News Archive


Health insurer Anthem’s profit beats as Medicaid enrollments rise


(Reuters) – Anthem Inc (ANTM.N), the second-largest U.S. health insurer, reported a better-than-expected quarterly profit, helped by rise in memberships for government plans, particularly Medicaid.

The company, whose shares were untraded before the opening bell on Wednesday, said total medical enrollments rose 4.3 percent to about 38.5 million in the quarter ended March 31.

Indianapolis-based Anthem said it now expected 2015 medical memberships rise to between 38.2 million and 38.4 million, up from its previous estimate of 38 million to 38.2 million.

Anthem runs a large employer-based insurance business, but is also one of the biggest players on the individual exchanges created under the national healthcare reform law, or Obamacare.

It also provides plans for Medicare, the government’s insurance program for the elderly, and Medicaid, for lower-income families.

Medicaid memberships rose 25 percent to 5.6 million in the quarter. Medicare membership rose 3.4 percent to 1.4 million.

The company’s first-quarter net profit rose to $865.2 million, or $3.09 per share, from $701.0 million, or $2.40 per share, a year earlier.

Excluding items, Anthem earned $3.14 per share, above the average analyst estimate of $2.67, according to Thomson Reuters I/B/E/S. Total operating revenue rose about 7 percent to $18.85 billion, below the %19.32 billion analysts had expected.

The insurer, which also operates Blue Cross Blue Shield insurance plans in 14 states, said its benefit-expense ratio in the quarter was 80.2 percent, down from 82.7 a year earlier.

The ratio represents the percentage of premiums paid out in medical claims and is closely watched by investors.

Anthem said it now expected 2015 adjusted net income of more than $9.90 per share, up from its previous estimate of more than $9.70. Analysts on average expect earnings of $9.83 per share.

The company said in early February that hackers had breached its computer system containing data on up to 80 million people.

(Reporting by Ankur Banerjee in Bengaluru; Editing by Savio D’Souza and Ted Kerr)

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Turner, HBO drive Time Warner revenue beat


(Reuters) – Time Warner Inc (TWX.N) reported a better-than-expected 4.8 percent rise in first-quarter revenue, boosted by its Turner division and Home Box Office network.

Shares of the company, whose profit also beat expectations, rose about 2 percent in premarket trading.

Revenue at Turner, which owns channels such as CNN, TNT and Cartoon Network as well as NCAA.Com, rose 4.5 percent in the quarter, helped by NCAA Division I men’s basketball championship tournament and growth in Turner’s news businesses.

Revenue at HBO, whose popular shows include hit medieval fantasy series “Game of Thrones”, increased 4.4 percent.

HBO’s standalone streaming service, HBO Now, launched on Apple Inc’s (AAPL.O) devices this month, in time for the season premiere of “Game of Thrones”, reaching millions of viewers who do not subscribe to pay TV.

Time Warner said the fifth season premiere of “Game of Thrones” was watched by a total of 18.1 million people in its first two weeks, over 1 million more than the viewership for the prior season’s first episode.

Turner and HBO together account for more than half of Time Warner’s total revenue.

Time Warner last year spun off its publishing business Time Inc (TIME.N) to focus on its more profitable broadcasting businesses.

Revenue in the company’s Warner Bros. Studio business rose 4.3 percent, helped mainly by higher licensing revenue from subscription video-on-demand sale of “Friends” and the box-office success of “American Sniper”.

The company’s net income, however, fell to $970 million, or $1.15 per share, in the quarter ended March 31, from $1.29 billion, or $1.42 per share, a year earlier.

Net income was hurt due to an increase in marketing costs primarily related to the launch of HBO NOW and higher spending on original programming.

Excluding items, the company earned $1.19 per share from continuing operations.

Revenue rose to $7.13 billion from $6.80 billion.

Analysts on average had expected earnings of $1.09 per share and revenue of $7.0 billion.

