News Archive


Possible Buffett heir Abel has small Berkshire stake, likely to grow

(Reuters) – Greg Abel, considered by many investors the top contender to succeed Warren Buffett as Berkshire Hathaway Inc’s (BRKa.N) chief executive officer, on Friday reported owning about $2.1 million of the conglomerate’s stock.

Abel, who along with Ajit Jain was named a Berkshire vice chairman and director last week, disclosed his stake a day after Jain reported a $109 million ownership stake.

The stakes were disclosed in regulatory filings.

Abel, 55, who has run the Berkshire Hathaway Energy unit, was appointed vice chairman to oversee non-insurance operations such as the BNSF railroad, Dairy Queen ice cream, Fruit of the Loom underwear and NetJets planes.

Jain, 66, Berkshire’s top reinsurance executive and the other strong contender to succeed Buffett, was appointed vice chairman to oversee insurance operations such as Geico auto insurance and General Re reinsurance.

Abel reported holding his Berkshire stake indirectly for the benefit of his family. Berkshire Hathaway Energy said about a year ago that Abel owned a stake in that unit that could be converted into Berkshire stock worth more than $400 million at the time.

Omaha, Nebraska-based Berkshire said last week that relevant factors in its succession planning were that both possess “integrity, business savvy, an owner-oriented attitude and a deep genuine interest in Berkshire.”

Buffett, 87, has run Berkshire since 1965 and has not signaled any plans to leave soon. He owns roughly one-sixth of the company, comprising most of what Forbes magazine said on Friday is his $91.6 billion fortune.

Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman

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Parent company of 7-Eleven agrees to divest some U.S. stores in Sunoco deal

WASHINGTON (Reuters) – Seven i Holdings Co Ltd (3382.T), the Tokyo-based parent company of the 7-Eleven network of stores, agreed to sell and divest some of its stores in its proposed $3.3 billion acquisition of 1,100 Sunoco LP (SUN.N) outlets, the U.S. Federal Trade Commission said Friday.

Under the terms of the consent agreement, 7-Eleven will sell 26 retail fuel outlets that it owns to Sunoco, and Sunoco will retain 33 fuel outlets that 7-Eleven otherwise would have acquired. The FTC said without the sales the acquisition would harm competition in 76 local markets across 20 metropolitan areas and potentially result in higher prices. The deal was announced in April 2017.

The FTC said without the conditions, 7-Eleven would have a monopoly in some markets. The deal will preserve competition as Sunoco will convert the stations retained and acquired from 7-Eleven from company-owned sites to stations run by independent operators.

The remedy will “preserve competition as it is today, ensure that the divestiture assets go to a viable, large-scale competitor, and reduce the risks and costs associated with asset integration,” the FTC said.

The U.S. network of 7-Elevens consists of approximately 8,500 stores located in 35 states and more than 1,000 locations are company-operated.

The FTC said without the required divestitures a number of places would have uncompetitive markets include areas around Boston; Buffalo, New York; Fort Myers, Florida, Miami, Florida; Richmond, Virginia and the metropolitan Washington, DC area.

Under the agreement, 7-Eleven must provide notice for 10 years of plans to acquire additional outlets in the 76 local areas.

Sunoco announced the deal to sell the 1,000 convenience stores to 7-Eleven’s U.S. unit to focus on its fuel supply business. Sunoco said in November on an earnings call it hoped to close the transaction before the end of the year but said it could slip into the first quarter depending on regulatory reviews.

Reporting by David Shepardson; Editing by Lisa Shumaker and Diane Craft

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Venezuela’s woes poised to hit U.S. oilfield service firms’ earnings

HOUSTON (Reuters) – U.S. oilfield service companies exposed to Venezuela face new hits to earnings from the South American nation’s ongoing economic turmoil and U.S. sanctions on the country and state-run oil company PDVSA.

Insufficient investment, payment delays to suppliers, and the sanctions imposed by the administration of U.S. President Donald Trump have hammered Venezuela’s oil industry and saw crude oil production fall 13 percent in 2017.

On Friday, Schlumberger (SLB.N) disclosed a $938 million write-down on its Venezuelan assets and receivables, citing political and economic woes affecting the country. It was the first big energy company to report fourth quarter results.

Schlumberger and other suppliers accepted promissory notes or reclassified Venezuelan receivables in recent years as a way to manage debts from PDVSA [PDVSA.UL]. But Friday’s charge signals troubles ahead for those with outstanding bills.

However, that is likely to be offset by improving business outlooks elsewhere as higher prices for crude boost oilfield activity.

Halliburton (HAL.N) and Weatherford International (WFT.N), which will report results over the next two weeks, are also owed money for their Venezuelan operations, the companies said in 2017 filings.

