Discover Financial Services 4Q net income rises

Discover Financial Services on Thursday reported higher earnings for its fiscal fourth quarter, as users of its namesake credit card stepped up purchases and the company wrote off fewer unpaid balances.
Even so, the Riverwoods, Ill.-based company's results fell short of Wall Street expectations, and investors sent its shares down over 3 percent Thursday.
Discover, the nation's sixth-largest credit card issuer, said total loans, credit card loans and Discover card sales volume increased 6 percent in the quarter, which coincided with the tail end of the back-to-school shopping season and the ramp up to the December holidays — key periods when consumers traditionally spend more.
Discover card sales volume increased to $26.5 billion, while credit card loans at the end of the quarter totaled $49.6 billion. Private student loans rose 6 percent, while personal loans climbed 24 percent, the company said.
"Our strong receivables and sales growth results demonstrate the effectiveness of our marketing programs, consumers' preference for cash rewards and our acceptance and awareness initiatives," Chairman and CEO David Nelms said during a conference call with analysts.
While Discover's customers racked up more debt, more of them paid off credit card balances on time. The delinquency rate on credit-card loans over 30 days past due was 1.86 percent, an improvement of 53 basis points from a year earlier. The rate of charge-offs, when the company writes off unpaid credit card balances, dropped to a historic low of 2.29 percent.
"While the continued improvement in credit appears to be nearing an end, we don't believe we are at a point where charge-offs are poised to rise significantly," Nelms said.
Nationwide the rate of credit card payments at least 90 days overdue edged up in the third quarter to 0.75 percent, according to credit reporting agency TransUnion. The rate is coming off historically low levels, however.
Discover has traditionally had one of the lowest rates for default and delinquency in the credit card industry, the result of tighter lending standards and close monitoring of problem accounts.
The company has reported improvement in its customers' default and late-payment rates since the Great Recession, as cardholders moved to pay down debt and boost savings.
Late-payment rates tend to creep higher in the fall, particularly as cardholders spend more money on holiday shopping, travel and other expenses. The company said that seasonal factor led to a slight increase in its credit card loan delinquency rate between the third and fourth quarter.
While Discover's rates for late payments and defaults remain low, the company has been making more loans. As a result, it has been setting aside more funds to cover potential loan losses.
In the September-to-November quarter, Discover increased its provision for loan losses by 6 percent to $338 million, noting that was somewhat offset by a drop in the number of unpaid credit card balances that had to be written off.
Meanwhile Discover's payment-services business, which competes with Visa and MasterCard, saw dollar volume increase 13 percent in the latest quarter.
In a client note Thursday, RBC Capital Markets analyst Jason Arnold said Discover is benefiting from increased acceptance of its cards and favorable credit trends.
"We remain very enthused by Discover's fundamental position and believe the company remains well positioned for loan and (earnings per share) growth," wrote Arnold, who has a $50 price target on the stock.
For the period ended Nov. 30, Discover earned $541 million, or $1.07 per share. That compares with $513 million, or 95 cents per share, a year earlier.
Analysts surveyed by FactSet expected earnings of $1.12 per share.
Revenue climbed 11 percent to $2 billion, after interest expense. Wall Street forecast $1.96 billion.
Also on Thursday, Discover declared a dividend of 14 cents per share. It will be paid on Jan. 17 to shareholders of record on Jan. 3.
Discover shares fell $1.36, or 3.4 percent, to close at $38.41 Thursday. The stock is up 60 percent this year.

Read More..

RIM shares fall at the open after earnings

TORONTO (Reuters) - Research In Motion Ltd fell in early trading on Friday following the BlackBerry maker's Thursday earnings announcement, when the company outlined plans to change the way it charges for services.
RIM, pushing to revive its fortunes with the launch of its new BlackBerry 10 devices next month, surprised investors when it said it plans to alter its service revenue model, a move that could put the high-margin business under pressure.
Shares fell 16.0 percent to $11.86 in early trading on the Nasdaq. Toronto-listed shares fell 15.8 percent to C$11.74.

Read More..

