News Archive


GoPro revenue misses due to weak demand for new cameras


GoPro Inc forecast lower-than-expected revenue for the fourth quarter, due to lower demand for its recently launched flagship cameras and lack of new products for the crucial holiday quarter.

Shares of the company, which also forecast adjusted profit for the quarter well below analysts’ estimate, slumped 18.6 percent in extended trading on Wednesday.

GoPro Chief Executive Nicholas Woodman said weaker-than-expected demand for its Hero4 Session camera was due to its initial high price and fewer marketing campaigns.

“We made some mistakes and we have taken corrective action,” Woodman said.

The company launched its flagship camera in July for $399.99, but slashed its price by $100 two months later.

GoPro’s helmet- and body-mounted cameras are popular with surfers, skydivers and other adventure sports enthusiasts.

However, the recent advancements in video-shooting capabilities of smartphones, such as Apple Inc’s iPhone 6 range, is likely eroding GoPro’s consumer base.

The company forecast adjusted profit of between 35-45 cents per share on revenue of $500 million-$550 million.

Analysts had expected a profit of 82 cents per share on revenue of $690.5 million, according to Thomson Reuters I/B/E/S.

“They had a bigger portfolio this year, more stores, and the fact that their guiding down so much year-on-year shows that there just isn’t the end demand for their product longer term,” Oppenheimer Co analyst Andrew Uerkwitz said.

The company also reported lower-than-expected quarterly revenue and profit.

Net income rose to $18.8 million, or 13 cents per share, in the third quarter ended Sept 30 from net income of $14.6 million, or 10 cents per share, a year earlier.

Revenue rose 43 percent to $400.3 million.

Excluding one-time items, it earned 25 cents per share.

Analysts expected earnings of 29 cents per share on revenue of $433.6 million.

Revenue from its Americas market, which accounted for nearly three quarters of its sales a year earlier, fell 7 percent to $190.8 million.

However, demand for its cameras globally was strong as revenue from its international market nearly tripled to about$210 million.

The company has benefited from its focus on Japan, South Korea and China, which, GoPro said, was the fastest growing market in its history.

GoPro shipped about 1.59 million units during the quarter, up from about $1.08 million units shipped a year earlier.

(Reporting by AlanJohn Koshy and Lehar Maan in Bengaluru; Editing by Anil D’Silva)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/oGSIv2slZFE/story01.htm

VW dealers offer hefty discounts as diesel crisis keeps U.S. buyers away


DETROIT/SAN FRANCISCO Many of Volkswagen AG’s (VOWG_p.DE) U.S. dealers are offering hefty discounts of $6,000 and more on new 2015 and 2016 gasoline models as the German automaker began more aggressive efforts to rebuild sales in the wake of the diesel emissions cheating scandal, a Reuters analysis of dealer prices shows.

Retail price discounts range up to $7,850 on the 2015 Passat, according to an online survey of VW dealers on Wednesday. Discounts of up to $7,290 are being offered on the 2015 Jetta and up to $5,625 on the 2016 Jetta. Battery electric models such as the e-Golf have discounts of up to $11,000, while gasoline-electric models such as the Jetta Hybrid have prices slashed by up to $6,000.

Meanwhile, a potential deal between VW and U.S. and California regulators to fix nearly 500,000 diesel cars with illegal software could still be weeks away, according to two sources familiar with the discussions.

The German automaker continues to work to get its 2016 diesel models approved for sale by the U.S. Environmental Protection Agency and the California Air Resources Board, one of the sources said.

VW on Tuesday said it was “continuing to work with the agencies to provide a remedy” to resolve its diesel issues, but that it had “no announcements on timing.” CARB has given VW a Nov. 20 deadline to present solutions. EPA has not specified a deadline, but is working closely with CARB.

Owners of diesel VW models are “sitting back and waiting to see how much they’ll be compensated” in the form of discounts and other incentives, said Dennis Gaudet, a New Hampshire dealer who attended VW’s annual U.S. dealer meeting last week in Orlando.

VW has given U.S. dealers some money “to be able to take care of the customers who might be having the most difficult time,” said Gaudet.

After the scandal broke in mid-September, VW ordered its U.S. dealers to stop sales of 2015 models with four-cylinder diesel engines. The 2016 diesels have not been certified for sale by the EPA.

Previously, TDI versions of the Passat, Jetta, Golf and Beetle accounted for 20 percent or more of VW’s U.S. sales.