(Reporting by Sai Sachin R and Lehar Maan in Bengaluru; Editing by Saumyadeb Chakrabarty)

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Stock futures down ahead of Fed statement, GDP data


(Reuters) – U.S. stock index futures were lower on Wednesday as investors await the outcome of the two-day Federal Reserve meeting and ahead of U.S. economic growth numbers for the first quarter.

The Fed is not expected to raise interest rates. But investors will closely examine the central bank’s statement for clues on when rates are likely to be increased, as a batch of soft data could push back the timing of a hike until the end of the year. The statement is expected at 1400 p.m. EDT (1800 GMT).

U.S. gross domestic product likely braked sharply in the first quarter as harsh weather dampened consumer spending and energy companies struggling with low prices cut spending. GDP probably expanded at a 1.0 percent annual rate, down from the 2.2 percent growth rate in the fourth quarter.

GDP numbers are due at 8:30 a.m. EDT (1230 GMT).

Twitter (TWTR.N) shares were up 0.5 percent at $42.48 in premarket trading. The stock slumped as much as 24 percent after market on Tuesday as the company cut its full-year forecast due to weak demand for its new direct response advertising.

Lumber Liquidators (LL.N) slumped 15.4 percent to $28.25 after reporting a 2 percent fall in net sales so far in April and did not provide a full-year forecast.

Time Warner Inc (TWX.N) shares rose 1.2 percent to $69.00 after the company’s revenue rose 5 percent.

Companies expected to report results on Wednesday include MasterCard (MA.N), Marriott International (MAR.O) and Yelp (YELP.N).

Futures snapshot at 7:10 a.m. EDT (1110 GMT)

SP 500 e-minis ESc1 were down 2.5 points, or 0.12 percent, with 76,198 contracts traded.

Nasdaq 100 e-minis NQc1 were down 9 points, or 0.2 percent, on volume of 11,579 contracts.

Dow e-minis 1YMc1 were down 20 points, or 0.11 percent, with 13,320 contracts changing hands.

(Reporting by Tanya Agrawal; Editing by Savio D’Souza)

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Barclays takes extra $1.2 billion hit for potential forex settlements


LONDON (Reuters) – Barclays (BARC.L) set aside another 800 million pounds ($1.2 billion) on Wednesday to cover potential settlements for alleged foreign exchange manipulation, hitting profits and reflecting its struggle to put past problems behind it.

Barclays said it had now set aside 2.05 billion pounds ($3.2 billion) to cover any settlement, but offered only limited clues on how soon a deal might come.

U.S. and British authorities are investigating the allegations. Barclays pulled out of a settlement between some authorities and six rival banks in November because it had not reached a deal with New York’s regulator.

“That (extra provision) reflects the further discussions we’ve been having with a number of regulators and agencies around the world across multiple jurisdictions,” Finance Director Tushar Morzaria told reporters.

Barclays wanted to settle the allegations with as many agencies as possible in one go and Morzaria said the bank did not regret pulling out of the earlier settlement.

New York’s banking regulator has said it could reach a deal with Barclays next month if it excluded a probe of the possible rigging of rates through computer programs. It could take several more months if that trading is included.

Barclays could settle next month with a host of regulators, and leave any settlement with New York’s regulator on computer trading until a later date.

Barclays also set aside another 150 million pounds for compensating customer mis-sold insurance products in Britain, which has now cost Barclays 5.4 billion pounds and all British banks more than 26 billion.

Britain’s four biggest banks have paid out 42 billion pounds in charges related to misconduct in the past five years, and face paying out another 19 billion pounds over the next two years, Standard Poor’s said this week.

PROVISION DRAGS

Under Chief Executive Antony Jenkins, Barclays has abandoned its ambition of being a Wall Street powerhouse, shrinking its investment bank in favor of a return to its retail roots. He is cutting 19,000 jobs and shedding unwanted assets and businesses to cut costs and improve returns and its capital strength.