Walgreen fiscal 1Q profit sinks nearly 26 pct

Walgreen's fiscal first-quarter earnings sank nearly 26 percent as costs tied to a couple big deals and Superstorm Sandy helped put a bigger-than-expected dent in the drugstore chain's performance.
CEO Greg Wasson told analysts he saw the quarter as a "turning point" for the Deerfield, Ill., company, which has been working to recapture customers it lost during a contract dispute with Express Scripts Holding Co. But investors didn't buy that message at least initially, as the stock fell deeper than broader market declines in Friday trading.
Walgreen Co. spent $4 billion in cash earlier this year to buy a stake in Alliance Boots, a Swiss company that runs the largest drugstore chain in the United Kingdom. It also spent $438 million on a drugstore chain focused on the mid-South under the USA Drug, Super D Drug and Med-X names.
Costs tied to those deals totaled $23 million in the quarter, and Walgreen said it only counted a small portion of the gains it received from Alliance Boots. It is reporting those gains a quarter after they occur to address audit and regulatory requirements.
The storm system that swept up the East Coast in late October also cost $24 million in the quarter, as it forced Walgreen to temporarily close hundreds of stores.
Overall, Walgreen earned $413 million, or 43 cents per share, in the three months that ended Nov. 30. That compares with net income of $554 million, or 63 cents per share, a year ago. Walgreen said earlier this month revenue fell nearly 5 percent to $17.34 billion.
Excluding one-time costs, adjusted earnings were 58 cents per share.
Analysts forecast, on average, earnings of 70 cents per share, according to FactSet.
Shares dropped 3.3 percent, or $1.24, to close at $36.31 Friday, while the Standard & Poor's 500 index fell 1 percent.
Walgreen runs more than 8,000 drugstores in all 50 states as the nation's largest drugstore chain. The company's revenue has slumped through 2012 after it started the year stuck in a contract squabble with Express Scripts, for which it fills prescriptions.
The companies had let a contract between them expire last December, and their new agreement didn't start until September. The split meant many Express Scripts customers migrated to new drugstores for their prescriptions.
Walgreen is trying to bring those customers back, but competitors like CVS Caremark Corp. and Rite Aid Corp. are pushing aggressively to keep them.
Walgreen said prescriptions filled at stores open at least a year fell nearly 5 percent in the quarter, a smaller decrease than the 8 percent drop it reported in the previous quarter. The drugstore chain saw that improvement as a sign that customers are returning.
"We think we can redeem significant portion of these customers over time," Wasson said.
Walgreen said prescription revenue from stores open at least a year fell 11.3 percent, while revenue from the front end, or rest of the store, dropped 2 percent. Revenue from stores open at least a year is considered a key indicator of retailer health because it excludes stores that recently opened or closed.
Generic drugs have squeezed revenue for Walgreen and other drugstores this year because they are cheaper than brand-name drugs. But they help profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
Walgreen launched a customer loyalty program called Balance Rewards during the quarter. It allows shoppers to gain points at both Walgreen and Duane Reade stores and for online purchases that translate into cash rewards they can then use at the stores.
Walgreen executives said the program will encourage customers to visit their stores more frequently and to buy more.
"We now have a new kind of currency in place that will help drive our front-end business," Wasson said.

Read More..

Nigeria's Dangote Cement expects 38 pct rise in Q1 profit

Nigeria's biggest listed company, Dangote Cement, expects pretax profit to rise 38.9 percent year-on-year to 42.09 billion naira in the first three months of next year, it said in a filing with the Nigerian Stock Exchange.
Dangote Cement, Nigeria's biggest cement producer, said it expected turnover of around 81.6 billion naira in the first quarter, compared with 64.1 billion naira it achieved in the same period in 2012.
The company which is majority owned by billionaire tycoon Aliko Dangote earlier this month shut down a fifth of its production capacity because of a glut in the market caused by imported cement from Asia.
It is yet to release its 2012 full year results.

Read More..

