News Archive

Boeing’s new 737 MAX poised to make first flight Friday

Boeing Co’s 737 MAX aircraft took off on its first flight on Friday from wet tarmac at an airport south of Seattle, marking another step toward scheduled delivery to airlines in 2017.

A Boeing company video showed the take-off of the plane, the fourth version of the original 737, which made its first flight in 1967. It features new engines from CFM International a joint venture of General Electric (GE.N) and Safran SA of France (SAF.PA).

Boeing has sold 3,072 of the planes and is racing to sell more as it battles for market share against rival Airbus’s (AIR.PA) competing A320neo, which earlier this month was delivered to its first customer.

Boeing is expected to deliver its first 737 MAX to customers in 2017.

(Reporting by Alwyn Scott; Editing by Jeffrey Benkoe and Grant McCool)

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Valeant defends price hikes after Clinton remarks; shares jump

Shares of Valeant Pharmaceuticals International Inc (VRX.TO)(VRX.N) jumped 6 percent on Friday, after the company responded to criticism by Democratic presidential contender Hillary Clinton over price hikes for its migraine drug.

The stock had tumbled Thursday, pressured by a blog post by Clinton’s campaign that detailed exorbitant price increases for the drug, D.H.E. 45.

At an Iowa town hall over the weekend, Clinton had said the list price for 10 vials of D.H.E. 45 had increased to more than $14,000 in December, from just over $3,000 in June 2014.

Valeant said Friday in a statement that a generic version of the drug, made by Perrigo Company PLC (PRGO.N), was widely available and outsold the branded product. Valeant said it has less than 1 percent market share for the drug.

“Whenever the sales volume of a drug declines, manufacturers must consider pricing adjustments to keep production of the drug viable,” Valeant said on its website. “Patients are able to choose generic versions of the drug, however, at significantly lower prices.”

Valeant shares jumped 6 percent in New York and Toronto in morning trading, after falling about 9 percent on Thursday.

Perrigo stock was up slightly.

D.H.E. 45, or dihydroergotamine, is an injectable analgesic.

Valeant, based in Laval, Quebec, has been under pressure since last year as cracks appeared in its business model of acquiring older drugs, steeply increasing their U.S. price, and using aggressive methods to overcome insurer barriers to reimbursing its medicines.

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Bernadette Baum)

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Chevron posts first loss since 2002 on crude oil plunge

Chevron Corp (CVX.N) reported its first quarterly loss in more than 13 years on Friday despite Wall Street’s expectations for a profit, as plunging oil prices eroded profitability across all its divisions.

It was the latest sign that the more than 70 percent drop in crude prices CLc1 since 2014 has humbled a once-strong energy sector and forced it to curtail new projects, lay off staff and shrink spending.

Chevron, the No. 2 U.S. oil producer, last month signaled its pain by cutting its 2016 budget by 24 percent to $26.6 billion, part of a strategy to contend with lower oil prices and hunker down for a hoped-for price rebound.

Smaller rivals Hess Corp (HES.N), Continental Resources (CLR.N) and Noble Energy (NBL.N) cut their own budgets early this week, ranging from 40 percent to 66 percent.

“We’re taking significant action to improve earnings and cash flow in this low price environment,” John Watson, Chevron’s chief executive, said in a press release.

The company posted a fourth-quarter net loss of $588 million, or 31 cents per share, compared with a net profit of $3.47 billion, or $1.85 per share, in the year-ago period.

The last time Chevron posted a quarterly loss was the third quarter of 2002.

Analysts at Wells Fargo had expected the San Ramon, California-based company to report a profit of 45 cents per share, while analysts at Barclays had expected a profit of 32 cents a share.

Wells Fargo analyst Roger Read attributed the miss to higher exploration expenses and weak operating results in the company’s U.S. exploration and production unit.

The bulk of Chevron’s losses came from its divisions that explore for and produce oil and natural gas, with its U.S. division alone posting a loss of $1.95 billion.

Surprisingly, Chevron’s refining divisions also saw profit plunge. Refiners typically see profitability increase when the price of their main feedstock – oil – falls. Chevron said the drop was due to a boost in the prior year from asset sales, and also smaller margins on specialty refined products.

Production rose 4 percent to 2.67 million barrels of oil equivalent per day in the quarter ended Dec. 31.

