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BP pays $10.5 billion for BHP shale assets to beef up U.S. business

MELBOURNE (Reuters) – BP Plc (BP.L) has agreed to buy U.S. shale oil and gas assets from global miner BHP Billiton (BLT.L) (BHP.AX) for $10.5 billion, expanding the British oil major’s footprint in oil-rich onshore basins in its biggest deal in nearly 20 years.

The acquisition marks a big turning point for BP since the Deepwater Horizon rig disaster in the Gulf of Mexico in 2010, for which the company is still paying off more than $65 billion in penalties and clean-up costs.

“This is a transformational acquisition for our Lower 48 business, a major step in delivering our upstream strategy and a world-class addition to BP’s distinctive portfolio,” BP chief Executive Bob Dudley said in a statement.

In a further sign of the upturn in its fortunes, BP said it would increase its quarterly dividend for the first time in nearly four years and announced a $6 billion share buyback, to be partly funded by selling some upstream assets.

The sale ends a disastrous seven-year foray by BHP into shale on which the company effectively blew up $19 billion of shareholders’ funds. Investors led by U.S. hedge fund Elliott Management have been pressing the company to jettison the onshore assets for the past 18 months. BHP put the business up for sale last August.

The sale price was better than the $8 billion to $10 billion that analysts had expected, and investors were pleased that BHP planned to return the proceeds to shareholders.

“It was the wrong environment to have bought the assets when they did but this is the right market to have sold them in,” said Craig Evans, co-portfolio manager of the Tribeca Global Natural Resources Fund.

BHP first acquired shale assets in 2011 for more than $20 billion with the takeover of Petrohawk Energy and shale gas interests from Chesapeake Energy Corp at the peak of the oil boom. It spent a further $20 billion developing the assets, but suffered as gas and oil prices collapsed, triggering massive writedowns.

The world’s biggest miner said it would record a further one-off shale charge of about $2.8 billion post-tax in its 2018 financial year results.


The deal, BP’s biggest since it bought oil company Atlantic Richfield Co in 1999, will increase its U.S. onshore oil and gas resources by 57 percent.

BP will acquire BHP’s unit which holds the Eagle Ford, Haynesville and Permian assets for $10.5 billion, giving it “some of the best acreage in some of the best basins in the onshore U.S.,” the company said.

It beat rivals including Royal Dutch Shell (RDSa.L) and Chevron Corp (CVX.N) for the assets, which have combined production of 190,000 barrels of oil equivalent per day (boe/d)and 4.6 billion barrels of oil equivalent resources.

BP said the transaction would boost its earnings and cash flow per share and it would still be able to maintain its gearing within a 20-30 percent range.

The company also said it would increase its quarterly dividend by 2.5 percent to 10.25 cents a share, the first rise in 15 quarters.

Meanwhile, a unit of Merit Energy Company will buy BHP Billiton Petroleum (Arkansas) Inc and the Fayetteville assets, for $0.3 billion.

Tribeca’s Evans welcomed the clean exit for cash, rather than asset swaps which BHP had flagged as a possibility.

“It leaves the company good scope to focus on their far better offshore oil business,” he said.

BHP Chief Executive Andrew Mackenzie said the company had delivered on its promise to get value for its shale assets, while the sale was consistent with a long-term plan to simplify and strengthen its portfolio.

BHP (BHP.AX) shares rose 2.3 percent after the announcement, outperforming the broader market and rival Rio Tinto (RIO.AX)(RIO.L).

BP said it would pay the $10.5 billion in installments over six months from the date of completion, with $5.25 billion of the consideration to be raised through the sale of new shares.

An Elliott spokesman declined to comment.

Reporting by Sonali Paul, additional reporting by Aditya Soni in Bengaluru; editing by James Dalgleish and Richard Pullin

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Asian shares post modest gains, trade fears hamper China

(This story was refiled to clarify state bank activity in spot yuan market in 13th paragraph.)

By Hideyuki Sano

TOKYO (Reuters) – Asian stocks edged higher on Friday on signs of rapprochement between the United States and Europe over trade issues and the yuan staunched losses on buying by Chinese state banks, though concerns about the Sino-U.S. tariff dispute tempered overall optimism.

European shares are expected to be firm, with spread-betters looking at flat to higher openings of 0.3 percent in Britain’s FTSE, France’s CAC and Germany’s DAX.

