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Exclusive: Brookfield mulls buying mall operator General Growth

Brookfield Asset Management Inc (BAMa.TO) has been exploring an acquisition in recent months of General Growth Properties Inc (GGP) (GGP.N), the U.S. mall operator with a market value of $24 billion, according to people familiar with the matter.

A potential deal would illustrate how major property investors such as Brookfield view publicly listed real estate assets as cheap, as concerns over U.S. economic growth weigh on the valuations of several real estate investment trusts.

Brookfield, a Canadian asset management firm that through several entities owns around 34 percent of GGP, has approached several potential investment partners, including sovereign wealth funds, to discuss possibly taking GGP private, the sources said this week.

The preliminary deliberations have not advanced, according to the sources, who cautioned there was no certainty Brookfield would make an offer to GGP.

The sources asked not to be identified because the matter is confidential. Brookfield declined to comment while GGP did not respond to requests for comment. GGP shares jumped as much as 6.5 percent on the news and ended trading at $27.56, up 1.5 percent.

GGP has 131 properties, mainly in the United States, including the planned development of the Ala Moana Center in Hawaii. GGP’s tenants include car maker Tesla (TSLA.O), jeweler Tiffany Co (TIF.N) and retailer Macy’s Inc (M.N).

A deal for GGP would be similar to a related transaction that Brookfield is pursuing. Earlier this month, it offered to purchase the remainder of mall operator Rouse Properties Inc (RSE.N) that it does not already own. Rouse was spun off from GGP in 2012 and currently has a market value of $1 billion. It has said it is considering Brookfield’s offer.

Brookfield has also partnered with co-investors in the past. It has been a major backer of GGP since its emergence from bankruptcy in 2010.

In November, GGP reported in its third-quarter results that earnings before interest, taxes, depreciation and amortization had increased 5.6 percent to $526 million from $498 million in the same period from a year earlier.

GGP’s stock has traded down about 13.4 percent in the last 12 months, though the company had increased its quarterly dividend to $0.19 from $0.17 over the same time period.

In March 2015, rival mall owner Simon Property Group Inc (SPG.N) offered to buy peer Macerich Co (MAC.N) for $14.4 billion in cash, in a deal that would have joined the No. 1 and No. 3 U.S. shopping mall owners. Macerich spurred Simon’s overtures.

(Reporting by Pamela Barbaglia in London and Mike Stone in New York; Additional reporting by Anjuli Davies in London, Matt Scuffham in Toronto and David French in Dubai; Editing by Jeffrey Benkoe, Bernard Orr)

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Ford Motor quarterly profit beats Street expectations

DEARBORN, Mich. Ford Motor Co (F.N) said on Thursday fourth-quarter results beat Wall Street expectations, and it reiterated a forecast that 2016 pretax profit would be equal to or higher than last year.

Excluding one-time items, Ford earned 58 cents a share in the fourth quarter, versus Wall Street expectations of 51 cents, according to Thomson Reuters I/B/E/S.

The automaker earned most of its money in the quarter and for the full year in North America, where falling gasoline prices have spurred demand for profitable large pickups, including the Ford F-150 and Super Duty models.

However, Ford cautioned again Thursday that profit margins in its North American business in 2016 may not equal the 10.2 percent level achieved in 2015.

The stock lost 2.2 percent to $11.58.

Ford improved profits in Asia and in Europe, where the automaker Ford turned a full-year profit for the first time since 2011. However, a $295 million quarterly loss in Latin America more than offset the $131 million fourth quarter profit from European operations. Ford Chief Financial Officer Bob Shanks said Thursday Brazil’s economy will continue to contract.

Despite record profits for 2015, Ford shares have slumped more than 15 percent since Jan. 1 through the close of trade on Wednesday as analysts and investors have begun factoring in fears that the U.S. and Chinese auto markets are headed for slower growth, or possibly contraction, over the next several years following a long boom.

Ford disappointed investors earlier this month with a 2016 profit outlook that called for pre-tax profits excluding special items to be “equal to or greater than” the $10.8 billion reported for 2015. Analysts had expected pre-tax profit of $11 billion for 2016, on average.

Ford said earlier this month it will pay a special dividend of $1 billion.