Shares of Chevron have slid about 5 percent so far this year through the Thursday close of $85.92 per share. On Friday, the stock traded 1.5 percent lower at $84.62.

(Reporting by Ernest Scheyder Editing by W Simon)

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Xerox to split into two companies, Icahn to get board seats on one

Xerox Corp (XRX.N) will split into two companies, one holding its legacy printer operations and the other its business process outsourcing unit, it said on Friday, in a bid to be more nimble after years of trying to integrate the businesses.

Activist investor Carl Icahn, who first revealed a stake in Xerox in November, will get three board seats on the outsourcing company. He tweeted on Friday that “the separation will greatly enhance value for Xerox Corp shareholders.”

Xerox shares rose nearly 6 percent to $9.78.

Xerox Chief Executive Officer Ursula Burns said in an interview on Friday that the strategic review had been underway before Icahn publicly revealed he had bought Xerox shares.

“The reason why it was easy to get to a decision is because we do have two businesses that rotate around two different axes,” Burns said.

Xerox also posted fourth-quarter results, with profit rising 42.5 percent and costs and expenses falling 7.3 percent.

The company, whose shares had fallen more than 30 percent in the past 12 months, has tried to turn itself around by focusing on software and services as customers cut printing costs.

The document technology company, which will make printers and copiers, will have annual revenue of $11 billion, while the business process outsourcing company will have $7 billion in revenue.

Regarding the two companies potentially attracting interest from buyers, Burns acknowledged that Xerox’s board and executives would speak to anyone interested.

“They are both strong and both large companies. But this would not be a small buy at $11 billion and $7 billion,” she said.

Susquehanna Financial Group LLP analyst James Friedman said he thinks Xerox’s services business once it separates is “an easy acquisition for someone but they will try and grow it themselves.”

Xerox had been trying to turn itself around, shifting focus to software and services as corporate customers cut printing costs and consumers shift to mobile devices.

Burns, who took the helm in 2009, said on Friday the leadership and names of the new companies were yet to be decided.

Xerox also increased its quarterly dividend 11 percent to 7.75 cents per share, payable on April 29 to shareholders of record on March 31.

Under Burns, Xerox took a leap into the services market in 2010 with its $6.4 billion acquisition of Affiliated Computer Services Inc.

Burns said the services business has changed over the years and is not just the old ACS asset. In December 2014, it sold its informational technology outsourcing arm, previously part of ACS, to France’s Atos SE (ATOS.PA) for more than $1 billion.

The split, expected to be complete by the end of 2016, will deliver $2.4 billion in savings over the next three years, Xerox said.

Lazard and Goldman Sachs were advisers to Xerox while Centerview Partners advised the board of directors.

(Reporting by Kshitiz Goliya in Benagaluru and Liana B. Baker in New York; Additional reporting by Supantha Mukherjee in Bengaluru; Editing by Saumyadeb Chakrabarty and Jeffrey Benkoe)

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Nissan recalling 870,000 cars in U.S., Canada for hood latch problem

Nissan Motor Co said Friday it will recall about 870,000 Nissan cars in the United States and Canada for potentially faulty hood latches, marking the third time since 2014 the automaker has recalled vehicles to address the problem.

The Japanese automaker said it is recalling the 2013-2015 Nissan Altima, because its secondary hood latch may bind on account of improperly applied rust coating and remain in the unlatched position when the hood is closed. That could result in the hood unexpectedly opening while driving.

The U.S. National Highway Traffic Safety Administration, which said on Friday that 846,000 vehicles in the United States would be recalled, has received complaints from owners of Altimas whose hoods unexpectedly opened. Altimas accounted for about 25 percent of Nissan’s U.S. brand sales last year.

Transport Canada in an online posting on Friday cited the same problem, saying that 24,895 vehicles were affected.

Nissan said the previous recall fixes may not have been performed consistently to remove the safety risk. Dealers will replace the hood latch with a new one starting next month.

The new hood latch has an improved coating designed to avoid rust. Prior recall fixes included inspecting and cleaning the hood latch and applying a lubricant.

(Reporting by David Shepardson)

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Fed extends comment period on capital buffer rule

WASHINGTON The Federal Reserve has extended the comment period for its proposal on how much capital banks should hold as a buffer against a major credit meltdown, it said on Friday.

The central bank said the public now has until March 21 to comment on the proposal. Initially, comments were due by Feb. 19.