MSCI’s broadest index of Asia-Pacific shares outside Japan ticked up 0.3 percent, though Chinese shares underperformed with the CSI300 in the red for most of the day.

“Markets are worried that the Chinese economy will slow as trade frictions with the U.S. intensify. We think if the U.S. slaps additional tariffs on $200 billion goods from China, that would shave off China’s growth by 0.5 percentage point,” said Shuji Shirota, head of macroeconomic strategy at HSBC in Tokyo.

Japan’s Nikkei eked out a 0.1 percent gain though it was capped by worries that the Bank of Japan could scale down its asset purchase at its upcoming policy review next week.

MSCI’s gauge of stocks across the globe, ACWI, was up 0.05 percent after hitting four-month highs on Thursday, when European car maker shares gaining 2.6 percent after the European Union and the United States agreed to negotiate on trade, easing fears of a Transatlantic trade war.

U.S. industrial shares also made gains, rising 0.8 percent though the SP 500 Index dipped 0.30 percent on Thursday, due to a 19 percent dive in Facebook on its earnings showing slowing usage.

While that pushed down the Nasdaq Composite 1.01 percent, other U.S. tech firms held firm, with shares gaining 3.2 percent in after-market hours following its stellar earnings.

The 10-year U.S. Treasuries yield edged up to 2.9840 percent, its highest level in 1-1/2 months, on receding worries about trade tensions.

Yet Asian shares were more subdued as a heated trade dispute between Washington and Beijing have shown few signs of abating.

“Now that Washington does not need to use its energy to fight with Europe, it could increase pressure on China,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

So far this month, MSCI China A shares have fallen 2.6 percent, taking the biggest hit from U.S. President Donald Trump’s threats on tariffs and other issues among major markets, compared to 3.3 percent gains in MSCI ACWI.

The Chinese yuan eased, on course to mark its seventh week of losses, although the losses were cushioned by Chinese state banks’ swapping of dollars for yuan in the forward market. There was little evidence these banks had also been selling spot dollars, as they have been in recent weeks.

The onshore yuan traded at 6.8065 per dollar, near Tuesday’s 13-month low of 6.8295.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, fell to its lowest levels since May last year, having fallen 5.2 percent from a two year high hit in mid-May.

The euro traded little changed at $1.1647, having fallen 0.73 percent on Thursday after the European Central Bank signaled no change in its timetable to move away from ultra low rates or end its bond purchase program.

The dollar slipped 0.1 percent to 110.98 yen as the yen got a lift from rise in Japanese bond yields. The 10-year government bond yield hit one-year high of 0.105 percent.

In commodities, oil prices extended their recovery, after Saudi Arabia suspended oil shipments through a strait in the Red Sea following an attack on two oil tankers.

Brent crude futures traded flat at $74.52 per barrel, having gained 2.0 percent so far this week.

Editing by Sam Holmes Shri Navaratnam

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As Hyundai struggles, its labor union shows signs of softening

SEOUL (Reuters) – When workers at South Korea’s Hyundai Motor (005380.KS) went on strike last year, the stoppage lasted 24 days, triggered months of negotiations and netted them their smallest raise in nearly a decade.

This week, after just two days on strike, their powerful union agreed to a deal before the summer holidays, the first time in eight years that has happened.

The agreement gives workers a smaller raise than last year’s $14,000 in bonuses and wage increases, union officials said, declining to provide details. It had sought a 5.3 percent increase in wages, a request it reduced to 2.1 percent; inflation in South Korea is about 1.9 percent.

Those relatively small gains, and the speed to which they were agreed, are signs that the union may be softening its stance amid growing criticism, falling profits, the near bankruptcy of GM Korea and potential U.S. tariffs.

Union members endorsed the deal late Thursday, just before the automaker reported its second-worst quarterly net profit since 2012.

“We’re fed up with strikes and feeling a crisis too,” a Hyundai worker in its sprawling Ulsan factory complex, the world’s biggest automaking facility, told Reuters, citing GM Korea’s recent wage deal and trade disputes with Washington.

This year, General Motors’ (GM.N) South Korean unit shut down one of its four plants, cut jobs and agreed with its union to freeze wages, skip bonuses and trim benefits to stem mounting losses.