However, the cost of settling past misconduct issues continues to dog Barclays’ attempt to turn itself around.

The bank reported a statutory pretax profit of 1.3 billion pounds, down 26 percent from a year ago.

Its underlying pretax profit, stripping out the provision and other one-off items, was 1.8 billion pounds, up 9 percent from a year ago and just above the average forecast from analysts polled by the company.

Barclays shares dipped 0.6 percent by 1010 GMT (6.10 a.m. ET), as analysts said the results showed progress being made by the bank, but the forex provision was higher than expected.

“The increased FX provision, unaccompanied by further news-flow, is rather troubling,” said Mike Trippitt, analyst at Numis Securities.

Return on equity, a key measure of profitability, was 10.9 percent for the core business, as earnings from personal and corporate banking rose 14 percent and underlying costs fell 7 percent.

The investment bank’s profits rose 37 percent on the year to 675 million pounds, as revenues rose 2 percent to 2.2 billion pounds, in line with analysts’ expectations and echoing a strong performance by its U.S. rivals.

“The investment bank had a good Q1, representing a performance which is more indicative of the potential of the franchise following the repositioning undertaken last year,” Jenkins said.

(Editing by Keith Weir)

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UK ‘flash crash’ trader fails to raise bail, stays behind bars


LONDON (Reuters) – The British trader fighting extradition to the United States on charges that he illegally contributed to the 2010 Wall Street “flash crash”, appeared in court on Wednesday and was ordered to be kept in custody after failing to meet his bail conditions.

Navinder Singh Sarao, 36, who traded from his parents’ modest home in west London, has been charged by the U.S. Justice Department with wire fraud, commodities fraud and market manipulation.

At a hearing last week, he was granted bail provided he produced just over 5 million pounds ($7.7 million) and met other conditions.

“Those conditions have not been met and the defendant invites no further order from the court in that regard,” his lawyer Joel Smith told Westminster Magistrates’ Court.

District judge Jeremy Coleman said: “You have not met the conditions of bail as yet so I rebail you on exactly the same conditions as before. If you meet those conditions, you will be released, if you do not then you will be back here on May 6.”

The date for a full extradition hearing was put back from August to Sept. 24 and 25.

Sarao, wearing a grey sweatshirt and tracksuit trousers, spoke only to confirm his date of birth and address. The small courtroom was packed with more than two dozen journalists.

His lawyers declined to make any comment as they left the courtroom.

(Reporting by Michael Holden, writing by Estelle Shirbon; editng by Stephen Addison)

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Alibaba’s Ma says freezing hiring after growing ‘too quickly’: report


SHANGHAI (Reuters) – Chinese e-commerce giant Alibaba Group Holding Ltd is freezing hiring for the rest of the year because it has grown “too quickly”, Executive Chairman Jack Ma told staff.

“Alibaba has really developed too quickly … this year our entire group headcount will not go up by one person,” Ma said, according to a transcript of the April 23 speech carried on Alibaba’s official messaging app Laiwang.

He, however, said the company will replace employees who leave. “When one leaves, we’ll bring one in,” Ma added.

The hiring freeze came to light about a week ahead of Alibaba is due to report March quarter earnings on May 7. In January, Alibaba, which handles more online commerce than Amazon.com Inc and eBay Inc combined, reported slowing revenue growth. [ID:nL4N0V85W8]

Headcount had been growing quickly at Alibaba. As of Dec. 31, 2014, the company had 34,081 employees, a 63 percent increase from a year earlier, the company said in January.

As long as gross merchandise volume was under 10 trillion yuan ($1.6 trillion), headcount should be below 50,000, Ma said. A headcount of “over 30,000” was already enough for now, he added.

Gross merchandise volume in the quarter to Dec. 31, 2014, was 787 billion yuan, a 49 percent increase from the same quarter the year before. For the whole year, it totaled about 2.3 trillion yuan.