Piano maker Steinway takes down "for sale" sign

 Steinway Musical Instruments Inc, the famous manufacturer of pianos, saxophones and trumpets, said on Wednesday it had decided not to sell itself following a 17-month-long exploration of strategic alternatives.
An American icon synonymous with handmade grand pianos, Steinway has struggled to keep its production margins competitive amid stagnant sales, and has seen its shares plunge 10 percent year-to-date. Still, its third-quarter earnings last month offered signs that cost-cutting was paying off.
In a statement on Wednesday, Steinway said it had received several non-binding indications of interest in buying the company, following talks with other companies in the sector as well as private equity, yet these did not offer more value than its own strategic plan.
"We will continue to focus management's efforts on execution of that plan and we look forward to a prosperous 2013," Steinway CEO Michael Sweeney said in the statement.
An in-principle agreement to sell its band instrument division to an investor group led by two of its board members, Dana Messina and John Stoner, was also scrapped in light of the current operating performance of the band division, Steinway said.
In July 2011, Messina, Stoner and other members of management made an offer for Steinway's band instrument and online music divisions, prompting the company to set up a special committee in order to assess it.
Later that month, Steinway asked investment bank Allen & Company LLC to a assist the special committee on exploring strategic alternatives that could also include selling the whole company outright to other interested parties.
By October 2011, Messina had stepped down as CEO of the company after 15 years at the helm to pursue his bid, yet he remained a board member. He was replaced by Sweeney, a chairman of the board of Star Tribune Media Holdings and a former president of Starbucks Coffee Company (UK) Ltd.
Steinway said on Wednesday that it was continuing a separate process to sell its leasehold interest in New York's Steinway Hall building, situated on Manhattan's 57th Street, and was in talks with several parties.
According to its website, Steinway & Sons, the company's piano unit, opened the first Steinway Hall on 14th Street in Manhattan in 1866.
With a main auditorium of 2,000 seats, it became New York City's artistic and cultural center, housing the New York Philharmonic until Carnegie Hall opened in 1891. These days, Steinway Hall is a showroom for the company's instruments.
The Waltham, Massachusetts-based company's pianos have been used by legendary artists such as Cole Porter and Sergei Rachmaninoff and by contemporary ones like Chinese concert pianist Lang Lang.

Read More..

Microsoft lashes out at Google’s decision to spurn Windows Phone

Dave Heiner, vice president and deputy general counsel for Microsoft (MSFT), took aim at Google (GOOG) and the company’s unwillingness to develop for Windows Phone 8 in a blog post on Wednesday. Heiner claims that, “Google continues to prevent Microsoft from offering consumers a fully featured YouTube app [among other] for the Windows Phone.” Microsoft has been apparently been trying to get a full-feature YouTube app for its Windows Phone operating system for more than two years, however it has been unsuccessful.
[More from BGR: ‘iPhone 5S’ to reportedly launch by June with multiple color options and two different display sizes]
Despite the fact that the Windows Phone Marketplace has doubled in the past year, Google has not yet produced any quality apps for the platform. The company previously said that it will not be launching a native Gmail or Google Drive app for Windows 8 or Windows Phone until people start using the operating systems.

Read More..

What Happened to the 2012 Tech Bubble That Never Was

Turns out Facebook's fizzled IPO was a pretty good microcosm for 2012 in startup land: it was all one big fizzle. The final numbers for last year in venture-capital IPOs and acquisitions are in, and while there was no dot-com-era type of explosion, the much hyped new tech bubble appears to have just... petered out. There remains hope, as always, for the unpredictable year ahead. Here are some key stats from the Thompson Reuters and National Venture Capital Association survey released Wednesday:
RELATED: Mark Zuckerberg Promises Not to Bail on Facebook for the Next Year
Venture-backed companies made less money for their investors than they did a year ago.
There is less investment money out there, overall, with investors doling out $6.9 billion last quarter, compared to $10.1 billion the year before and $8.4 billion a quarter before that — a trend that The Wall Street Journal noted back in September, which we speculated may have had something to do with Facebook's IPO fail.
Acquisitions of "venture-backed companies" were also down, totaling $3.52 billion last quarter down from $4.99 the year before, as were acquisitions in general, which totaled $21.5 billion, down 11 percent from $24.09 billion in 2011.
The number of companies that opted to IPO fell to eight from 11 the year before.
The most positive figure from the entire report is actually skewed: Those eight companies that did IPO companies raised more money on average, combing out with higher valuations — an average that is weighed down almost entirely by Facebook. But venture-backed companies did raise $21.5 billion (way up from $10.7 billion the year before), which was the strongest annual funding since 2000.
RELATED: Ah, This Is Where the Real Silicon Valley Hackers Are
These numbers match the trends we saw all year, with Facebook's initial stock drop scaring away investors from start-ups, venture capitalists having a hard time raising money for tech ventures, and companies like Kayak pushing off their IPOs as long as possible until market conditions suit edtheir needs. It's just a lot of hesitancy. Part of that might just be a Facebook effect, or maybe 2012 was the "peak of the hype cycle" as Scott Sandell, a venture capitalist at New Enterprise Associates, described the year to The Wall Street Journal's Pui Wing-Tam.
RELATED: Tech Bubble Cautionary Tales: When Equity Replaces Money
And a descent generally follows a peak, right? Still, Sandell doesn't see 2013 as a year of doom or gloom for Silicon Valley. Things are sunny! "The end isn't anywhere near," he said, pointing to bright spots in companies that sell technologies to businesses. Of course, those aren't the big tech 2.0 companies we hear about all the time, the ones that made up the much discussed and much more specific social media bubble. What will become of the Twitters and Tumblrs, the Pinterests and Paths and SnapChats and all the clones they've already spawned? The path is less clear than ever, but, hey, it's only the first week fo January. And it probably won't be as bad as this.