The Countercyclical Capital Buffer would raise the capital requirements for large banks when they face increased risks of losses. The buffer would then be available to help banks absorb shocks associated with declining credit conditions, the Fed said.

The current proposal covers the factors the Fed would take into account to set the buffer.

(Reporting by Lisa Lambert; Editing by Meredith Mazzilli)

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Wall St. up as weak GDP spurs hope of slower rate hikes

Wall Street was higher on Friday after weak GDP data raised expectations that the U.S. Federal Reserve would go slow on future interest rate hikes.

U.S. gross domestic product rose 0.7 percent in the fourth quarter, below the 0.8 percent expected, as a strong dollar and tepid global demand hurt exports.

Intervention by central banks has become key to supporting turbulent markets, roiling under slowing global economic growth. The Bank of Japan cut a key interest rate below zero on Friday to spur its flagging economy.

While the Fed has not ruled out another rate hike in March, the current turmoil could force it to wait until June.

Investors are still reeling from one of the worst starts to a year as oil prices remain under pressure and fears of a China-led global slowdown grow.

U.S. stocks have failed to sustain several rallies in 2016 and are yet to post gains for three days in a row. The SP 500 has shed 7.4 percent this year to Thursday’s close.

“We’re likely to settle in at these levels for a short time, at least until more news comes out probably in a month or so,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

“Near term, I think it’s oil, earnings and technicals that are likely to drive the market.”

Crude prices held steady above $34 per barrel on Friday on hopes that top producers may agree to cut production.

At 9:36 a.m. ET, the Dow Jones industrial average .DJI was up 124.3 points, or 0.77 percent, at 16,193.94, the SP 500 .SPX was up 12.23 points, or 0.65 percent, at 1,905.59 and the Nasdaq Composite index .IXIC was up 21.28 points, or 0.47 percent, at 4,527.96.

Nine of the ten major SP sectors were higher, led by the 1.27 percent increase in tech stocks .SPLRCT.

Microsoft (MSFT.O) was up 4.6 percent at $54.46 on the software giant’s better-than-expected results. The stock was the biggest influence on all three indexes.

Chevron’s (CVX.N) shares were down 2.2 percent at $84.13, after the oil major reported its first quarterly loss in more than 13 years.

Amazon (AMZN.O) was down 9.4 percent at $575.84, after the company’s quarterly profit fell way below expectations.

Xerox (XRX.N) was up 3 percent to $9.51, after announcing a deal with Carl Icahn to split the company into two.

Abbvie (ABBV.N) was down 2.8 percent at $54.35 after the drugmaker reported lower-than-expected revenue.

Advancing issues outnumbered decliners on the NYSE by 2,375 to 336. On the Nasdaq, 1,731 issues rose and 451 fell.

The SP 500 index showed four new 52-week highs and five new lows, while the Nasdaq recorded eight new highs and 25 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D’Silva)

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BOJ stuns markets with surprise move to negative interest rates

TOKYO The Bank of Japan unexpectedly cut a benchmark interest rate below zero on Friday, stunning investors with another bold move to stimulate the economy as volatile markets and slowing global growth threaten its efforts to overcome deflation.

Global equities jumped, the yen tumbled and sovereign bonds rallied after the BOJ said it would charge for a portion of bank reserves parked with the institution, an aggressive policy pioneered by the European Central Bank (ECB).

“What’s important is to show people that the BOJ is strongly committed to achieving 2 percent inflation and that it will do whatever it takes to achieve it,” BOJ Governor Haruhiko Kuroda told a news conference after the decision.

In adopting negative interest rates Japan is reaching for a new weapon in its long battle against deflation, which since the 1990s have discouraged consumers from buying big because they expect prices to fall further. Deflation is seen as the root of two decades of economic malaise.

Kuroda said the world’s third-biggest economy was recovering moderately and the underlying price trend was rising steadily.

“But there’s a risk recent further falls in oil prices, uncertainty over emerging economies, including China, and global market instability could hurt business confidence and delay the eradication of people’s deflationary mindset,” he said.

“The BOJ decided to adopt negative interest rates … to forestall such risks from materializing.”

Kuroda said as recently as last week he was not thinking of adopting a negative interest rate policy for now, telling parliament that further easing would likely take the form of an expansion of its massive asset-buying program.

But, with consumer inflation just 0.1 percent in the year to December despite three years of aggressive money-printing, the BOJ’s policy board decided in a narrow 5-4 vote to charge a 0.1 percent interest on a portion of current account deposits that financial institutions hold with it.