Ford said North American automotive profit margins for the fourth quarter were 10.2 percent, compared with 9 percent a year ago. For 2016, Ford has projected North American profit margins of 9.5 percent or better.

“We are at more of a plateau, but at very high absolute levels,” Shanks told reporters Thursday morning.

Rival General Motors Co (GM.N), which reports fourth quarter results Feb. 3, has forecast 10 percent margins for its North American operations in 2015. GM earlier this month boosted its forecast for 2016 profits to $5.25 to $5.75 a share, excluding one-time items.

(Reporting by Joe White and Bernie Woodall in Detroit; Editing by Lisa Von Ahn and W Simon)

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Oil soars toward $34 on possible production cuts

NEW YORK Oil rose on Thursday after a Russian official said that Saudi Arabia had proposed that oil-producing countries cut output by up to 5 percent each, amid a global supply overhang that has depressed prices for over a year and a half.

Crude accelerated higher after Russian Energy Minister Alexander Novak revealed the proposed reductions in output, which would amount to about 500,000 barrels a day of cuts by Russia, one of the largest producers outside OPEC.

If implemented, the output reductions could help ease a supply glut that caused oil prices to fall more than 60 percent since mid-2014. Prices hit their lowest level for more than 12 years last week.

Novak’s comments helped send Brent crude LCOc1 up more than 8 percent to almost $36 a barrel and U.S. crude CLc1 up almost as much to crest just below $35.

The buying quickly subsided and as of 11:46 a.m. EST, Brent LCOc1 futures for March delivery were up 74 cents, or 2.2 percent, at $33.84 a barrel. Delivery for the contract begins tomorrow.

U.S. crude CLc1 was up 71 cents, or 2.2 percent, at $33.01 per barrel.

Novak also said that it was reasonable to discuss the situation in the oil market and that OPEC was trying to organize a meeting with other producers next month.

A senior Gulf OPEC delegate said that Gulf countries and Saudi Arabia are willing to cooperate on any action to stabilize the oil market.

Anticipation that OPEC and non-OPEC producers could coordinate production cuts has been around all week, and a closing gain on Thursday would be the third in a row.

But analysts and market watchers have been skeptical, saying it was unlikely a deal would emerge, particularly as Iran, which has boosted oil exports after the lifting of sanctions, seeks to recover its market share.

“The rally this morning isn’t going to last,” said Bill Baruch, senior market strategist at in Chicago.

“It’s a buy-the-rumor, sell-the-fact affair until we see something substantial”

A media report that OPEC delegates said they had not heard yet of any plans for talks also tempered oil’s initial gains.

“I haven’t seen any official comments from the Saudi Arabians yet, so I think the latest push is just another wave of covering by the spec shorts,” said Gene McGillian, Senior Analyst at Tradition Energy in Stamford Connecticut.

Short covering has been a major factor in oil’s recovery from last week’s lows. Speculators have raced to unwind some of the record-large bearish positions racked up over the last six months. [CFTC/]

(Reporting by Devika Krishna Kumar and Jessica Resnick-Ault in New York; Additional reporting by Meeyoung Cho in Seoul, Osamu Tsukimori in Tokyo and Henning Gloystein in Singapore and Simon Falush in London; Editing by Alden Bentley and Bernadette Baum)

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Lower oil prices squeezing U.S. manufacturing sector

WASHINGTON New orders for long-lasting U.S. manufactured goods in December recorded their biggest drop in 16 months as lower oil prices and a strong dollar pressured factories, the latest indication that economic growth braked sharply at the end of 2015.

Despite the slowdown in growth, which was acknowledged by the Federal Reserve on Wednesday, the labor market remains on solid ground. First-time filings for jobless benefits retreated from a six-month high last week, other data showed on Thursday.

Economists have expressed worries that the energy sector slump and drag from a strong dollar are spilling over to other parts of the economy, which would lead to continued weakness in early 2016.

“U.S. companies are cutting investment sharply, and the key worry is that it seems to be spreading beyond the oil sector and in the meantime consumers are missing in action, not able to offset the huge drag from the energy sector,” said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.