The one TDI model left on most VW dealer lots – the big Touareg V6 crossover – now comes with some of the heaviest price cuts, with a Houston dealer offering $11,400 off the sticker price of 2016 models and nearly $15,000 off 2015 models.

(Reporting by Paul Lienert in Detroit and Alexandria Sage in San Francisco; Additional reporting by Rory Carroll in San Francisco; Editing by Chris Reese)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/rhypsLzgL8g/story01.htm

Icahn takes stake in AIG, calls for breakup


Billionaire investor Carl Icahn on Wednesday urged American International Group Inc (AIG.N) to break itself apart, targeting a $78 billion insurer in one of the largest activist campaigns this year. AIG shares jumped almost 5 percent in heavy trading after the release of the proposal, which Icahn said was supported by hedge fund manager John Paulson.

Around two weeks ago, Icahn gave the company a heads up that he was taking a stake and was publishing a letter, according to a person familiar with the matter. The person added that AIG has hired an outside advisor to help it deal with Icahn’s campaign, a sign the two sides may be girding for a fight.

The bet by Icahn shows how top tier activists are targeting larger companies, and that no management team in Corporate America is immune from a dissident approach.

Icahn published a letter on Wednesday advising CEO Peter Hancock to spin off AIG’s life and mortgage units into public companies. The move would return more cash to shareholders, Icahn said, and help AIG rid itself of a regulatory burden.

AIG shares surged 4.9 percent to $63.89. Paulson, who owns 1.1 percent of AIG, added a quote to Icahn’s letter that said AIG can trade at over $100 per share.

Icahn’s regulatory angle refers to part of the 2010 U.S. financial reform known as Dodd-Frank. The legislation mandated that the Federal Reserve regulate all banks with assets exceeding $50 billion as well as certain non-bank entities.

AIG’s near collapse in 2008 was the driving force for Dodd-Frank’s inclusion of non-bank entities. The insurer received $182.3 billion in federal bailout money.

Four U.S. companies labeled non-bank “Systemically Important Financial Institutions” (SIFIs) are subject to enhanced regulation and supervision by the Fed: AIG, GE Capital, Prudential Financial and MetLife Inc (MET.N).

Some analysts said it will be tough for AIG to get rid of that kind of oversight, which also entails higher capital cushions.

“We think a spin-off of AIG’s mortgage insurer, coupled with an aggressive cost cutting campaign, are the most likely outcomes. However, we do not see AIG avoiding SIFI status given its previous government bailout,” said Cathy Seifert from SP Capital IQ.

‘FRANKLY OVERDUE’

General Electric Co (GE.N) announced this year that it was selling off large sections of GE Capital, in part to avoid being labeled a non-bank SIFI.

Icahn’s letter to AIG said the separate companies would be small enough to avoid the designation. He also said AIG should begin “much needed” cost cuts to better compete. (bit.ly/1M1Sxtf)

AIG’s Hancock said in a statement the insurer maintains a dialog with all its shareholders “and welcomes their feedback and ideas.” AIG is not expected to say anything further until its earnings call on Monday, according to the person familiar with the matter.

Icahn, who did not disclose the size of his stake, said several large shareholders, including Paulson, were frustrated and supported a break-up of AIG. Icahn’s campaigns have forced changes at companies such as Apple Inc (AAPL.O), eBay Inc (EBAY.O), and Chesapeake Energy Corp (CHK.N).

“AIG is frankly overdue in following in the footsteps of all other major multi-lines in breaking up Life and PC into separate companies,” Paulson said in a statement in Icahn’s letter.

In February 2012, Paulson urged The Hartford Financial Services Group to break itself up into two companies, but that campaign failed to significantly boost the company’s stock price, and Paulson began cutting his stake later that year.

Icahn’s go at AIG comes even after the company more than doubled its quarterly dividend and raised its share-repurchase target by $5 billion. AIG has also sold around 30 businesses for more than $90 billion since the financial crisis, and paid back the U.S. government.

But its cost structure remains bloated, and its underwriting operations have suffered from falling rates for commercial property and casualty insurance as pension funds have flooded the industry in search of yield.

AIG is trading below its book value of $79.74. Rival Prudential Financial Inc’s (PRU.N) book value is $92.33, and its shares traded up 2.3 percent to $82.93 on Wednesday.

Hancock has targeted a return on equity (ROE) of 10 percent over the long-term, up from 8 percent in the second quarter – a target Icahn said would still lag its peers.