The central bank said in a statement announcing the decision it would cut interest rates further into negative territory if necessary, in its battle against deflation.

“Kuroda had been saying that he didn’t think something like this would help so it is a bit surprising and it’s clear the market has been surprised by it,” said Nicholas Smith, a strategist at CLSA based in Tokyo.

Some economists doubted the BOJ move would prove effective.

“It has gone on the defensive,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. “It made this decision not because it’s effective, but because markets are collapsing and it feels it has no other option.”


Several European central banks have cut key rates below zero, and the ECB became the first major central bank to do so in June 2014.

In pursuing the same path, the BOJ is hoping banks will step up lending to support activity in the real economy, rather than pay a penalty to deposit excess cash at the central bank.

There is little sign of any pent-up demand from Japanese banks or cash-rich companies for fresh funds, however, and any money released into the system may merely be hoarded or steered into speculative activity.

“This is an aggressive all-stick-no-carrot approach to spurring investment,” said Martin King, co-managing director at Tyton Capital Advisors in Tokyo.

The BOJ maintained its pledge to expand base money at an annual pace of 80 trillion yen ($675 billion) via aggressive purchases of Japanese government bonds (JGBs) and risky assets conducted under its quantitative and qualitative easing (QQE) program.

The BOJ’s move – boosting the dollar by 1.7 percent against the yen – could make it even harder for the U.S. Federal Reserve to raise interest rates four times this year, as originally envisaged by its policy board.


Markets have been split on whether Japan’s central bank would ease policy as slumping oil costs and soft consumer spending have ground inflation to a halt, knocking price growth further away from the BOJ’s ambitious 2 percent target.

This is the fourth time the BOJ has pushed back its time frame for hitting its inflation target – from an initial goal of around March 2015.

Friday’s surprise interest rate decision came in the wake of data that showed household spending and output slumped in December, underscoring the fragile nature of Japan’s recovery.

Many analysts had already been suggesting that the BOJ had little scope left to expand its asset-buying program.

“I think this is a regime change and the BOJ’s main policy tool is now negative interest rates,” said Daiju Aoki, an economist at UBS Securities in Tokyo. “This shows that the ability to buy more JGBs is limited.”

Kuroda said the BOJ was not running out of policy ammunition.

“Today’s steps don’t mean that we’ve reached limits to our JGB buying,” he said. “We added interest rates as a new easing tool to our existing QQE framework.”

(Additional reporting by Stanley White, Tetsushi Kajimoto, Kaori Kaneko and Joshua Hunt; Writing by Alex Richardson; Editing by Eric Meijer and Jacqueline Wong)

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MasterCard profit rises 11.1 percent as purchase volumes jump

MasterCard Inc (MA.N) reported a better-than-expected quarterly profit and said it would accelerate investments in China, even as concerns mount over slowing growth in the world’s second-largest economy.

Shares of the world’s No. 2 payments network rose as much as 5.6 percent and were set for their best day in five months.

The company’s profit beat mirrored that of larger rival Visa Inc (V.N), which backed its full-year forecast on Thursday.

Visa’s shares rose as much as 5.2 percent to $72.95.

MasterCard is working with China’s two top state-held commercial banks to launch their mobile payment products in the country, Chief Executive Ajay Banga said on a conference call.

China’s decision to open up its $7 trillion bank card market to foreign companies is expected to boost earnings at MasterCard and Visa.

MasterCard expects to see double-digit annual growth in credit card transaction volumes in the country, a senior executive told Reuters in November.

The company, which operates payments service MasterPass, also plans to increase its digital investments.

MasterPass is a digital payments service that enables users to shop online using mobile phones.

The company’s net income rose to $890 million, or 79 cents per share, in the fourth quarter ended Dec. 31 from $801 million, or 69 cents per share, a year earlier.

Analysts on average estimated earnings of 69 cents per share, according to Thomson Reuters I/B/E/S.

Net revenue rose 4 percent to $2.52 billion.

Gross dollar volume — the total value of transactions made by its customers — rose 12 percent to $1.2 trillion on a local currency basis.

Up to Thursday’s close of $83.43, MasterCard’s stock had lost about 3 percent since the beginning of 2015, underperforming Visa’s 5.8 percent gain.

(Reporting By Sudarshan Varadhan and Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

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