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Showing posts with label Goldman Sachs. Show all posts
Showing posts with label Goldman Sachs. Show all posts
Wednesday, December 12, 2012
Investopedia: Is Alcatel-Lucent Playing Its Last Cards?
To say that Alcatel-Lucent (NYSE:ALU)
is in serious trouble is to say that water is wet, as these shares have
seen a bumpy ride down from the tech bubble peaks in 2000. Despite a
lucrative patent estate and solid technology, the company has struggled to translate its intellectual property into successful products and has largely failed to compete effectively with other telco equipment rivals like Cisco (Nasdaq:CSCO), Juniper (Nasdaq:JNPR), Huawei and ZTE (OTC:ZTCOY).
Now with rumors flying that the company is considering using its patent
portfolio to secure financing, it's worth asking if Alcatel-Lucent is
down to its final cards to play in its ongoing effort to turn around.
Please read more here:
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Tuesday, November 27, 2012
Investopedia: Recent Scandals Show Wall Street Still Needs A Lot Of Watching
Analysts
and fund managers come and go, banks and asset
management firms rise and fall, and investing trends appear and
disappear with surprising regularity. And yet, for all of that
change, one thing seems to remain the same: despite pretty clear (if
not tiresomely thorough) rules and compliance procedures, people
continue to flout laws and common sense in the overall pursuit
of making a buck.
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Thursday, September 27, 2012
Investopedia: Overvaluation Could Split The Fortunes Of FactSet And Its Stock
It has been a few years now since I've had a regular Wall Street desk job, but I still miss having FactSet's (NYSE:FDS)
databases and analytic tools close-at-hand. Not only does this
financial information company offer a very sticky product, but the
company also continues to add functionality and breadth to its platform.
Unfortunately, the Street has long had a love affair with the stock as
well, and I am worried that the process of transitioning from growth
stock multiples to those of a more mature company could be a tough one
for shareholders.
Please read more here:
http://www.investopedia.com/
Please read more here:
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Thursday, January 19, 2012
Investopedia: Wells Fargo Continues To Show Its Quality
Although Wells Fargo (NYSE:WFC) certainly made its share of mistakes during the housing bubble, it looks like the company is on track to emerge from the credit crisis as one of the strongest names in banking. Strong while others are still weak, Wells Fargo could yet be on the hunt for assets and expansion opportunities that could take this bank to a new level.
A Good End to the Year
The fourth quarter of 2011 is shaping up to have been a pretty good quarter for the large banks. Wells Fargo surprised with its revenue this quarter, growing 5% from the third quarter and beat the average estimate by about half a billion dollars.
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A Good End to the Year
The fourth quarter of 2011 is shaping up to have been a pretty good quarter for the large banks. Wells Fargo surprised with its revenue this quarter, growing 5% from the third quarter and beat the average estimate by about half a billion dollars.
Click this link for more:
http://stocks.investopedia.
Tuesday, January 17, 2012
Seeking Alpha: Citi Earnings Show The Clouds And The Silver Lining
Almost like a game show, with each major bank that reports earnings, the true picture gets a little bit more clear. At this point, it's looking like the fourth quarter was a fair bit better for banks than Wall Street wanted to acknowledge. To what extent this helps Citigroup (C), though, is an open question - while there is still interesting long-range potential here, fourth quarter results highlight both how much further Citi needs to travel and how rocky that path may be.
Fourth Quarter Results - Which Numbers Matter?
When even relatively well-respect banks like JPMorgan (JPM) and M&T Bank (MTB) hand out messy earnings reports, you know it's a fairly common industry issue. Citigroup's earnings were no exception, as they contained the usual melange of charges, special items, and gains.
On the top line, though, Citi missed. Instead of the $18.5 billion that analysts expected, Citi produced about $17.2 billion. Core Citicorp revenue fell 11% (very much due to the trading and banking operations), while the Citi Holdings run-off arm saw reported revenue fall 1%.
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Citi Earnings Show The Clouds And The Silver Lining
Fourth Quarter Results - Which Numbers Matter?
When even relatively well-respect banks like JPMorgan (JPM) and M&T Bank (MTB) hand out messy earnings reports, you know it's a fairly common industry issue. Citigroup's earnings were no exception, as they contained the usual melange of charges, special items, and gains.