Some analysts expressed doubt at the prospect of a breakup, which for a $78 billion insurer like AIG is likely a complex and potentially disruptive maneuver.

“It would be a mistake to think such a split could be accomplished quickly or easily considering the company’s substantial regulatory oversight and holding company obligations that are ultimately backed by the full organization,” RBC Capital Markets analyst Mark Swelle wrote in a research note.

(Additional reporting by Mike Stone; Editing by Savio D’Souza, Christian Plumb and David Gregorio)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZUq2V1C2ADA/story01.htm

Exclusive: U.S. trade czar says Britain would lose on trade outside the EU


WASHINGTON/BRUSSELS The United States is not keen on pursuing a separate free trade deal with Britain if it leaves the European Union, U.S. Trade Representative Michael Froman said on Wednesday, the first public comments from a senior U.S. official on the matter.

British voters are due to decide before the end of 2017 whether their country should remain in the EU, and opinion polls show rising support for leaving the bloc.

Froman’s comments undermine a key economic argument deployed by proponents of a British exit, who say the United Kingdom would prosper on its own and be able to secure bilateral free trade agreements (FTAs) with trading partners.

The United States is Britain’s biggest export market after the EU, buying more than $54 billion in goods from the United Kingdom in 2014.

“I think it’s absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity,” Froman told Reuters in an interview, adding that EU membership gives Britain more leverage in negotiations.

“We’re not particularly in the market for FTAs with individual countries. We’re building platforms … that other countries can join over time.”

If Britain left the EU, Froman said, it would face the same tariffs and trade barriers as other countries outside the U.S. free trade network.

“We have no FTA with the U.K. so they would be subject to the same tariffs – and other trade-related measures – as China, or Brazil or India,” he said.

Washington has just sealed a major trade deal with 11 other Pacific nations and wants to wrap up negotiations with the EU on the Transatlantic Trade and Investment Partnership (TTIP) by the end of next year.

The United States is Britain’s second-largest export market for vehicles outside the EU.

If Britain is not part of the EU and therefore not part of TTIP, British cars exported to the United States, such as those made by Jaguar Land Rover, would face a 2.5 percent tariff and could be at a disadvantage to German and Italian-made competitors.

British exports of fuel and chocolate could also be at a disadvantage if TTIP abolishes tariffs on those products.

(Reporting by Krista Hughes; Editing by Tiffany Wu)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/SZvWzU9C6OU/story01.htm

Northrop third-quarter results top estimates, 2015 profit outlook raised


WASHINGTON Hours after winning a multibillion-dollar contract to build a new U.S. bomber, Northrop Grumman Corp (NOC.N) reported higher-than-expected quarterly revenue and earnings on Wednesday, and increased its profit outlook for the full year.

Northrop, maker of the current B-2 bomber and Global Hawk unmanned planes, reported a 9 percent rise in third-quarter net profit to $516 million, or $2.75 per share, from $473 million, or $2.26 per share, a year earlier. Revenue edged up to $5.99 billion from $5.98 billion.

Analysts polled by Thomson Reuters I/B/E/S looked for earnings per share of $2.19 on revenue of $5.86 billion.

The company’s share price jumped 5.5 percent to $190.60 on the New York Stock Exchange.

On Tuesday Northrop beat out a Boeing Co (BA.N) and Lockheed Martin Corp (LMT.N) team to develop and build a next-generation long-range strike bomber for the U.S. Air Force. Analysts said the deal could be valued at up to $80 billion.

In a conference call after the earnings release, Chief Executive Officer Wesley Bush said an organizational realignment announced earlier his month was not intended to separate its services businesses.

The realignment would lower costs in the long term, but the company did not expect any material effect on costs this year, said Chief Financial Officer Ken Bedingfield.

Northrop raised its outlook for full-year 2015 earnings to $9.70 to $9.80 per share, from $9.55 to $9.70. It now expects 2015 revenue at $23.6 billion to $23.8 billion, raising the lower end of the previous range from $23.4 billion.

Overall operating income rose 3 percent and the operating margin increased to 13.3 percent from 12.9 percent due to higher pension adjustments and a $21 million decrease in corporate expenses.

Northrop said at the end of the quarter, $4.6 billion remained on its share repurchase program, but it will not introduce a new target for buybacks.

