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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.
Alcoa Narrows Loss, Misses Estimates; Financial Services Fee Part of Obama's Budget Plan; China's Exports Grow For 1st Time in 13 Months; Google Slammed With Complaints on Nexus One Phone; Femsa Sells Beer Franchise To Heineken; IRS Set to Audit Harvard's Investments
- Alcoa Inc. (NYSE: AA) yesterday (Monday) reported a fourth-quarter net loss of $277 million, or 28 cents a share. In the year-earlier quarter, Alcoa lost $1.2 billion, or $1.49 a share, when aluminum prices and demand collapsed. Sales fell 4% to $5.4 billion. Analysts had forecast a profit of five cents a share on sales of $4.9 billion, according to FactSet Research. Sales have now ticked higher for three straight quarters. Alcoa shares closed up 2.5% at $17.45.
- A fee on financial services companies is reportedly part of President Barack Obama's budget plan as a way to cut the federal deficit, an administration official said. Obama is considering the fee for inclusion in the budget he's set to release next month, Bloomberg News reported. The President vowed to halve the deficit, which was $1.4 trillion last year after a huge boost in stimulus spending, the costs of wars in Iraq and Afghanistan and financial bailouts. A White House official declined to give specifics about the structure of the possible fee. The fee wouldn't amount to a transaction tax or a bonus levy, according to anonymous sources.
- China's export volume reversed course, making gains in December after 13 months of declines in another sign of improvement in global trade, The Wall Street Journal reported. The resumption of growth came a year after Chinese leaders initiated a $585 billion (2 trillion yuan) stimulus program to counter the worldwide decline in demand for its exports. December's trade data showed that exports appeared to have turned the corner, increasing 18% from a year earlier. Imports accelerated even faster, by 56%, reflecting China's stimulus-fueled appetite for natural resources. Crude-oil imports set a monthly record, and iron ore imports were the second-highest ever. The trend also showed in the annual trade surplus, which shrank for the first time in six years. For all of 2009, exports fell 16% to $1.202 trillion and imports slid 11.2% to $1.006 trillion, data issued Sunday by the General Administration of Customs showed. It was China's first annual export decline since 1983.
- After the celebrated launch of Google Inc.'s (Nasdaq: GOOG) Nexus One phone last week, the company is being deluged with complaints, according to reports by The Wall Street Journal. When askedspecifically about complaints from people seeking support for the Nexus One, Google VP of engineering Andy Rubin conceded that there is no phone support and that there is sometimes a 3-day delay in response time. "We have to get better at customer service," he said. Google's Nexus One support site shows an online troubleshooting guide and options to e-mail Google, although it cautions that "in most cases you won't receive a personal response." The site also tells people to contact HTC Corp., which partnered with Google to build the phone, or T-Mobile USA Inc., the only U.S. carrier that offers a discount on the phone with a wireless plan. On the Google mobile help forum, one of the biggest user complaints appears to be spotty 3G coverage.
- Fomento Economico Mexicano SAB (ADR NYSE: FMX) agreed to sell its beer division, the second-largest beer brewery in Mexico behind Corona-maker Grupo Modelo SAB (NYSE: TAP), to Heineken Group NV (ADR OTC: HINKY) in an all-stock transaction valued at $7.7 billion (5.3 billion euros). Femsa, Latin America's largest soft-drink company, will receive a 20% stake in Heineken Group and can't sell any of the shares for three years. But Femsa's stock plunged the most in almost a decade after investors expressed disappointment with the sale price of its beer unit. "Investors were expecting that the value of the deal would be between $7 billion to $9 billion," said Gerardo Roman, the head of trading at Mexico City-based Actinver SA. "The transaction's value was at the lower range of expectations." Femsa analyzed at least five other deals and the best was to exchange the beer business for the 20% Heineken holding, Chief Executive Officer Jose Antonio Fernandez told Bloomberg in an interview.
- Harvard University will be subject to an audit by the Internal Revenue Service this year as part of a review of the tax-exempt status of some nonprofit organizations, the school said in bond offering documents examined by Bloomberg. The IRS is probing whether 40 colleges and universities tax-exempt status should apply to income from activities not related to their educational mission. Harvard "has no reason to believe that the examination will have an adverse effect on the tax-exempt status of the university or any other aspect of the university's operations," the Cambridge, Massachusetts-based university said in documents detailing plans to sell $400 million of tax-exempt securities this week. The audit "is just now beginning," and the "examinations typically extend over more than a year and involve a team of agents reviewing a broad array of activities," the documents said.