Hyundai chief executive Ha Eon-tae said during negotiations that a 25 percent tariff – a possibility as the U.S. escalates trade pressures globally – would be a “nuclear bomb.” He said it would lead vehicle prices to increase as much as $5,500 each and wipe out 70 percent of the company’s revenue, according to union notes seen by Reuters.

More than 70 percent of Hyundai’s workers are unionized. By contrast, the union participation rate in South Korea is only about 10 percent, the second-lowest after Turkey among member countries of the Organization for Economic Co-operation and Development.

The union’s 50,000 members helped drive Hyundai’s rapid growth in the 2000s, when the company earned record profits and had an operating margin above 10 percent – the industry’s highest.

The union, which has staged strikes in all but four of the 30 years since it was created, points to that performance in negotiating for generous wages and benefits.

But the inflation-beating wage increases over the years have widened the pay gap with non-unionized workers and subcontractors. Union members’ annual average wage was 92 million won ($82,000) in 2017, among the highest in the global auto industry.

When they launch strikes, the union’s office is bombarded with calls from businesses, conservative groups and others criticizing them for taking for granted their high wages, benefits and job security, some union members say.

South Korean news media also often slam the country’s auto unions for being “aristocrat unions.”

“We did our best to break through the social isolation the labor union faces and reach a deal before summer holidays,” union leader Ha Bu-young said in a newsletter after the deal.

At Hyundai’s Ulsan factory, a leaflet distributed by management in March ahead of wage talks warned of a GM Korea-like crisis, citing Hyundai’s high costs and low productivity. Hyundai claimed that the productivity of its South Korean factories is only 60 percent of those overseas.

“The crisis of the South Korea’s auto industry… it is not just the problem of GM Korea. Are we assured about the future of Hyundai Motor?” the leaflet said.


Another Hyundai employee, who works at the No.3 plant in Ulsan, said he will be forced to take a two-week summer holiday this month, instead of the company’s standard one-week holiday, because of slow demand for the Elantra sedan in South Korea and the United States.

“We have no choice but to change. If we don’t change, we will not able to survive,” another Hyundai worker said.

A lack of SUV models in the United States, a diplomatic row between South Korea and China last year and U.S. threats to impose tariffs on auto imports pose other problems to Hyundai’s high manufacturing costs in South Korea.

In another memo, dated June 21, Hyundai CEO Ha wrote: “When we look back enormous production and wage losses we have had, it may not be just me who has doubts about whether all those sacrifices were worth it. I am strongly committed to changing our consuming and routine negotiating culture.”

But workers say that even if their union softens its position, it needs to stay strong in fighting against the country’s powerful chaebol, which imposed massive job cuts during the 1997-1998 Asian financial crisis.

“It has to be powerful to give protection to its workers. We are concerned that the company will not protect us (when things go wrong),” the second worker said.

($1 = 1,125.5400 won)

Reporting by Hyunjoo Jin, Additional reporting by Haejin Choi; Editing by Miyoung Kim and Gerry Doyle

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U.S. regulator stands by decision to block Winklevoss bitcoin ETF

NEW YORK/WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.

The securities regulator found “unpersuasive” arguments that the bitcoin ETF proposed by Cameron and Tyler Winklevoss, the twin brothers who founded crypto exchange Gemini Trust Co LLC, would be sufficiently protected from manipulation, it said in a 92-page analysis posted on its website.

“Regulated bitcoin-related markets are in the early stages of their development,” the SEC said, saying that it “cannot…conclude that bitcoin markets are uniquely resistant to manipulation.”

But the SEC did not completely shut the door to such products coming to market once the bitcoin market has matured, offering some hope for at least five other bitcoin ETF proposals that are still pending before the regulator.

Bitcoin turned negative after the SEC’s ruling, and last traded down 2.9 percent.

The virtual currency can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could attract more investors and push its price higher.

The SEC said there was not enough evidence that efforts to thwart manipulation of the ETF’s price or that of the underlying bitcoin market would be successful.

The SEC had blocked the Winklevoss ETF from coming to market in March 2017, but then faced an appeal from exchange operator CBOE’s Bats exchange, which applied to list the ETF.

The CBOE said it was reviewing both the SEC’s notice and Commissioner Hester Peirce’s dissent.

“Investors are better served by products traded on a regulated securities market and protected by robust securities laws and we will continue to work with the SEC and ETF issuers to construct a fully regulated product,” said Chris Concannon, chief operating officer of CBOE Global Markets.

The parties can appeal the SEC’s decision in federal court.

