriber Exodus; Slowing Wii Sales Hurt Nintendo’s Profit
The number of new jobless insurance claims fell less than expected last week, dropping by 1,000 to a seasonally adjusted rate of 530,000 for the week ended Oct. 24, the Labor Department said. Analysts polled by Thomson Reuters Corp. (NYSE: TRI) were expecting a drop of 10,000 to 521,000. The four-week moving average dropped for the eighth consecutive week to 526,250, indicating that companies are laying off fewer workers. The drop suggests "people are returning to work rather than shifting" from regular state benefits to emergency benefits, Nomura Securities economist Zach Pandl wrote in a note to clients.
The Obama administration endorsed legislators’ plans to extend the $8,000 tax credit for first-time homebuyers. The credit has “brought new families into the housing market and contributed to three consecutive months of rising home prices,” U.S. Treasury Secretary Timothy Geithner said. Both Democrats and Republicans in Congress generally agree the credit should be extended, but differ on what form an extension should take.
The decline from last year’s record-high energy prices lead to Exxon Mobil Corp.’s (NYSE: XOM) profit falling 68% to $4.73 billion, or 98 cents per share in the third quarter. The results were Exxon’s best of the year, but still less than one-third of what it reported in the same period last year, after oil prices peaked at $147 per barrel. The company expects its production levels to be in line with 2008’s, even after a decline in global demand for oil.
Motorola Inc.’s (NYSE: MOT) return to profitability came sooner than expected, as the communications bellwether earned $12 million, or 1 cent per share in the third quarter, compared to a net loss of $397 million, or 18 cents per share in the same period a year ago. Thomson Reuters Corp. (NYSE: TRI) analysts were expecting earnings to be flat. Motorola gave an upbeat outlook, saying it will earn between seven cents and nine cents per share for the current quarter in which it is launching two smartphones that use Google Inc.’s (Nasdaq: GOOG) Android operating system. Shares of Motorola gained 9.80% to close at $8.74 in trading yesterday (Thursday).
Consumers are responding to price cuts by The Procter & Gamble Co. (NYSE: PG), which reported a profit of $3.35 billion, or $1.06 per share in the third quarter, compared to $3.31 billion, or $1.03 per share in the same quarter last year. This was the first quarter under new Chief Executive Officer Bob McDonald, who took aggressive steps to win back market share from lower-priced competitors and store brands, cutting prices across 10% of its broad catalog and increasing advertising focused on offering value. “What we're about is growth, and we're focused on growth,” McDonald told investors on a conference call. Shares of P&G gained 4.04% in trading yesterday to close at $59.54.
Sprint Nextel Corp. (NYSE: S) chipped away at its hemorrhaging subscriber losses, but still posted a wider third quarter loss of $478 million, or 17 cents per share, compared to a loss of $326 million, or 11 cents per share in the same period last year. The company said it lost 801,000 wireless subscribers, down from 1.25 million and 991,000 subscribers in the first and second quarters respectively. “They still have an extremely long way to turn around the business and generate positive post-paid subscriber growth,” Soleil/Nelson Alpha Researchanalyst Michael Nelson told Reuters. “Clearly, a loss of 800,000 a quarter isn't going to cut it, but it does show some sign of improvement and says they are at least heading in the right direction.” AT&T Inc. (NYSE: T) added 2 million subscribers and Verizon Communications Inc. (NYSE: VZ) gained 1.2 million subscribers in the last quarter.
Nintendo Co. Ltd. (OTC ADR: NTDOY) saw its profit plunge 52% after a saturated market caused sales of its popular Wii console to lose momentum. The Japanese video game giant saw its net income fall to 69.49 billion yen ($772 million), trailing its own outlook in May for a profit of 100 billion yen. Its fiscal first-half sales fell 34.5% to 548.01 billion yen. KBC Securities Japan director Hiroshi Kamide said Nintendo would have to introduce a new console, perhaps handheld, to spur its next stage of growth. “It’s just not realistic for them to repeat what they did last year,” Kamide told The Associated Press.