Read More..

Patent hints Apple may bring its own unique stylus to iOS devices

Many people had a good laugh when Samsung (005930) unveiled the Galaxy Note last year and made a big deal out of the device’s Palm Pilot-like stylus. But once the Galaxy Note became a hit, people stopped snickering and began to take the stylus seriously as an accessory once again. Apple (AAPL) is apparently considering hopping on the stylus bandwagon, as HotHardware reports that the company has filed a patent for a pen accessory it describes as an “active stylus” that “can either act as a drive electrode to create an electric field between the drive electrode and the sense lines of a mutual capacitive touch sensor panel, or as a sense electrode for sensing capacitively coupled signals from one or more stimulated drive rows and columns of the touch sensor panel or both.”
[More from BGR: ‘iPhone 5S’ to reportedly launch by June with multiple color options and two different display sizes]
Putting things into plain English, HotHardware says that this active stylus “would perform the same functions as a traditional stylus, it would just do a better job” by allowing for “more accurate input.”
[More from BGR: Nokia predicted to abandon mobile business, sell assets to Microsoft and Huawei in 2013]
Since Apple has willingly followed market trends over the past year by releasing a larger version of the iPhone and an 8-inch version of the iPad, it shouldn’t be too surprising that Apple is considering adding a stylus to its lineup of iOS products. That said, you probably shouldn’t expect Apple to release an “iNote” phablet anytime in the near future even if the company does release the next-generation iPhone in two different sizes.

Read More..

Quick fix for Boot Camp brings Windows 8 to new iMac computers

Early adopters of Apple’s (AAPL) new iMac computers who chose the 3TB Fusion Drive model have been unable to use Boot Camp Assistant. The program, which allows OS X users to install a Windows partition on their computers, is limited to drives of up to 2.2TB. Apple has hinted that the software may be updated in the future to support larger drives, however no set time frame has been given. Despite the set back, it has been discovered that it is still possible to create a working Boot Camp partition on new iMacs.
[More from BGR: ‘iPhone 5S’ to reportedly launch by June with multiple color options and two different display sizes]
TwoCanoes Software notes that, “since it is not possible to get around the 2.2 TB limitation with booting Windows, it is possible to organize the partitions so that Windows is the last of the first four partitons [sic] and is within the first 2.2 TBs of space on the drive. Since the Mac can see the remaining space above the 2.2 TB limit, this space can be used for addtional [sic] storage space for OS X.”
[More from BGR: Nokia predicted to abandon mobile business, sell assets to Microsoft and Huawei in 2013]
TwoCanoes has created a simple step-by-step guide that will help users install Windows on their new iMac computers, and the fix will work with the latest version of Microsoft’s (MSFT) operating system, Windows 8.

Read More..

Samsung forced to reveal Galaxy sales data to Apple

Samsung (005930) was found to have infringed upon six of Apple’s patents this past August and ordered to pay the company $1.05 billion in damages. Apple (AAPL) is also seeking additional damages after its bid to blocks sales of eight Samsung devices failed. In order to asses the damages, Apple requested that Samsung hand over its sales data for its popular Galaxy line of smartphones and tablets. The company refused, however, in an effort to protect its confidential pricing details and profit margins.
[More from BGR: ‘iPhone 5S’ to reportedly launch by June with multiple color options and two different display sizes]
U.S. District Judge Lucy Koh recently ruled that Samsung must file an exhibit listing the total number of units of sold during certain time periods, Bloomberg reported. In a separate order, the Judge granted Samsung its request to delay the publication of part of a sealed document that showed per-unit operating profit for two of its phones.
[More from BGR: Nokia predicted to abandon mobile business, sell assets to Microsoft and Huawei in 2013]
Koh denied most of Apple’s and Samsung’s other requests to seal documents, noting that here isn’t a “compelling reason” that would require them to be sealed.

Read More..