On the top line, though, Citi missed. Instead of the $18.5 billion that analysts expected, Citi produced about $17.2 billion. Core Citicorp revenue fell 11% (very much due to the trading and banking operations), while the Citi Holdings run-off arm saw reported revenue fall 1%.
Please click here for more:
Citi Earnings Show The Clouds And The Silver Lining
Friday, January 13, 2012
Seeking Alpha: JPMorgan Earnings Disappointing, But Not Disastrous
If JPMorgan Chase's (JPM) fourth quarter earnings are a sign of things to come for other large banks, bulls on the largest financial stocks are going to have sit tight a while longer for real signs of progress. While the core lending and credit card businesses seem to be doing alright, the lucrative investing banking business was even weaker than expected, and JPMorgan is not yet posting especially high returns on its capital.
Readers should note that this article was written before the company's conference cal,l and is based upon the company's press release and earnings supplements.
A Miss On The Top
JPMorgan reported top-line results of $22.2 billion - missing the analysts' average guess by close to $1 billion. Although investment banking performance was expected to be bad, it was even worse in this quarter as fees and trading revenue both fell significantly. Although declines were broadly expected, investors will need to see earnings reports from rivals like Goldman Sachs (GS), Citigroup (C), Bank of America (BAC), and Morgan Stanley (MS) to get a real sense of how weak the market was, and how much (if any) share JPMorgan lost.
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JPMorgan Earnings Disappointing, But Not Disastrous
Readers should note that this article was written before the company's conference cal,l and is based upon the company's press release and earnings supplements.
A Miss On The Top
JPMorgan reported top-line results of $22.2 billion - missing the analysts' average guess by close to $1 billion. Although investment banking performance was expected to be bad, it was even worse in this quarter as fees and trading revenue both fell significantly. Although declines were broadly expected, investors will need to see earnings reports from rivals like Goldman Sachs (GS), Citigroup (C), Bank of America (BAC), and Morgan Stanley (MS) to get a real sense of how weak the market was, and how much (if any) share JPMorgan lost.
Please click here for more:
JPMorgan Earnings Disappointing, But Not Disastrous
Sunday, January 1, 2012
Seeking Alpha: JPMorgan Chase Has Value But Little Momentum
There may be plenty of apparent values in the banking sector these days, but investors aren't biting. Take the case of JPMorgan Chase (NYSE: JPM) – most analysts seem happy enough to crown them as the best-run major bank in America, but that didn't keep the stock from losing about 20% of its value in 2011. At least part of the problem here is timing and the absence of any real near-term momentum. Although there are plenty of long-term factors in the bank's favor, the list of what could go wrong in the short term is a fair bit longer than the list of things that could go right.
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JPMorgan Chase Has Value But Little Momentum
Good Capital … Or Is It?
Unlike major rivals like Citigroup (NYSE: C) and Bank Of America (NYSE: BAC), JPMorgan has been lauded for how it managed its credit exposures through the crisis and recovery. In terms of metrics like Tier 1 capital, JPMorgan does look to be reasonably well off and credit losses have been improving apace.Follow this link for more:
JPMorgan Chase Has Value But Little Momentum
Monday, October 24, 2011
Investopedia: Bank Of America Is A Mess Unlike Any Other
Maybe the best thing that can be said about the U.S. banking industry is that it's in better shape than its European cousin. That's faint praise indeed, and Bank Of America (NYSE:BAC) continues to stand out as an especially challenged major U.S. bank. While there is undeniable value in this large banking franchise, it seems like every quarter pushes out the timeline for realizing that value.
Q3 Earnings are Whatever You Want Them to Be
Bank earnings are never the easiest to analyze or interpret in good times, and bad times only make it worse. Investors have to countermand all manner of special charges and benefits, and B of A had more than a dozen of them this time around. Making matters worse, no two analysts or investors are going to see exactly eye-to-eye on what constitutes the "real" earnings power.
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http://stocks.investopedia.
Q3 Earnings are Whatever You Want Them to Be
Bank earnings are never the easiest to analyze or interpret in good times, and bad times only make it worse. Investors have to countermand all manner of special charges and benefits, and B of A had more than a dozen of them this time around. Making matters worse, no two analysts or investors are going to see exactly eye-to-eye on what constitutes the "real" earnings power.
Read more here:
http://stocks.investopedia.
Tuesday, October 18, 2011
Seeking Alpha: Is A Stronger FINRA A Good Thing For Investors?