Gemini did not immediately respond to requests for comment.

The Winklevoss twins are best known for their feud with Facebook Inc founder Mark Zuckerberg over whether he stole the idea for what became the world’s most popular social networking website from them. The former Olympic rowers ultimately settled their legal dispute, which was dramatized in the 2010 film “The Social Network.”

The SEC’s decision to block the ETF was voted for 3-1 by its sitting commissioners, with Peirce voting against. In a statement, Peirce said she believed the product met the legal standard.

“More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order,” she said, adding that the ruling “sends a strong signal that innovation is unwelcome in our markets.”

Reporting by Trevor Hunnicutt in New York and Michelle Price in Washington; additional reporting by Anna Irrera in New York; editing by Phil Berlowitz and Leslie Adler

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Papa John’s founder says successor not right fit for CEO

NEW YORK (Reuters) – John Schnatter, the founder and largest shareholder of Papa John’s International Inc (PZZA.O), said on Thursday that Steve Ritchie, who rose from a $6-per-hour employee to CEO with Schnatter’s backing, should not be leading the company.

Schnatter, who owns about 30 percent of Papa John’s, made the comments in an interview after he sued the pizzeria chain earlier on Thursday for not producing documents related to his ouster following allegations of inappropriate behavior.

“Steve Ritchie would be a great executive for another company. I just don’t think he’s the right fit for Papa John’s at this time,” Schnatter said, adding that he has informed the board of his concerns.

Asked to comment on behalf of Ritchie and Papa John’s, a company spokesperson said in an emailed statement that it would not let Schnatter’s “numerous misstatements” distract the company and its customers.

Ritchie, who was previously Papa John’s president, took over as chief executive in January after Schnatter came under fire in November for criticizing the National Football League’s leadership over national anthem protests by players.

Schnatter said in the interview that the company’s performance had suffered under Ritchie. The company’s shares have dropped about 40 percent over the last 12 months.

“In my view, things are getting worse, not better. That is why the board needs to take action and shareholders may need to take action in regards to the board,” he said.

Schnatter said that as long as he owns such a big chunk of the company, he intended to stay on the board. He said the company had not indicated that it would hold a special meeting to oust him as a director.

Schnatter’s lawyers said they wanted to inspect company documents “because of the unexplained and heavy-handed way in which the company has treated him since the publication of a story that falsely accused him of using a racial slur.”

The spokesperson said the company was disappointed that Schnatter filed a “wasteful lawsuit” and that it had given him all the materials he was entitled to as a director.

The lawsuit was the latest installation in a weeks-long drama surrounding the pizza chain following a report by Forbes this month that Schnatter had used the “n-word” during a media training call that led to his ouster as chairman.

Papa John’s said earlier this week that it would implement a “poison pill” stock dilution that would act against any move by Schnatter to take a bigger stake.

Reporting by Alana Wise and Liana B. Baker in New York; Editing by Marguerita Choy

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Amazon earnings skyrocket on cloud computing, advertising

(Reuters) – Inc (AMZN.O) forecast strong fall sales and posted a profit that was double Wall Street targets on Thursday thanks to the retailer’s younger, higher-earning businesses, including cloud computing and advertising.

Shares rose more than 3 percent in after-hours trade. The report was a relief to investors in the U.S. technology sector, still reeling from a profit warning by Facebook Inc (FB.O) Wednesday that plunged its stock 19 percent.

Amazon’s report shows how the world’s largest online retailer has increasingly learned to compensate for the high costs of fast package delivery and video streaming by controlling expenses and building up higher-profit businesses. It was the first mover in the business of selling data storage and computing power in the cloud, a bet that continues to reap rewards and give it the leeway to invest in grand projects.

For instance, the company is working to ship food from Whole Foods Market stores across the United States, in an ambitious attempt to bring groceries into the age of online retail.

Amazon’s spending typically climbs in the summer quarter, pressuring profits as the company prepares for Christmas and the winter holidays, its peak sales period each year.

Yet the company said it expects an operating profit between $1.4 billion and $2.4 billion, up from $347 million a year earlier. The company also reported a second-quarter profit of $2.5 billion, its largest ever.

“A big contributor to the quarter and the last few quarters obviously has been strong growth in our highest profitability businesses and also advertising,” Brian Olsavsky, Amazon’s chief financial officer, said on a call with media. “We’ve seen a greater-than-expected efficiency in a lot of our spend in things like warehouses, data centers, marketing.”