Ma also that Alibaba would consolidate its businesses into seven segments – e-commerce, Ant Financial, Cainiao logistics, big data and cloud computing, advertising, cross-border trade and other internet services.

($1 = 6.2018 yuan)

(Reporting by John Ruwitch and Paul Carsten; Editing by Kenneth Maxwell and Miral Fahmy)

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European shares follow Asia lower, dollar weak before Fed


LONDON (Reuters) – The euro and German bond yields rose to their highest level in weeks on Wednesday, after data showed that a measure of bank lending across the bloc stopped shrinking in March and consumer inflation expectations rose for the first time this year.

The euro traded above $1.10 EUR= and the 10-year German bond yield rose as high as 0.25 percent DE10YT=TWEB. Earlier this month, the euro was as low as $1.05 and the Bund yield was just 0.05 percent, threatening to fall below zero.

The rise in European yields kept stocks under pressure and lifted U.S. bond yields. But higher U.S. yields failed to lift the dollar, which was kept in check by the euro’s rise ahead of the Federal Reserve’s policy statement later on Wednesday.

“Happier days are on the cards,” said Timo del Carpio, European economist at RBC Capital Markets.

“The continued improvement in credit supply conditions bodes well for the sustainability of the euro area recovery overall.”

Euro zone bank lending to the private sector rose 0.1 percent in March, a tiny rise but the first in three years. Meanwhile, a survey of consumer inflation expectations showed a sharp jump in April.

Both these developments suggest the European Central Bank’s 1 trillion euro bond buying stimulus program may be starting to have the desired impact.

The euro rose to a three-week peak of $1.1014, while the German Bund yield hit a 6-week high thanks to its biggest one-day rise since December 2013.

Germany failed to sell the entire 4 billion euros of five-year bonds on offer at auction on Wednesday, another sign investors are turning away from low and negative-yielding assets.

FED DAY

Stocks fell, following Asian stocks lower, while the dollar held near two-month lows ahead of the Fed’s decision. The U.S. central bank is expected to show it is in no hurry to raise interest rates.

The Fed wraps up its two-day meeting with the U.S. economy in something of a soft patch – data due later on Wednesday is expected to show growth slowed sharply in the first quarter – that has weighed on the dollar and, in the view of many analysts, pushed back the first U.S. rate rise since 2006.

The dollar index .DXY, which measures the greenback against a basket of currencies, fell to its lowest since March 5, despite the rise in the 10-year U.S. Treasury yield US10YT=RR over 2 percent for the first time in a month.

European shares gave up early gains to trade slightly lower on Wednesday as investors digested a batch of mixed corporate results from bank BBVA (BBVA.MC) and UK retailer Next (NXT.L), among others. The pan-European FTSEurofirst 300 index .FTEU3 was down 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS retreated 1 percent having touched their highest since early 2008 at one point. Trade in Asia was thinner than usual with Japanese markets closed for a holiday.

U.S. futures pointed to a lower open on Wall Street SPc1.

On Tuesday, the Dow .DJI ended up 0.4 percent, while the SP 500 .SPX rose 0.28 percent and the Nasdaq .IXIC dipped 0.1 percent.

The Fed’s policy statement is due at 1800 GMT (2.00 p.m. EDT). Before that, data is expected to show the U.S. economy grew at a 1.0 percent annual pace in the first quarter, down from 2.2 percent in the previous three months.

“Investors are approaching (the Fed) with the view it will bore as much as possible. The risk is that what is neutral to the Fed may be surprisingly upbeat to the market,” said analysts at Citi.

“We would not see this as a big near-term boost to the dollar and bond yields, but more a reminder that the Fed remains hopeful that data will improve sufficiently for a lift-off in September.”

Oil prices fell as oversupply and weak demand outweighed uncertainty over the impact of Saudi King Salman bin Abdulaziz’s decision to sack his younger half-brother as crown prince in favor of his nephew.