Regular investors don't always seem to know who's minding the store when it comes to supervising brokers, brokerages, and asset managers. While the Securities and Exchange Commission (SEC) gets a great deal of attention, and arguably has the most power, there are a host of other agencies and associations that play significant regulatory roles. Now one of the largest of them, FINRA, is reaching for even more power and authority. While more regulation of such an aggressive industry as financial services may seem logical to some, particularly after the abuses of recent years, FINRA's track record should give investors a moment or two of pause.
What FINRA Is
FINRA, short for Financial Industry Regulatory Authority, came into being in 2007 with the merger of the National Association of Securities Dealers (NASD) and the New York Stock Exchange's regulatory arm. Though many investors assume that FINRA is a government body, it is not – it is a private corporation that regulates financial services firms that deal with the public (in other words, brokerages and registered representatives like brokers and sell-side analysts).
To read the full column, please follow this link:
Is A Stronger FINRA A Good Thing For Investors?
What FINRA Is
FINRA, short for Financial Industry Regulatory Authority, came into being in 2007 with the merger of the National Association of Securities Dealers (NASD) and the New York Stock Exchange's regulatory arm. Though many investors assume that FINRA is a government body, it is not – it is a private corporation that regulates financial services firms that deal with the public (in other words, brokerages and registered representatives like brokers and sell-side analysts).
To read the full column, please follow this link:
Is A Stronger FINRA A Good Thing For Investors?
Thursday, September 29, 2011
Investopedia: Berkshire Buys Shares And Controversy
Such is the cult of attention around Berkshire Hathaway (NYSE:BRK.A) and its CEO Warren Buffett that he probably cannot have dinner without a dozen financial columnists debating the merits of him choosing beef, pork or chicken. With Monday's announcement that the company has authorized a share buyback that could be worth close to $30 billion or more, there is rampant second-guessing about the decision and numerous attempts to divine some further meaning in the move.
The Buyback to Be
Buffett has commented in the past that a buyback would only make sense if the shares of Berkshire Hathaway were significantly undervalued and there were no better apparent uses of the company's cash. Apparently both conditions are true in the market today.
To read the full piece, please click here:
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Monday, September 26, 2011
Investopedia: Here We Go Again - Markets Continue To Move On Governments
Those who believe that the best government is unobtrusive and nearly invisible have probably ground their teeth to dust by now, but as markets open again on Monday it looks like governments on each side of the Atlantic continue to call the tune in the markets. While Europe tries every trick in the book to keep Greece afloat, politicians in the U.S. seem committed to elbowing each other aside in a rush to drill more holes in the bottom of their boat.
A Government Shutdown?
If the politicians in Washington continue to court a government shutdown and play a massive game of chicken with each other, the general public may stop caring and the markets may just decide to install a semi-permanent "knucklehead premium" on U.S. government securities. In the meantime, though, investors should expect another spate of debate, controversy and wall-to-wall talk about whether Congress can come together and agree on another short-term funding measure to keep the government working.
Read more here:
http://stocks.investopedia.
A Government Shutdown?
If the politicians in Washington continue to court a government shutdown and play a massive game of chicken with each other, the general public may stop caring and the markets may just decide to install a semi-permanent "knucklehead premium" on U.S. government securities. In the meantime, though, investors should expect another spate of debate, controversy and wall-to-wall talk about whether Congress can come together and agree on another short-term funding measure to keep the government working.
Read more here:
http://stocks.investopedia.
Wednesday, July 20, 2011
Investopedia: The Grind Goes On For Bank Of America
Bank of America (NYSE:BAC) seems locked into a dance of "two steps forward, two steps back." While the company got itself into a huge mess with poor underwriting and acquisition decisions, the company continues making mistakes like taking shortcuts in its foreclosure process. The conundrum for investors is that Bank of America has an invaluable branch network and strong positions in key states like California, Texas and Florida, but that network will never get full value absent evidence that B of A can run itself effectively and earn its cost of capital.
Another Bank with Swampy Second Quarter Results
Like Citigroup (NYSE:C), and indeed most large banks, Bank of America's second quarter earnings are complicated by all manner of charges, gains and items. At the bottom-most bottom line, though, the company delivered on its guidance and produced earnings of 33 cents after those items. Of course, reserve release is still a big part of the story, and Bank of America saw $2.4 billion in earnings from this line item, while tangible book value fell about 4%.