The Seattle-based company cut hundreds of consumer jobs in its headquarters earlier this year, in a move that may have lowered costs and freed up resources for fast-growing areas like Amazon’s voice aide Alexa.

Wedbush Securities analyst Michael Pachter called the expansion in the company’s gross profit margin “remarkable,” citing impressive results from cloud sales and services to third-party merchants on Amazon.

“That drove the bulk of the earnings beat,” he said.

CFO Olsavsky noted that third-party sales were changing the profit equation for Amazon, too. The company for years was notorious for roller-coaster results.

More lucrative than sales of goods that Amazon owns, third-party transactions offer the company a commission that increases significantly when merchants choose to hand over fulfillment and advertising to Amazon, as many do. Half of all units sold through Amazon are from these sellers, and these sales keep growing.


Highly profitable ad sales were a bright spot last quarter. The company said revenue from the category and some other items grew 132 percent to $2.2 billion. Analysts were expecting $2.1 billion, according to Thomson Reuters I/B/E/S.

The company is working to automate tasks for advertisers and to help media buyers measure the results, Olsavsky said.

Key to its allure has been that advertisers’ placements result directly in sales, reaching customers on Amazon with an intent to shop. That contrasts with ads reaching users who are on industry leaders Facebook and Alphabet Inc’s (GOOGL.O) Google for a range of purposes.

Amazon Web Services (AWS), the company’s must lucrative unit, saw its operating profit margin expand from a year earlier. Sales picked up speed from the year prior, too, rising 49 percent to $6.1 billion and beating the average estimate of $6 billion.

The unit’s success has helped make Amazon Chief Executive Jeff Bezos the richest person in the world.

“It’s really becoming the crown jewel of Bezos’ empire,” said GBH Insights analyst Daniel Ives. “They’ve invested significant dollars in building out the infrastructure, sales force and AWS partner ecosystem worldwide that I think now is starting to pay just massive dividends.”

While cloud rivals are gaining ground, AWS remains far in front with 31 percent of the fast-expanding market, versus 18 percent for Microsoft Corp (MSFT.O) and 8 percent for Google in the second quarter, research firm Canalys said Thursday. Amazon shares, up 55 percent this year versus 6 percent for the SP 500 .SPX as of Thursday’s close, trade at a premium, too. The stock’s price-to-earnings ratio is more than 10 times that of Microsoft. Cloud and ad sales, along with a July event that Amazon created to drum up revenue during the summer shopping lulls, are helping the company overcome high costs in the third quarter.

During the event, called Prime Day, Amazon sold more than 100 million products and signed up more people to its Prime loyalty club than on any other previous day in its history.

Prime members spend above average on Amazon. The company said it now expects third-quarter sales of between $54 billion and $57.5 billion, up from $43.7 billion a year earlier.

Hiking the annual U.S. price of Prime 20 percent in the second quarter appeared to have few negative consequences: Amazon said subscription revenue increased 57 percent to $3.4 billion.

Total net sales for the second quarter rose 39 percent to $52.9 billion, missing the average analyst estimate of $53.4 billion.

Reporting by Jeffrey Dastin in San Francisco and Arjun Panchadar in Bengaluru; Additional reporting by Salvador Rodriguez; Editing by Patrick Graham and Lisa Shumaker

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Starbucks reports cooling quarterly growth and pares outlook

NEW YORK (Reuters) – Starbucks Corp (SBUX.O) forecast slower growth for the current fiscal year on Thursday as boutique coffee chains and fast-food retailers won business in the United States and other established markets and the bloom came off once-booming China.

Wall Street had been braced for a disappointing quarter from the ubiquitous coffee brand, and its shares were relatively unchanged in after-market trading.

Seattle-based Starbucks last month warned of lower quarterly sales growth and announced plans to close about 150 U.S. cafes in the next fiscal year, triple the typical number of closures, as it seeks to enter under-served markets in the U.S. South and Midwest.

But investors saw bright spots in the results, as Starbucks, the world’s biggest coffee retailer, reported revenue rose to a record high in its fiscal third quarter. The company also pledged a $10 billion increase in its share buyback and dividend commitment, to $25 billion through fiscal year 2020.

Starbucks said its same-store sales rose just 1 percent globally and in its U.S. cafes in its third quarter ended July 1. Same-store sales in China slipped 2 percent amid fierce competition and stricter regulations on delivery services.