“Going forward we will return to our prior approach of assessing our repurchases from time to time in the context of our capital deployment strategy which has not changed,” Bush said during the call.

Bush said the international market accounted for 15 percent of its business so far this year and it was seeing interest from Europe on the Triton plane.

(Reporting by Andrea Shalal and Idrees Ali; Editing by W Simon and JS Benkoe)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/aWERwS2YzcQ/story01.htm

Apple defies China slowdown fears with strong iPhone sales


Slowdown? What slowdown?

Apple Inc (AAPL.O) reported blockbuster iPhone sales in China, suggesting that worries about the company’s growth trajectory in the world’s second-largest economy are overdone.

Apple’s shares rose nearly 3 percent in early trading on Wednesday.

The stock has lost about 7 percent of its value in the past three months as investors fret that the slowing Chinese economy would derail Apple’s successful run in the country.

Apple’s sales in Greater China, including Taiwan and Hong Kong, nearly doubled in the third quarter, accounting for nearly a quarter of the company’s total sales.

“If the Chinese consumer is pulling back on spending then it seems to be either at the very high luxury end or maybe on some of the everyday non-essential items,” Atlantic Equities analyst James Cordwell said.

“I think the smartphone is increasingly viewed as an essential in China. So, I don’t see the economy weighing significantly on Apple growth over the next few quarters.”

Apple’s results follow stronger-than-expected earnings from companies including Alibaba Group Holding Ltd (BABA.N) and Nike Inc (NKE.N).

RISING MIDDLE CLASS

Apple Chief Executive Tim Cook downplayed concerns about China on Tuesday.

“If I … just look at how many customers are coming in our stores regardless of whether they are buying, how many people are coming online and in addition to looking at our sales trends, I would not know there was any economic issue at all in China,” Cook said on a conference call.

Many large U.S. companies, including United Technologies Corp (UTX.N) and General Electric Co (GE.N), have expressed concerns about China’s slowing growth.

However, William Blair analyst Anil Doradla said Apple has several factors in its favor.

“These include the rising middle class and stronger purchasing power in the emerging markets, especially China and India, combined with the company facing little or no competition in the high end of the market,” Doradla wrote in a note.

Few analysts changed their price target on Apple’s stock after the results and only Pacific Crest changed its rating, upgrading the stock to “overweight” from “sector weight”, according to Thomson Reuters data.

Of 50 analysts covering the stock, 41 rate it “buy” or higher, while only one rates it “sell,” according to Thomson Reuters data. Their median price target is $150.

Apple’s stock was trading at $117.35 after the open.

(Reporting by Abhirup Roy and Tenzin Pema in Bengaluru, Writing by Sayantani Ghosh; Editing by Savio D’Souza)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Q4StPI_SIgc/story01.htm

Short sellers double down on Weight Watchers after Oprah invests


SAN FRANCISCO Bets against Weight Watchers International appear to have spiked after an investment by media mogul Oprah Winfrey led the troubled diet brand’s shares to double.

Borrowing in Weight Watchers shares jumped 25 percent last week after the celebrity disclosed she was buying 10 percent of the company, according to lending data from SunGard’s Astec Analytics, which provides a strong glimpse into short-selling activity.

Short sellers borrow shares and sell them, hoping to buy them back later for less to return to the lender.

A favorite of short sellers in recent years, Weight Watchers is suffering from a shift by consumers to free calorie-counting apps on smartphones as well as fitness tracking devices from companies including Fitbit.

News on Oct. 19 of Winfrey investing in Weight Watchers led its shares to rally 150 percent over five days, even as an upcoming quarterly report is expected to show a double-digit sales decline.

“Though the cash market seems to attribute paranormal stock-picking powers to Oprah, short sellers are seemingly more cautious,” SunGard said in a report on Wednesday.

Weight Watchers now trades at 29 times expected earnings, pricey compared with rival Nutrisystem at 21 times earnings.

With active online subscribers down a fifth from a four-year high last March, Winfrey’s frankness about her decades-long struggle with weight loss may help revive the brand.

“With so many free apps, it’s going to be difficult in the near-term to materially improve their operating performance,” said SP corporate ratings analyst Diane Shand. “But Oprah might bring a different perspective.”

From July through mid-October, 27 percent or more of Weigh Watchers’ outstanding shares were shorted, far above the average rate of 4.1 percent for consumer discretionary companies, according to Thomson Reuters data.