Continue below:
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Another Bank with Swampy Second Quarter Results
Like Citigroup (NYSE:C), and indeed most large banks, Bank of America's second quarter earnings are complicated by all manner of charges, gains and items. At the bottom-most bottom line, though, the company delivered on its guidance and produced earnings of 33 cents after those items. Of course, reserve release is still a big part of the story, and Bank of America saw $2.4 billion in earnings from this line item, while tangible book value fell about 4%.
Continue below:
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Monday, April 11, 2011
Investopedia: Prefer Dividends? Why Not Look At Preferred Stock?
Everybody assumes that there is a lot of demand for, and interest in, articles and columns detailing growth stock ideas. While that is true to a point, it is also true that there is a strong interest in income ideas as well. What is interesting, though, is how relatively little there is out there about preferred stocks and their close cousin, trust preferred securities. While these are not flawless investment options, they should be a serious consideration for many income-oriented investors.
Preferreds - Some Good, Some Bad
In brief, preferred stock is something of a hybrid security that combines features of fixed income and common equity. Preferred stock is higher up in the credit structure than common equity and preferred shareholders are almost always entitled to dividends before common shareholders get any. On the other hand, preferred stock does not grant voting rights and investors often see significantly limited upside when the company thrives, as preferred stock dividends are usually locked in while common stock dividends can be whatever management can afford to pay. (For more, see A Primer On Preferred Stocks.)
Investors should also realize that their choices are quite a bit more limited when it comes to the companies and industries that issue preferred stock. Look at the rolls and investors will see a lot of banks and real estate companies, as well as some insurance and utility companies. By and large, industrial, health care and tech companies have no need to issue these securities.
To read the full piece, please go here:
http://stocks.investopedia.
Preferreds - Some Good, Some Bad
In brief, preferred stock is something of a hybrid security that combines features of fixed income and common equity. Preferred stock is higher up in the credit structure than common equity and preferred shareholders are almost always entitled to dividends before common shareholders get any. On the other hand, preferred stock does not grant voting rights and investors often see significantly limited upside when the company thrives, as preferred stock dividends are usually locked in while common stock dividends can be whatever management can afford to pay. (For more, see A Primer On Preferred Stocks.)
Investors should also realize that their choices are quite a bit more limited when it comes to the companies and industries that issue preferred stock. Look at the rolls and investors will see a lot of banks and real estate companies, as well as some insurance and utility companies. By and large, industrial, health care and tech companies have no need to issue these securities.
To read the full piece, please go here:
http://stocks.investopedia.
Thursday, March 31, 2011
Investopedia: Valeant Offers A Princely Sum For Cephalon
The news Tuesday evening that Cephalon (Nasdaq:CEPH) had received a bid was not all that surprising. Cephalon had long been a fixture on analysts' short-lists of biotech/specialty pharma companies that could be sellers in M&A transactions. To see the bid come from Valeant (NYSE:VRX), though, was surprising as few people had talked about this pharma company as an active bidder in high-value deals.
That said, and while the deal is far from a sure thing at this point, this deal makes quite a bit of sense and may be the best opportunity for Cephalon shareholders to get value for some time.
The Terms of the Deal
After what appears to be weeks of frustrated attempts to strike a friendly deal, Valeant went public with an unsolicited bid of $5.7 billion for Cephalon. This deal would deliver $73 a share in cash to Cephalon shareholders, an amount that Valeant would fund with debt from Goldman Sachs (NYSE:GS).
All in all, it does not look like a bad bid for Cephalon. It represents a 24% premium to Cephalon's prior close, and a 12% premium to the consensus analyst price target on the shares (for the very little that those are often worth). The deal also represents an EV/EBITDA of just under five and a forward P/E of over eight on 2011 earnings and almost 13 on 2012 earnings.
To read the full article, please click the link:
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Monday, January 10, 2011
Investopedia: Bank of America's Incredible Shrinking Liability
At this point in the credit crisis it would seem that anybody claiming to have a firm handle on everything going on is either crazy, dishonest or a singular genius. Take the latest news from Bank of America (NYSE:BAC) - the terms of a deal to settle much of its liability to Freddie Mac (Nasdq:FMCC) and Fannie Mae (Nasdaq:FNMA) for mortgage put-backs not only surprised most observers, but angered a lot of people all over again. Moreover, there is uncertainty everywhere an investor cares to look regarding whether or not other banks will be able to strike similar deals and how these banks will deal with other claimants.