Halliburton in October said it was experiencing payment delays from its primary customer in Venezuela. At the time, it had $429 million in net trade receivables for its Venezuelan operations.

Meanwhile, Weatherford said in November that it would reclassify $158 million in receivables owed from its largest customer in Venezuela as non-current assets to reflect payment delays.

“The sanctions could affect our ability to collect payment on our receivables,” Weatherford said at the time.

A representative for Halliburton did not immediately respond to a request for comment. Weatherford declined to comment.

Schlumberger said it would remain in Venezuela and continue to seek payment for its work.

“It’s likely they’ll maintain a presence but only work if they are paid up front,” James West, senior managing director and a partner at investment bank Evercore ISI, said of the suppliers.

The United States in August slapped sanctions on Venezuela in a bid to punish actions by socialist President Nicolas Maduro, whose consolidation of power has sparked political turmoil. The sanctions prohibit dealings in new debt from the Venezuelan government and PDVSA.

Reporting by Liz Hampton, Editing by Rosalba O’Brien

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Wall Street ends higher despite government shutdown threat

NEW YORK (Reuters) – Wall Street rose on Friday, led by gains in consumer stocks, even as a possible government shutdown loomed.

The SP 500 and the Nasdaq hit record closing highs, while the Dow ended the day higher after trading in a narrow range.

Nike Inc (NKE.N), Philip Morris International Inc (PM.N) and Home Depot Inc (HD.N) rose between 1.5 percent and 4.8 percent on upbeat analyst expectations, helping to boost the SP 500. Conversely, losses in International Business Machines Corp (IBM.N) and American Express (AXP.N) capped gains on the Dow.

The Dow Jones Industrial Average .DJI rose 53.91 points, or 0.21 percent, to close at 26,071.72, the SP 500 .SPX gained 12.27 points, or 0.44 percent, to 2,810.3 and the Nasdaq Composite .IXIC added 40.33 points, or 0.55 percent, to 7,336.38.

For the week, the Dow rose 1.04 percent, the SP 500 added 0.86 percent and the Nasdaq gained 1.04 percent.

Nine of the 11 major SP sectors were higher, led by a 1.1 percent gain in the consumer staples index .SPLRCS and a 0.9 percent rise in consumer discretionary stocks .SPLRCD.

A disappointing full-year profit forecast from IBM pushed its shares down 4.0 percent, the biggest single-day loss since July.

American Express slipped 1.8 percent after posting its first quarterly loss in 26 years and suspending share buybacks for the next six months.

“The market has a few jitters as the result of a potential shutdown,” said Kevin Miller, chief executive of E-Valuator Funds in Bloomington, Minnesota. “From a longer-term perspective, corporate earnings are still strong, and we’re about to engage in the benefits of tax reform.”

The U.S. Senate was racing to avert a shutdown ahead of a midnight deadline on the spending measure amid lingering disagreements between Democrats and Republicans. Negotiations continued on Friday after Senate Democratic leader Chuck Schumer met with President Donald Trump at the White House to address the impasse.

Advancing issues outnumbered declining ones on the NYSE by a 1.98-to-1 ratio; on Nasdaq, a 2.51-to-1 ratio favored advancers.

The SP 500 posted 105 new 52-week highs and nine new lows; the Nasdaq Composite recorded 171 new highs and 30 new lows.

Volume on U.S. exchanges was 6.82 billion shares, compared to the 6.32 billion average over the last 20 trading days.

Additional reporting by Sruthi Shankar in Bengaluru; Editing by Leslie Adler and James Dalgleish

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/3k4jX6FnZhc/wall-street-ends-higher-despite-government-shutdown-threat-idUSKBN1F81E5

GE shares stumble to worst week since financial crisis

NEW YORK (Reuters) – General Electric (GE.N) shares tumbled for a fifth straight session on Friday, sending the stock to its biggest weekly percentage drop since the financial crisis, after the company flagged a possible breakup and more than $11 billion in charges earlier in the week.

Shares in the U.S. industrial conglomerate fell 3 percent to $16.26 on Friday. That resulted in a 13.3 percent drop for the week, the largest such weekly decline since March 2009.

The stock fell as low as $16.02 on Friday, threatening to fall below $16 only a day after the stock breached $17 for the first time since December 2011.

The latest bout of selling for the struggling stock stemmed from GE’s announcement on Tuesday of more than $11 billion in tax, impairment and insurance charges. New GE Chief Executive John Flannery also indicated the company was looking closely at breaking itself up.

“The company has a more complicated issue than just making some changes to its business portfolio,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York. “These issues are going to probably take a long time to resolve.”

Potentially adding to the pressure on the shares, Deutsche Bank analyst John Inch said on Friday that GE may ultimately be forced to raise equity capital, given the company’s “cash squeeze” and apparent debt pressures.