The Commerce Department said durable goods orders plunged 5.1 percent last month, the biggest drop since August 2014, after slipping 0.5 percent in November. The decline was generally broad-based, with orders for transportation equipment plunging 12.4 percent and bookings for non-defense aircraft plummeting 29.4 percent.

The drop in aircraft orders is surprising as Boeing (BA.N) received orders for 223 aircraft in December, up from 89 planes the prior month, according to information posted on its website.

Economists had forecast durable goods orders falling only 0.6 percent last month. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 4.3 percent in December, the largest drop in 10 months. These so-called core capital goods orders fell 1.1 percent in November. The decline in orders for both durable and capital goods adds to weak data on retail sales, industrial production, exports and business inventories, suggesting the economy slowed sharply in the fourth quarter.

Apart from the buoyant dollar and spending cuts by energy firms bruised by the slump in oil prices, the economy has been blindsided by anemic demand overseas and business efforts to trim an inventory overhang. The growth outlook has been dimmed by the recent stock market selloff.

According to a Reuters survey of economists, the government is expected to report on Friday that fourth-quarter gross domestic product increased at a 0.8 percent annual rate after notching a 2 percent pace in the third quarter. There is, however, a risk that output contracted in the fourth quarter.

The U.S. dollar .DXY extended losses against the euro after the data and was down against a basket of currencies. Stocks were largely flat as were prices for U.S. government debt.


The Fed said on Wednesday “economic growth slowed late last year” and noted that business fixed investment has been increasing at a “moderate” pace in recent months.

The U.S. central bank left its benchmark overnight interest rate unchanged and said it was “closely monitoring global economic and financial developments” to assess their impact on the U.S. labor market and inflation.

Economists said the dour durable goods orders report could heighten the Fed’s concerns about the impact of global headwinds and the fallout from the dollar .DXY, which has gained 11 percent against the currencies of the United States’ main trading partners since last January.

“While some of this slowdown is likely to be reversed in coming quarters, it will continue to argue for caution at the Fed about whether the economy can handle a further tightening in monetary policy in the near term,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

The Fed raised rates in December for the first time in nearly a decade.

Weak oil prices have eroded the profits of energy companies, forcing oilfield service firms like Schlumberger (SLB.N) and Halliburton (HAL.N) to cut capital spending budgets.

Oil prices have dropped more than 60 percent since mid-2014.

Pointing to weak business spending in the fourth quarter, shipments of core capital goods – used to calculate equipment spending in the GDP report – fell for a third straight month in December. Unfilled core capital goods orders declined 1.0 percent, the biggest drop in nearly six years. In a second report, the Labor Department said initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 278,000 during the week ended Jan. 23. The drop almost reversed the prior two weeks’ increases.

It was the 47th straight week that claims remained below the 300,000 mark, which is associated with strong labor market conditions. That is the longest stretch since the early 1970s.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

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Under Armour demand continues to soar, stock leaps

Under Armour Inc (UA.N), the No. 2 U.S. sportswear maker, on Thursday reported a better-than-expected 31 percent jump in revenue, allaying concerns that apparel sales were slowing, sending its stock up as much as 21 percent.

The company’s shares were up 19.3 percent at $81.84 in heavy trading after it also forecast full-year 2016 revenue above Wall Street estimates.

Analysts and investors have been spooked by results from department stores and sporting goods retailers, such as Macy’s Inc (M.N) and Dick’s Sporting Goods Inc (DKS.N), who had warned of poor sales during the holiday quarter.

Dick’s Sporting Goods, Under Armour’s biggest customer, cut its same-store sales expectations for the holidays in November, saying it was seeing lower demand for apparel and footwear.

But Under Armour’s sales of apparel rose 22.2 percent to $864.8 million in the fourth quarter, driven by demand for training, running, golf and basketball clothing. Apparel accounts for nearly three quarters of the company’s total revenue.

“The growth last quarter affirms that the momentum continues for them. Even apparel continues to be very strong, which people had thought would slow by now, but it hasn’t,” FBR Capital Markets analyst Susan Anderson said.

Under Armour has been quick to cash in on the new trend of “athleisure,” a mash-up of athletic and casual clothing growing popular even in formal settings like offices, which has helped it maintain a revenue growth momentum of more than 20 percent for 23 straight quarters.