A Quick Take on the Deal
Early in January, Bank of America announced a deal with Freddie and Fannie whereby it was settling its potential put-back obligations to these entities for a total of $2.8 billion. This deal covers just mortgages related to Countrywide (which Bank of America bought), but will avoid more litigation regarding BAC's ultimate responsibility in buying back misrepresented or outright fraudulent mortgages under the terms of the put-back agreements that it had with these agencies.
Please follow this link for the full piece:
http://stocks.investopedia.
A Quick Take on the Deal
Early in January, Bank of America announced a deal with Freddie and Fannie whereby it was settling its potential put-back obligations to these entities for a total of $2.8 billion. This deal covers just mortgages related to Countrywide (which Bank of America bought), but will avoid more litigation regarding BAC's ultimate responsibility in buying back misrepresented or outright fraudulent mortgages under the terms of the put-back agreements that it had with these agencies.
In many respects, this was a deal so favorable to BAC it was close to outright theft. The liability between BAC and Freddie/Fannie could have been anywhere from $10 billion to upwards of $20 billion depending upon the assumptions an investor wanted to make about the settlement. As it stands, even more than $20 billion would have represented only about a 1% delinquency rate for these loans, when the actual rate has been running more like 11%.
It is also worth mentioning that this is tantamount to another bailout for the banks. Freddie/Fannie are under direct government control, while Bank of America (along with Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and many others) needed very cheap government money to stay liquid. What is interesting about this move, though, is that it avoids the splashy headlines of another TARP-like program that would be announced from a White House or Congressional podium. (For more, see Liquidity And Toxicity: Did TARP Fix The Financial System?)
Please follow this link for the full piece:
http://stocks.investopedia.
Tuesday, November 23, 2010
FinancialEdge: Who Stands To Benefit From QE2?
The markets have been all atwitter from the very first mention of the next round of quantitative easing via the Fed. As with any government (or in the case of the Fed, quasi-government) program, there will be winners, losers and unintended consequences. (For a closer look at QE, also check out Quantitative Easing: What's In A Name?)
All told, the Fed expects to inject $600 billion into the system, primarily by having the Federal Reserve Bank of New York acquire Treasury securities from primary dealers like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America's (NYSE:BAC) Merrill Lynch. Although the precise details of the program may change as time goes on, the systematic purchases will likely have the most impact on the medium area of the yield curve.
The idea here is that the Fed says it wants to fight deflation and produce something on the order of 2% inflation. It is an open question as to where exactly the Fed is seeing deflation. True, housing prices are still dropping, but food prices are higher, gas prices are higher, electricity prices are flat-to-higher and so on. Nevertheless, a $600 billion program comes to almost 7% of the latest M2 money supply reading, so it will clearly have some impact on the economy and markets.
Please follow the link for the full piece:
http://financialedge.investopedia.com/financial-edge/1110/Who-Stands-To-Benefit-From-QE2.aspx
All told, the Fed expects to inject $600 billion into the system, primarily by having the Federal Reserve Bank of New York acquire Treasury securities from primary dealers like Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America's (NYSE:BAC) Merrill Lynch. Although the precise details of the program may change as time goes on, the systematic purchases will likely have the most impact on the medium area of the yield curve.
The idea here is that the Fed says it wants to fight deflation and produce something on the order of 2% inflation. It is an open question as to where exactly the Fed is seeing deflation. True, housing prices are still dropping, but food prices are higher, gas prices are higher, electricity prices are flat-to-higher and so on. Nevertheless, a $600 billion program comes to almost 7% of the latest M2 money supply reading, so it will clearly have some impact on the economy and markets.
Please follow the link for the full piece:
http://financialedge.investopedia.com/financial-edge/1110/Who-Stands-To-Benefit-From-QE2.aspx
Wednesday, October 20, 2010
What Drives A Bank of America Recovery?
Like most other major U.S. banks, Bank of America (NYSE:BAC) is managing to deliver successively less-worse quarterly reports. Credit is getting better and the securities markets are closer to back-to-normal. What is not so clear, though, is what horse Bank of America is going to ride back to prosperity. After all, less-bad can only power a turnaround story for so long.