Brent crude LCOc1 fell to $64.52 a barrel.

Gold traded near three-week highs with the dollar soft. Spot gold XAU= last traded at $1,207.51 an ounce.

(Additional reporting by Wayne Cole in Sydney, Francesco Canepa, John Geddie and Anirban Nag in London; Editing by Toby Chopra)

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Wal-Mart to expand China store network by nearly a third after growth stalls


BEIJING/SHANGHAI (Reuters) – Giant U.S. retailer Wal-Mart Stores Inc (WMT.N) plans to expand its footprint in China by nearly a third by opening 115 new stores by 2017, the firm’s chief executive said, in a renewed push to lure China’s grocery shoppers despite slowing growth.

“Our aim is to become an integral part of China’s economy,” Chief Executive Doug McMillon said at a news conference in Beijing on Wednesday. “China is a top priority.”

Wal-Mart’s new push in China comes as global supermarket firms seek ways to tackle slowing growth in the world’s second-biggest economy. Wal-Mart in February said its China net sales declined 0.7 percent for the quarter ended Jan. 31, with comparable same-store sales falling 2.3 percent.

As well as new stores to boost sales, the world’s biggest retailer will close some under-performing stores and seek to tap into the faster-growing online grocery market through its Yihaodian.com service. McMillon said he was excited by prospects for a platform that offered 8 million products at end-2014, up from just 18,000 items in 2011.

The Bentonville, Arkansas-based retailer said the 115 new stores will be opened in cities such as Shanghai, Shenzhen and Wuhan between 2015 to 2017, without saying how much it would invest in the new outlets. It had 411 stores in China at the end of January this year, according to its annual report: The retailer said on Wednesday it will remodel more than 50 of these this year at a cost of more than 370 million yuan ($60 million).

Scott Price, head of Wal-Mart’s Asia operations, said the retailer would close an unspecified number of poorly performing stores after shutting 29 outlets in China last year. Commenting on recent sales trends, Price said, “There is some softening in retail sales but we’ve gained share … in the hypermarket channel.”

Wal-Mart, France’s Carrefour SA (CARR.PA) and Britain’s Tesco PLC (TSCO.L) have all seen sales growth slip over the last five years, losing market share to local rivals, according to a report published on Tuesday from consumer analytics firm Kantar Worldpanel.

Average same-store sales growth dropped into negative territory last year, according to an analysis of six major grocers by consultancy OCC.

CEO McMillon also addressed ongoing investigations into Wal-Mart’s accounting by the company itself and government agencies. He said the company was investing in improving systems and processes to bolster compliance with the U.S. Foreign Corruption Practices Act.

“Being compliant with the law,” McMillon said, “That’s a high priority for us.” For the year ended Jan. 31, Walmart spent $173 million on investigations and compliance programs, after spending $282 million a year earlier.

(Writing by Brenda Goh; Editing by Kazunori Takada and Kenneth Maxwell)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/KfPo_IyBLXY/story01.htm

Absence of contagion changes whole Greek game


LONDON (Reuters) – If fear of Europe-wide financial wildfire was Athens’ trump card in its standoff with euro zone creditors – then the card has now turned up a dud.

The merits of ruling socialist party Syriza’s demands aside, its brinkmanship in renegotiating the painful terms of its international bailout always required one key element – a financial version of the old Cold War doctrine of ‘mutually assured destruction’.

A reprise of 2010/2011 would have seen any threat of Greek default or euro exit infecting markets everywhere and sending government borrowing costs across Italy, Spain, Ireland and Portugal soaring, heaping pressure on the Eurogroup to move closer to Athens’ demands to prevent a systemic euro collapse.

“Whoever gets scared in this game loses,” Greek Prime Minister Alexei Tsipras said this week as a three-month impasse threatens cash shortages ahead of critical debt repayments.