The stock has lost about 80 percent from highs in 2011 and on Wednesday it was down 0.48 percent at $16.61.

Weight Watchers is due to hand in its third-quarter report card on Nov 5. Analysts on average expect it to post a 23 percent drop in revenue from the same time last year, according to Thomson Reuters data.

The average estimate for earnings per share is 29 cents, although the SmartEstimate considering analysts with above average track records is for 28 cents per share.

(Reporting by Noel Randewich; Editing by Alan Crosby)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/8RbL365_kE4/story01.htm

Twitter’s results show its turnaround Moment still far off


Twitter Inc (TWTR.N) may be counting on Moments to drive growth, but the moment for celebrating a turnaround still looks far off.

Anyone hoping that Chief Executive Jack Dorsey’s plans to boost growth would have had a big impact on third-quarter results would have been disappointed.

Twitter reported both anemic user growth for the three months to Sept. 30 and offered up a tepid revenue forecast for the current quarter on Tuesday.

Twitter’s shares, already down 13 percent this year, were down 11 percent in early trading on Wednesday.

Some investors clearly expected more from Dorsey, the company’s co-founder who took the CEO role earlier this month after serving on an interim basis for nearly four months.

“While we believe many of the growth initiatives highlighted by ‘new’ CEO Jack Dorsey are promising, it remains less clear whether these will translate into more active user growth and engagement,” Baird Equity Research analysts wrote.

Twitter’s fourth-quarter revenue forecast of $695 million- $710 million was well below the average analyst estimate of $739.7 million.

In a few short months under Dorsey, Twitter introduced the ‘Moments’ feature, added polls to tweets, laid off about 8 percent of its workforce and rolled out a “buy” button.

Twitter executives spent a lot of time touting Moments on a post-earnings call. However, analysts remain mixed on the potential of the feature, which organizes what Twitter employees consider to be the day’s best tweets about key events.

PRICE TARGETS CUT

“We have been singularly unimpressed with Moments, and view the service as no different or more interesting than a typical home page on any competing news site,” Wedbush analysts said.

User growth will depend on the execution of those projects and Dorsey’s ability to find time to lead those efforts, analysts said.

Apart from Twitter, Dorsey is also running mobile payments company Square Inc, which is prepping for an initial public offering, and might require more of his time.

“We don’t believe a non-fulltime CEO is an ideal solution for Twitter today,” RBC Capital Markets analysts said in a note.

Of 44 brokerages covering Twitter, at least 17 cut their price targets, although none lowered their ratings.

And there are still 18 “buy” or higher ratings on the stock, along with 24 “holds” and only two “sell” ratings, according to Thomson Reuters data. The median price target is $34. Twitter’s shares were trading at $27.88 just after the opening.

Some analysts also believe that Twitter’s fourth-quarter guidance was conservative, and noted potential for the company to execute better in 2016 as its nascent products take hold.

And Dorsey may yet come through, some think.

“Twitter faces declining expectations and easing comps as it approaches 2016, which should be a perfect backdrop for a product-focused founder to look like a savior,” Stifel, which raised its rating on the stock, said in a note.

(Reporting by Anya George Tharakan in Bengaluru; Writing by Supantha Mukherjee; Editing by Ted Kerr)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/g6qP2nEJGms/story01.htm

GM offering UAW bigger bonus, profit sharing than FCA: Bloomberg


General Motors Co’s (GM.N) tentative agreement with the United Auto Workers union offers hourly employees a signing bonus of as much as $8,000 and better profit-sharing than Fiat Chrysler Automobiles NV FCAU.MI, Bloomberg reported.

The union’s new contract with Fiat Chrysler signed last week offers workers hired after 2007 a ratification bonus of $3,000, and those hired before 2007 a $4,000 bonus.

UAW members at GM got $5,000 under the 2011 contract, and those at Fiat Chrysler received $3,500.

The profit-sharing formula for GM workers would remain the same as in the previous contract, but wage increases would be similar to that agreed with Fiat Chrysler, Bloomberg said.

GM declined to comment.

Wages for GM’s lower-tier workers, those hired since 2007, would eventually climb to the veteran rate of about $29 an hour from a current maximum of about $19.

The UAW has pushed for a better deal with GM as the automaker is larger and more profitable than FCA, the report said. (bloom.bg/1S9tS6J)

(Reporting by Ankit Ajmera in Bengaluru; Editing by Anil D’Silva)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/jFiR1BqYOeE/story01.htm