The Quarter That Was
Due in part to better credit conditions and sizable loan loss reserve releases, Bank of America beat on the bottom line while missing slightly on the top line. Revenue rose 2% from last year, but fell more than 8% on a sequential basis, led in part by a 4% sequential decline in net interest income. Although revenue from card services did drop sequentially, investment banking did a little better.
Please click the link below for the full article:
http://stocks.investopedia.com/stock-analysis/2010/What-Drives-A-Bank-of-America-Recovery-BAC-C-WFC-MS-GS1020.aspx
The Quarter That Was
Due in part to better credit conditions and sizable loan loss reserve releases, Bank of America beat on the bottom line while missing slightly on the top line. Revenue rose 2% from last year, but fell more than 8% on a sequential basis, led in part by a 4% sequential decline in net interest income. Although revenue from card services did drop sequentially, investment banking did a little better.
Please click the link below for the full article:
http://stocks.investopedia.com/stock-analysis/2010/What-Drives-A-Bank-of-America-Recovery-BAC-C-WFC-MS-GS1020.aspx
Friday, September 3, 2010
Private Equity Has A Hankering For Fast Food
The long, strange story of Burger King (NYSE:BKC) is soon to take another twist. The world's #2 hamburger chain announced Thursday morning that it had accepted a long-rumored bid from 3G Capital that will give current Burger King shareholders $24 in cash per share.
What a Long, Strange Trip it has Been
BurFor a large international restaurant chain, Burger King has had some ups and downs on the ownership front. The company was privately-owned for about eight years before Pillsbury bought it. Pillsbury had difficulty running the company and it became part of Grand Metropolitan (now Diageo (NYSE:DEO)) in 1989, when Grand Metropolitan bought Pillsbury.
Diageo built on Pillsbury's legacy of poor management with even more poor management, but decided to sell the chain at the turn of the century. A group of three well-known investors (a unit of Goldman Sachs (NYSE:GS), Bain Capital, and TPG Capital) bought the company, actually ran it reasonably well by prior standards and then took the company public in 2006.
Click on the link below to read the full piece:
http://stocks.investopedia.
What a Long, Strange Trip it has Been
BurFor a large international restaurant chain, Burger King has had some ups and downs on the ownership front. The company was privately-owned for about eight years before Pillsbury bought it. Pillsbury had difficulty running the company and it became part of Grand Metropolitan (now Diageo (NYSE:DEO)) in 1989, when Grand Metropolitan bought Pillsbury.
Diageo built on Pillsbury's legacy of poor management with even more poor management, but decided to sell the chain at the turn of the century. A group of three well-known investors (a unit of Goldman Sachs (NYSE:GS), Bain Capital, and TPG Capital) bought the company, actually ran it reasonably well by prior standards and then took the company public in 2006.
Click on the link below to read the full piece:
http://stocks.investopedia.
Friday, July 30, 2010
Financial Edge: The Biggest Corporate Image Catastrophes
It is a dubious testament to the well-greased PR machine of the corporate world that the general public tends to accept all manner of corporate malfeasance and blundering with barely a second look. But despite spending millions of dollars on PR, some companies still manage to muddy their reputations with tone-deaf responses to trouble. Let's look at some of the most egregious PR offenders of recent days.
1. BP
BP's (NYSE:BP) handling of the well explosion and subsequent oil spill in the Gulf of Mexico is going to go down as a classic case of horrible corporate public relations. Even though BP tried to stop the leak as soon as physically possible, tone-deaf comments from the now-former CEO quickly led to a thundering backlash. Much as Exxon Mobil (NYSE:XOM) never completely out-ran the legacy of the Valdez oil spill, it's likely that BP will always be stained by how it handled this accident. (For more insight on how much this type of disaster can cost, see The Most Expensive Oil Spills.)
2. Goldman Sachs
When the Blues Brothers told people they were on a mission from God, it became a classic line of cinema. When the CEO of Goldman Sachs (NYSE:GS) said words to basically the same effect, he became People's Exhibit A for the hubris of Wall Street. Later, when the public learned that Goldman was allegedly misleading some of its customers, paying huge bonuses and essentially lecturing the government on how things ought to be, the public said "enough". Truth be told, Goldman did not do anything new or anything that its peers have not done - it was just clumsy enough to do it in front of microphones at precisely the time when the public wanted contrition and modesty. (Find out more about why Goldman came under fire in The Goldman Sachs Accusation Explained.)