But the much-feared financial contagion – dubbed ‘euro crisis 2.0’ by forecasters at the turn of the year – has not materialized for euro zone governments sitting across the table.

And few if any investors expect the talks to be electrified by any sudden market blowout – eye-watering gyrations in local Greek markets notwithstanding. Borrowing costs across the euro zone hover near record lows, euro zone equities are within a whisker of 7-year highs and the euro currency has held in a five-cent range for two months.

That’s all the more remarkable given how negative markets have turned on the outlook for Greece itself.

Almost half of all investors polled by German research group Sentix this month expect Greece to leave the single currency within 12 months, while the survey’s index measuring the risk of contagion to other parts of the euro zone fell to a record low.

“Greece is not capable of derailing the euro zone recovery nor is there a real risk of contagion to the periphery,” reckons Wouter Sturkenboom, strategist at the $272 billion asset manager Russell Investments.

Most scenarios sketched by banks and fund managers still center on some progress in talks or some protracted limbo involving some limited Greek default within the zone.

But even though exit is now a real risk, the gloomiest forecasts look mild compared to the chaos of three years ago.

Goldman Sachs says ‘Grexit’ – which they don’t expect to happen – could see Italian and Spanish 10-year bond premia over Germany more than trebling to as much as 400 basis points.

That’s about 200 basis points shy of peaks hit during the winter of 2011/12. And given German 10-year borrowing rates are near zero, those spreads would imply nominal borrowing costs for Italy or Spain 300 basis points below peaks of three years ago.

QE STABILIZER

Critical is the fact that foreign private exposure to Greek assets has dwindled since the default of 2012 and the bulk of Greek debts are now owed to other euro governments, the ECB and International Monetary Fund.

But regional calm is mainly thanks to several euro-wide emergency firewalls – such as the European Central Bank’s Outright Monetary Transactions or the European Stability Mechanism – built painstakingly over the past four years.

Chief among them is the trillion euro bond buying, or ‘quantitative easing’ program launched just last month.

“QE is probably the primary defense against contagion,” Deutsche Bank economist Mark Wall told clients.

By accident or design, the ECB’s rationing of QE via its so-called ‘capital key’ has an in-built stabilizer of its own.

That model means the ECB is set to buy more bunds than anything else with its 60 billion euro per month splurge to September 2016. But, partly as a result, three quarters of all bunds now yield less than zero and a quarter of that universe is illegible for QE purchases because yields are under the -0.2 percent threshold below which the ECB refuses to buy.

That has two implications. Any prior euro shock typically herded euro domestic investors to the perceived safety of bunds. Now they face blindingly expensive securities that even bond guru Bill Gross last week called the ‘short of a lifetime’.

But more powerfully, the growing inability of the ECB to buy bunds will likely force it to alter its capital key and skew purchases more toward the large, higher-yielding peripheral bond markets of Italy and Spain – further protecting these markets in the event of any Greek shock in the interim.

Without a spike in borrowing rates, shocks to business confidence and investment that whacked equity markets last time round are muffled.

It’s possible mutual or hedge funds shift money out of the bloc altogether. But the main result of that would be pressure on an already weakened euro exchange rate – a move likely cheered rather than booed in the rest of Europe as it underpins economic recovery and wards off deflation.

Some say the bigger risk from Syriza’s rise to power was political rather than financial contagion – emboldening anti-austerity movements across Europe, such as Podemos in Spain, and stoking euro scepticism and existential threats to the currency.

But chaos in Greece, no financial shock elsewhere and no concessions from Brussels could well have the opposite effect.

“There is no other Greece and there isn’t quite another Syriza,” JPMorgan economists told clients, pointing out the only popular anti-austerity party seeking euro exit was Italy’s Northern League. “The disorder unleashed by Greece’s exit would probably dampen support for these parties and reduce rather than increase the odds that others follow its lead.”

(Graphic by Vincent Flasseur and Marius Zaharia; Editing by Anna Willard)

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