Sales have also been boosted by the company’s sponsorship deals with popular sports personalities such as basketball star Stephen Curry and golfer Jordan Spieth, and English Premier League club Tottenham Hotspur.

Overall, sales rose 31 percent to $1.17 billion, beating analysts’ average estimate of $1.12 billion.

“If you look at the numbers versus Nike Inc (NKE.N), they’re still very, very tiny, so I think we can continue to see this growth over the next 3-5 years,” Anderson said.

Another bright spot was footwear sales, which nearly doubled to $166.9 million, driven by new products in running and demand for NBA-star Curry’s signature basketball shoe line.

The Baltimore, Maryland-based company forecast full-year 2016 sales of $4.95 billion, topping analysts’ average expectations of $4.91 billion.

Net income rose 20.4 percent to $105.6 million, or 48 cents per share, in the quarter ended Dec. 31, beating the average estimate by 2 cents.

(Reporting by Ramkumar Iyer in Bengaluru; Editing by Shounak Dasgupta)

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Yahoo to shut Argentina and Mexico offices

Yahoo Inc plans to close its offices in Argentina and Mexico, a company spokeswoman said on Thursday.

The company will maintain its Latin American operations through its teams in Brazil and Coral Gables, Florida.

Yahoo declined to specify how many jobs were affected, but said the offices were “small sales-focused”.

Technology news website TechCrunch first reported the closures.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Maju Samuel)

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Facebook’s market value surges $38 billion as mobile ad sales soar

Facebook Inc’s (FB.O) market value soared by $38 billion in morning trading on Thursday, vaulting the company ahead of Inc (AMZN.O), after the social networking service’s quarterly results blew away expectations on every key measure.

Facebook’s stock jumped more than 14 percent to $107.95 after the company reported a blockbuster quarter on Wednesday, pushing the company’s market capitalization over $300 billion.

That made it the fourth most valuable technology company, overtaking Amazon, which was valued at about $290 billion ahead of its results later on Thursday.

At least 22 brokerages raised price targets on Facebook’s stock, with most analysts focusing on a far better-than-expected the 81 percent jump in revenue from mobile ads.

Facebook’s strong quarter contrasted with a disappointing performance by Apple Inc (AAPL.O), which is worth about $519 billion, making it the most valuable U.S. company.

“FB has built a remarkable ad platform that enables marketers of all stripes to serve targeted ads to nearly every consumer on the planet,” Jefferies analysts wrote.

Facebook said it had 1.59 billion monthly active users as of Dec. 31 – about one in every four people in the world.

Mobile ad revenue accounted for 80 percent of the total ad revenue in the quarter compared with 69 percent a year earlier.

“FB saw nothing that indicated macro weakness, and we think results bode well for other online ad names like Alphabet (GOOGL.O),” Jefferies analysts added.

Google-owner Alphabet, valued at $500 billion and closing in on Apple, will report results on Monday.

The median stock price target of the analysts tracked by Reuters was $138 on Thursday, suggesting that Facebook could add $123 billion in market value over the next 12 months.

Piper Jaffray was the most bullish, raising its target to $170 from $155.

“We believe Facebook is well positioned to increase its share of digital ad spend as well as to help grow the overall category given its reach and effectiveness for advertisers,” Goldman Sachs analysts said in a client note.

Facebook’s photo-sharing service Instagram, in particular, is poised to become a material contributor to revenue in 2016, the analysts said.

(Reporting by Sayantani Ghosh in Bengaluru; Additional reporting by Tenzin Pema; Editing by Saumyadeb Chakrabarty and Ted Kerr)

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Raytheon sees higher sales, profit in 2016; fourth-quarter profit tops view

WASHINGTON Raytheon Co (RTN.N) on Thursday reported better-than-expected fourth-quarter profit and forecast higher results for 2016, citing increasing demand from the Middle East, Asia and Europe for precision missiles and missile defense.

Chief Executive Officer Tom Kennedy told analysts that lower oil prices were not hurting demand from the Middle East, and several countries were looking to upgrade existing Patriot missile defense systems.

Revenues should rise 3 percent to 5 percent this year, up from an earlier forecast of 3 percent to 4 percent, Chief Financial Officer Toby O’Brien said.