For the full column:
http://financialedge.investopedia.com/financial-edge/0710/The-Biggest-Corporate-Image-Catastrophes.aspx
1. BP
BP's (NYSE:BP) handling of the well explosion and subsequent oil spill in the Gulf of Mexico is going to go down as a classic case of horrible corporate public relations. Even though BP tried to stop the leak as soon as physically possible, tone-deaf comments from the now-former CEO quickly led to a thundering backlash. Much as Exxon Mobil (NYSE:XOM) never completely out-ran the legacy of the Valdez oil spill, it's likely that BP will always be stained by how it handled this accident. (For more insight on how much this type of disaster can cost, see The Most Expensive Oil Spills.)
2. Goldman Sachs
When the Blues Brothers told people they were on a mission from God, it became a classic line of cinema. When the CEO of Goldman Sachs (NYSE:GS) said words to basically the same effect, he became People's Exhibit A for the hubris of Wall Street. Later, when the public learned that Goldman was allegedly misleading some of its customers, paying huge bonuses and essentially lecturing the government on how things ought to be, the public said "enough". Truth be told, Goldman did not do anything new or anything that its peers have not done - it was just clumsy enough to do it in front of microphones at precisely the time when the public wanted contrition and modesty. (Find out more about why Goldman came under fire in The Goldman Sachs Accusation Explained.)
For the full column:
http://financialedge.investopedia.com/financial-edge/0710/The-Biggest-Corporate-Image-Catastrophes.aspx
Thursday, July 15, 2010
Quick Follow-Up On JPMorgan
Last night I gave a quick preview of JPMorgan's (NYSE: JPM) earnings release, so I thought I would follow up on the actual release this morning.
All in all, it was alright. Better credit was pretty much the entire story behind the earnings beat; both higher-than-expected reserve releases and lower charge-offs. This was not really all that surprising; by taking and keeping those higher reserves in earlier quarters, JPMorgan basically "stored up" some earnings power for later quarters. Had things gone a little differently, and we had seen another credit crunch or dive in the economy, those reserves would have helped JPM keep its head further above water than the competition.
I was a little disappointed with overall revenue performance, but then I expected a stronger quarter than the analysts.
Results for this company are always confusing, but here are some of the highlights:
- Revenue down 8%
- All business lines profitable
- $1.5B (0.36/sh) reduction in loan loss reserves
- $550M (0.14/sh) charge for UK bank bonus tax
- $0.9B (0.22/sh) in securities gains
- Losses in home lending are getting smaller
- Credit quality in Cards is getting better
- Loan loss provision ($3.4B) was down by more than half from Q1
- ROE of 12% (much better than I'd hoped)
- ROA of 0.94%
- Loans down 3%
- I-banking not great (down 3%)
- Fixed-inc trading down 35%, equity trading down 29%
So, now we have a hurdle for the rest of the field. Let's see what Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Bank of America (NYSE: BAC), and the rest can do...
Disclosure - I own share of JPMorgan
All in all, it was alright. Better credit was pretty much the entire story behind the earnings beat; both higher-than-expected reserve releases and lower charge-offs. This was not really all that surprising; by taking and keeping those higher reserves in earlier quarters, JPMorgan basically "stored up" some earnings power for later quarters. Had things gone a little differently, and we had seen another credit crunch or dive in the economy, those reserves would have helped JPM keep its head further above water than the competition.
I was a little disappointed with overall revenue performance, but then I expected a stronger quarter than the analysts.
Results for this company are always confusing, but here are some of the highlights:
- Revenue down 8%
- All business lines profitable
- $1.5B (0.36/sh) reduction in loan loss reserves
- $550M (0.14/sh) charge for UK bank bonus tax
- $0.9B (0.22/sh) in securities gains
- Losses in home lending are getting smaller
- Credit quality in Cards is getting better
- Loan loss provision ($3.4B) was down by more than half from Q1
- ROE of 12% (much better than I'd hoped)
- ROA of 0.94%
- Loans down 3%
- I-banking not great (down 3%)
- Fixed-inc trading down 35%, equity trading down 29%
So, now we have a hurdle for the rest of the field. Let's see what Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Bank of America (NYSE: BAC), and the rest can do...
Disclosure - I own share of JPMorgan
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