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Boeing swings to loss, cuts 2009 forecast
NEW YORK (MarketWatch) -- Boeing Co. (BA 50.94, -0.95, -1.83%) reported Wednesday a third-quarter loss of $1.6 billion, or $2.23 a share, compared to a profit of $695 million, or 96 cents a share, in the year-ago period. Revenue in the recent period rose 9% to $16.7 billion from $15.3 billion. Analysts polled by FactSet Research were looking for a loss of $1.93 a share on sales of $17.2 billion. For 2009, the Chicago manufacturer lowered its earnings forecast to $1.35 to $1.55 a share, from $4.70 to $5 a share. The Wall Street consensus was for full-year earnings of $2.34 a share. Shares of Boeing fell 2% premarket to $50.74.
Sun Microsystems to Cut 3,000 Jobs
(AP) Sun Microsystems Inc. plans to eliminate up to 3,000 jobs as it awaits a takeover by Oracle Corp., a deal that is being held up by antitrust regulators in Europe.
The layoffs Sun outlined Tuesday in a regulatory filing amount to about to 10 percent of the company's 29,000 workers and will happen over the next year.
They are the latest rounds of cuts at the struggling server and software maker, which reached the $7.4 billion deal with Oracle in April after nearly a decade of wobbly financial performance.
Sun said in its filing that the layoffs would come from all its major regions, including North America, Europe, Asia and emerging markets. The company expects to incur $75 million to $125 million in restructuring charges over the next several quarters.
Oracle's purchase of Sun is being held up by European antitrust authorities who are concerned about possible harm to the database software market. The deal has been approved by U.S. regulators.
Key congressional leaders want to extend the tax credit for first-time home buyers beyond its scheduled end-of-November expiration despite complaints of fraud and Obama administration concerns about the costs.
Housing and Urban Development Secretary Shaun Donovan says the administration is not sold on the idea.
An audit by the agency's inspector general found that 93 percent of the returns claiming credits for homes bought in 2009 were coded incorrectly, meaning those taxpayers could be incorrectly identified as liable for repaying the credit. The audit was released in September by the Treasury Inspector General for Tax Administration. It reviewed 47,276 electronically filed returns.
On Monday the Federal Reserve held a major reverse repo test, as was announced by the NY Fed and by Zero Hedge. We have subsequently received several unconfirmed reports that the conducted test has been a disaster (we have calls into the Federal Reserve to confirm or deny this, we are eagerly awaiting their reply). Presumably, after conducting various repos last year, a typical transaction would be in the $1 to $5 billion range. At around the time the financial system was being pulled apart, were two separate $50 billion repo transactions on September 18, 2008, a day when as Paul Kanjorski had highlighted earlier in the year the money market system nearly collapsed as a result of Lehman and AIG's failure, and the Reserve Fund breaking the buck. Notable about Monday's reverse repo "test" was that it was quite sizable: in the $100 billion ballpark, on parallel with the biggest liquidity extraction from 2008. The outcome was the discovery that the dealer community does not have the capacity to do reverse transactions of this magnitude. As a result the Fed was forced to go directly to the money market industry, which has been speculated as a key source of excess liquidity withdrawals, another topic we discussed previously.
This sets a dangerous precedent on two levels. First, if the dealer community, recently expanded to consist of such middle-market banks as Jefferies which allegedly has over $20 billion on its balance sheet compliments of various Fed repo actions, is unable to satisfy reverse repos of this size, a big question mark appears as to what is the illiquid collateral backing the Dealer community, if it is unable to comply with a $100 billion liquidity withdrawal. Second, it indicates that reverse repos as a source of liquidity extraction by the Fed will be contained to the very precarious money market industry. All that is needed, in today's hair-trigger mindset on liquidity, is for another systemic glitch to be made apparent to all market participants, before yet another run on money markets occurs. As readers will recall, money markets were recently stripped of their implicit Federal guarantees: as such, this is the biggest potential threat to a nascent "recovery."
We will follow this topic closely, as the rumor now is that the Fed will no longer attempt dealer-based reverse repos after Monday's failure, but confine them exclusively to money markets. Whether or not the Fed is correct in gambling with the $3 trillion+ money market industry when it should be doing all it can to extract liquidity out of the very same dealer community it has so generously been rewarding for over 7 months, is very much open to debate.
"The outcome was the discovery that the dealer community does not have the capacity to do reverse transactions of this magnitude."
Some of the nation’s largest financial companies, including Citigroup (NYSE: C), GE Capital (NYSE: GE), JPMorgan Chase (NYSE: JPM), Wells Fargo (NYSE: WFC), Bank of America (NYSE: BAC) and others will no longer have certain debt guaranteed by the federal government through the FDIC’s Temporary Liquidity Guarantee Program as of October 31st.
The FDIC voted on Tuesday to end the Temporary Liquidity Guarantee Program that is being used to guarantee certain debt issued by some of the nation’s largest banks, but also setup a 6-month safety net facility as part of the process. All five members of the FDIC’s panel of regulators voted to end the program as scheduled on October 31st.
New debt can be issued and guaranteed under the program up until the deadline. The deadline on the newly placed debt would expire no later than December 31st, 2012.
Shares of eBay fall 8% after hours following report of lower earnings
SAN FRANCISCO (MarketWatch) -- EBay Inc. reported a drop in third-quarter earnings Wednesday afternoon, though revenue for the quarter came in notably higher than Wall Street's estimates.
For the third quarter, eBay (EBAY 23.90, -1.13, -4.52%) reported earnings of $349.7 million, or 27 cents a share, compared to earnings of $492.2 million, or 38 cents a share, for the same period last year.
Excluding charges related to stock-options and other items, the company said it would have earned $502 million, or 38 cents a share, for the recent period. Revenue rose more than 5% to $2.24 billion.
Analysts were expecting eBay to report earnings of 37 cents a share on revenue of $2.14 billion for the third quarter, according to consensus forecasts from Thomson Reuters.
Europe stocks fall 1.5 pct early; Ericsson sinks
PARIS, Oct 22 (Reuters) - European stocks fell 1.5 percent in early trade on Thursday, tracking losses on Wall Street, with Ericsson's (ERICb.ST) poor results hitting tech shares.
At 0705 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.5 percent at 1,010.11 points, after ending just shy of a one-year closing high in the previous session.
Ericsson shares sank 8.8 percent after the telecom gear maker posted lower-than-expected third-quarter core earnings on and said sales in its key mobile networks market were hampered by tough market conditions.
Shares of rivals Nokia (NOK1V.HE) were down 1.1 percent and Alcatel-Lucent (ALUA.PA) were down 3.5 percent.
"The market was poised for a retreat, but I'm not expecting a major correction," said Christian Jimenez, president of Imene Investment partners, in Paris.
"At these levels, if all companies would report satisfying results, that would justify further gains on the market. Obviously, it's not the case."