Earnings per share were forecast to increase to $6.80 to $7.00 in 2016, from $6.75 per share in 2015, driven by domestic and international demand for its products and services.

Raytheon said international sales hit a record 31 percent of the total in 2015, while total revenues rose 2 percent to $23.2 billion, and should be in the same range this year.

Kennedy said Raytheon saw about $5 billion in potential Patriot sales around the world, including a large deal with Poland that could be completed this year. Upgrades to existing systems could add billions more, he said.

The company also sees more international demand across Raytheon’s portfolio of products and services, including cybersecurity, Kennedy said.

O’Brien said the company was still looking at smaller acquisitions for both its commercial and defense business as it continued to integrate the $1.9 billion Forcepoint cyber acquisition last year.

Raytheon shares rose 2.2 percent at $120.65 as analysts lauded the better-than-expected revenue forecast.

Quarterly net earnings fell to $571 million, or $1.85 per share, from $582 million, or $1.86, a year earlier, while revenues rose 3 percent to $6.3 billion.

The acquisition of Forcepoint lowered earnings per share by 8 cents, as expected, Raytheon said.

Analysts polled by Thomson Reuters I/B/E/S looked for earnings per share of $1.81 and $6.3 billion in revenues.

Full-year revenue grew for the first time since 2010, a year earlier than expected, and were expected to rise 3 percent to 5 percent this year, up from an earlier forecast of 3 percent to 4 percent, O’Brien said.

O’Brien said domestic sales were slated to rise in 2015 for the first time since 2009, with a budget agreement signed last year providing stability and higher funding levels for the future.

(Reporting by Andrea Shalal; Editing by Chizu Nomiyama and Jeffrey Benkoe)

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Italian tax police believe Google evaded 227 million euros in taxes: sources

MILAN Italy believes Google (GOOGL.O) evaded 227 million euros ($247.5 million) in taxes between 2009 and 2013 and could hit the U.S. Internet giant with hefty punitive fines, investigative sources said on Thursday.

The report by Italian finance police was due to be handed to Google later in the day and comes amid an increasingly angry debate across Europe over taxation of multinationals who park earnings in low-tax nations.

Asked about the Italian report, a Google spokesperson said: “Google complies with the tax laws in every country where we operate. We are continuing to work with the relevant authorities.”

Finance police suspect that over a five-year period, Google failed to declare some 100 million euros of revenues in Italy which would have fallen into a 27 percent corporate tax bracket.

In addition, some 600 million euros of royalties should have been revealed to the tax authorities and would have faced a tax demand for some 200 million euros.

A source said there was no agreement yet with Google on the issue and said the eventual sum requested of the U.S. company could be considerably higher once penalties and interest arrears were added.

Google’s latest figures show it paid 2.2 million euros of tax in Italy in 2014 on revenues of 54.4 million euros generated in the country. Italy’s Communications Authority estimates Google’s Italian revenues at around 10 times higher.

Last week Google agreed to pay 130 million pounds ($185 million) in back taxes to the British authorities, though the opposition Labour Party and others said the sum was too small compared with the profits the company earned in Britain.

In December, Apple Inc (AAPL.O) agreed to pay Italy’s tax office 318 million euros to settle a dispute over allegations it failed to pay taxes for six years, a source with direct knowledge of the matter said.

On Thursday, the European Commission weighed into the row over taxation of multinationals with a proposal that would allow EU countries to tax corporate profits at home in some cases, even if the money had been transferred elsewhere.

Google has based its regional headquarters in Dublin, where corporate tax rates are much lower than in Italy. The firm says its Italian presence merely provides consulting and marketing services for Google Ireland, the Middle East and Africa.

EU tax law protects companies against paying tax in a country where they do not have what is termed a “permanent establishment”.

Speaking to Reuters last September, a Google spokeswoman said the company was “naturally” attracted by Ireland’s relatively low corporate tax rate, as well as by the expansion prospects the country offered.

“If governments don’t like these laws they have the power to change them,” she said.

(Reporting by Sara Rossi, Manuela D’Alessandro, Emilio Parodi, Writing by Crispian Balmer; Editing by Janet Lawrence)

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