Inch, who rates the stock “sell” with a $15 price target, said in a research note the prospects have increased that GE cuts its dividend further. GE in November cut its dividend in half as it also slashed its 2018 profit forecast.

A GE spokeswoman said the company has no plans to raise equity. GE earlier this week said its industrial cash flow will come in above its prior full-year estimate.

GE’s shares have been sliding for more than a year, falling nearly 45 percent in 2017 and frustrating shareholders at a time when the broader stock market has been rising to record levels.

The stock rebounded as much as 11 percent to start 2018, but is now down 6.8 percent for the year. This year, GE is the worst-performing component of the blue-chip Dow Jones Industrial Average .DJI, which has climbed 5.5 percent.

GE is due to report fourth-quarter results on Wednesday.

Additional reporting by Alwyn Scott; Editing by Rosalba O’Brien and Chris Reese

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ZSqVlVgAaB0/ge-shares-stumble-to-worst-week-since-financial-crisis-idUSKBN1F82BG

Fed’s Quarles says regulators have begun work to ‘streamline’ Volcker Rule

WASHINGTON (Reuters) – U.S. financial regulators have begun work on a proposal to “streamline” the Volcker Rule banning banks from making risky bets with their own money, the country’s top banking regulator said on Friday, in a development that will be cheered by banks that have long complained the rule is too onerous.

Randal Quarles, vice chairman for supervision at the Federal Reserve, told a conference in Washington that the five agencies which oversee the rule were working on a proposal but warned it would “take a bit of work for the agencies to congeal around a thoughtful Volcker Rule 2.0.”

Quarles, who was appointed to his role in October, used the speech to outline for the first time a comprehensive vision for how the Fed – the country’s top banking regulator – can go about easing rules introduced following the 2008 global financial crisis.

In addition to simplifying the Volcker Rule, Quarles said a proposal to recalibrate the leverage ratio that imposes an extra capital burden on banks should be published “relatively soon” and that he was working with the Fed board to simplify other loss-aborbency bank capital requirements.

He added that the Fed should take “concrete steps” to tailor liquidity requirements for non-global large banks and to increase further the transparency of bank stress tests designed to gauge how a bank would cope with a sudden market shock.

The Fed has also recently told on-the-ground bank examiners not to treat 2013 guidelines outlining restrictions on leveraged lending as a hard and fast rule – a subject of contention between the regulators and bankers, who say examiners have imposed the guidelines as though they were written into law.

Quarles cautioned that none of the envisaged proposals represented a gutting of core post-crisis reforms that have improved the resilience of the financial system and that his intention was to improve upon the efforts of his predecessors.

“Now is an eminently natural and expected time to step back and assess those efforts. It is our responsibility to ensure that they are working as intended and – given the breadth and complexity of this new body of regulation – it is inevitable that we will be able to improve them, especially with the benefit of experience and hindsight.”

Reporting by Michelle Price; Editing by Lisa Von Ahn and Cynthia Osterman

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/u7c_Y3ic8rM/feds-quarles-says-regulators-have-begun-work-to-streamline-volcker-rule-idUSKBN1F82B8

Nike at two-year high as analysts tout margin benefits of direct sales

(Reuters) – Nike Inc’s (NKE.N) shares surged to a two-year high on Friday after two Wall Street brokerages said the footwear maker’s profitability would soon reap the benefits of its recent move to sell directly to consumers.

Nike’s shares jumped nearly 5 percent, set for their best day since June 30, 2017, when the company said it would sell more products directly through retailers such as Amazon.com Inc (AMZN.O) and its own stores, rather than through wholesalers.

Bernstein Research and Wedbush Securities said this direct-to-consumer (DTC) model would boost Nike’s margins once the plans were fully implemented and the business accounted for a larger chunk of total sales from the current 28 percent.

In fact, Wedbush estimated Nike’s overall gross margins would expand for the first time in 10 quarters in the March-May quarter. It upgraded Nike’s stock to “outperform.”

Analyst Christopher Svezia said the company’s results next fiscal would also get a boost from the launch of new shoe styles and easier comparison with last year, when it took a bit of a beating from weak demand in North America.

Bernstein estimated said Nike’s realized retail price was double its wholesale price, suggesting the gross profit contribution of each product it sold directly was more than three times higher than if sold through a wholesaler.

“As Nike moves from a wholesale business to a more direct business, we believe there is clear margin upside from this shift,” analyst Jamie Merriman wrote in a note.

Merriman estimated gross margins in Nike’s DTC business are 62 percent, compared with 38 percent in its wholesale business.

Nike’s overall gross margins could grow by as much as 3.3 percentage points by 2022, Merriman estimated, if the DTC business increased to about 42 percent of total revenue.

That growth would be even more if margins in its e-commerce business scale to those in its store business, Merriman said, who rates Nike’s stock “outperform.”

The company’s shares were up 4.5 percent at $66.98, easily the top gainer on the bluechip Dow Jones Industrial Average .DJI. The stock rose to as much as $67.14, its highest since December 2015.

Reporting by Siddharth Cavale in Bengaluru; Editing by Savio D’Souza

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/gIHylARjyiA/nike-at-two-year-high-as-analysts-tout-margin-benefits-of-direct-sales-idUSKBN1F82E1

General Electric shares drop for fifth straight session

NEW YORK (Reuters) – General Electric (GE.N) shares tumbled for a fifth straight session on Friday, flirting with their biggest weekly percentage drop since the financial crisis, after the company flagged a possible breakup and more than $11 billion in charges earlier in the week.

Shares in the U.S. industrial conglomerate fell as low as $16.02, threatening to fall below $16 only a day after the stock breached $17 for the first time since December 2011.

In midday trading on Friday, the stock had pared some of its losses, falling 1.9 percent to $16.45. That put the shares on pace for a 12.3 percent drop for the week, just shy of a 12.8 percent weekly drop in October that was the largest such decline since March 2009.

The latest bout of selling for the struggling stock stemmed from GE’s announcement on Tuesday of more than $11 billion in tax, impairment and insurance charges. New GE Chief Executive John Flannery also indicated the company was looking closely at breaking itself up.

“The company has a more complicated issue than just making some changes to its business portfolio,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York. “These issues are going to probably take a long time to resolve.”

Some analysts said that the sum of GE’s various business units, including aviation, power and healthcare, may not be worth more than the stock price at current levels.

GE’s shares have been sliding for more than a year, falling nearly 45 percent in 2017 and frustrating shareholders at a time the broader stock market has been rising to record levels. In November, GE slashed its 2018 profit forecast and halved its dividend.

The stock rebounded as much as 11 percent to start 2018, but is now down more than 5 percent for the year. This year, GE is the worst-performing component of the blue-chip Dow Jones Industrial Average .DJI, which has climbed 5 percent.

GE is due to report fourth-quarter results on Wednesday.

Reporting by Lewis Krauskopf, Editing by Rosalba O’Brien

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/HSqqXGL9N7g/general-electric-shares-drop-for-fifth-straight-session-idUSKBN1F82BG

S&P lifted by consumer stocks, IBM weighs on Dow

(Reuters) – The SP 500 and the Nasdaq edged higher on Friday following positive brokerage recommendations on a bunch of consumer names, but the Dow was reined in by losses in IBM.

Philip Morris (PM.N), Nike (NKE.N) and Home Depot (HD.N) rose between 1.3 percent and 4 percent as analysts expect lower taxes and improving trends to boost their earnings.

“We’ve seen estimates being raised for 2018, so that provides some fundamental underpinnings for the strength we’ve in equity markets,” said Bill Northey, senior vice president of U.S. Bank Wealth Management in Helena, Montana.

However, a “disappointing” full-year profit forecast from IBM (IBM.N) pushed its shares down 4 percent, on track for their biggest single-day loss since July 2017.

American Express (AXP.N) slipped 3 percent after posting its first quarterly loss in 26 years and suspended buybacks for the next six months.

At 12:42 p.m. ET (1742 GMT), the Dow Jones Industrial Average .DJI was down 53.94 points, or 0.21 percent, at 25,963.87. The SP 500 .SPX was up 4.54 points, or 0.16 percent, at 2,802.57 and the Nasdaq Composite .IXIC was up 25.02 points, or 0.34 percent, at 7,321.07.

Eight of the 11 major SP sectors were higher, led by a 0.85 percent gain in the consumer staples index .SPLRCS and a 0.63 percent rise in discretionary stocks .SPLRCD.

The U.S. Senate raced to avert a government shutdown ahead of a midnight deadline with no agreement on funding in sight.

Although the House of Representatives voted on Thursday to extend the funding through Feb. 16, the bill appeared to be on the verge of collapse in the Senate.

“The market appears to be looking through this as a non-essential event, although we’re seeing a little bit of a pickup in volatility in the last couple of days,” Northey said.

Oil prices were down more than 1 percent as a bounce-back in U.S. production outweighed ongoing declines in crude inventories. [O/R]

Advancing issues outnumbered decliners on the NYSE by 1,718 to 1,111. On the Nasdaq, 2,004 issues rose and 896 fell.

Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/bPbFi6z8eaI/sp-lifted-by-consumer-stocks-ibm-weighs-on-dow-idUSKBN1F81E5