“While acknowledging a disappointing Q3, I want to be clear that we have 100 percent confidence in our growth strategy and the sustainability of the leadership position we have built in the market,” Chief Executive Officer Kevin Johnson said in the company’s quarterly earnings call.

Starbucks blamed a combination of cannibalization of its own stores and hiccups in its China delivery program for much of the slowdown in the country.

In the year-ago quarter, Starbucks’ same-store sales grew by 5 percent in the United States and Americas and 4 percent globally. The sales dip in China is an even steeper departure from the 7 percent growth rate reported in last year’s quarter.

Revenue rose to $6.3 billion from $5.7 billion in the year prior. Starbucks’ closely monitored digital membership program grew 14 percent year-over-year to 15.1 million active users.

Starbucks’ shares are down 10.4 percent year to date.

The company said it now expects full-year same-store sales growth to be “just below” its 3 percent to 5 percent targeted range, and sees fourth-quarter growth at the lower end of its 3 percent to 5 percent range.

Starbucks’ report comes exactly one month after Howard Schultz, the brand’s elder statesman and former chief executive, stepped down as executive chairman, in a move that stoked investor concerns on how the company would evolve after nearly four decades of Schultz’s near-constant presence.

Reporting by Alana Wise; Editing by Leslie Adler

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Game publisher EA’s revenue forecast misses estimates

(Reuters) – Electronic Arts Inc forecast tepid second-quarter revenue growth on Thursday, overshadowing quarterly results that topped analysts’ estimates and sending its shares down 7 percent in extended trading.

The company said it expected adjusted revenue of $1.16 billion for the current quarter, down slightly from a year earlier, when sales were driven by “Battlefield 1”.

The timing of the recognition of bookings in Asia as well as foreign exchange weighed on the company’s forecast, EA added.

Analysts on average had expected revenue of $1.23 billion, according to Thomson Reuters I/B/E/S.

“Expectations may have been higher for second-quarter guidance and the Street may have expected an increase in annual guidance but we understand EA is conservative early in the year,” Consumer Edge Research analyst Raymond Stochel said. 

The rise in popularity of games from the “battle royale” genre such as “Fortnite” is posing challenges to established game publishers, including EA, and rivals Activision Blizzard Inc and Take Two Interactive Software Inc.

EA said it expected the launch of new games, including “Madden NFL” and “Battlefield V”, in the coming months to take on some of those challenges.

For the first quarter, the company said “The Sims 4” player base grew 35 percent and the “FIFA World Cup” update had over 15 million unique players.

Chief Financial Officer Blake Jorgensen told Reuters that though EA had only two weeks of the World Cup in its first quarter, user engagement with FIFA was “extremely” high and that should help “FIFA 19” when it is launched in September.

EA reported revenue of $749 million on an adjusted basis for the latest quarter ended June 30, beating analysts’ average estimate of $742.42 million.

Net income fell to $293 million, or 95 cents per share, from $644 million, or $2.06 per share, a year earlier.

Excluding items, the company earned 13 cents per share, according to Reuters’ calculation, topping analysts’ estimate of 6 cents per share.

Shares of the company have risen nearly 40 percent this year.

Reporting by Pushkala Aripaka in Bengaluru; Editing by Shounak Dasgupta and Anil D’Silva

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Amgen profit beats Street view, will not raise prices again in 2018

(Reuters) – Amgen Inc (AMGN.O) on Thursday reported a better-than-expected second quarter profit and raised its full-year earnings forecast, and its chief executive pledged not to raise drug prices again this year.

Amgen joined several drugmakers that have vowed to limit or delay price increases under intensifying pressure from the Trump administration to cut health care costs for U.S. consumers.

The world’s largest biotechnology company also announced replacements for its head of research and development and retiring global commercial operations chief.

The company said on a conference call that it decided in May to forego list price increases it had planned for July, although it did not say which drugs it had targeted for price hikes.

“We have no plans to change that for the balance of the year,” CEO Robert Bradway said.

  • Amgen CEO says will not raise drug prices again this year

Amgen posted adjusted earnings of $3.83 per share, topping analysts’ average expectations by 29 cents, according to Thomson Reuters I/B/E/S.

Growth of newer drugs like cholesterol fighter Repatha and osteoporosis drug Prolia offset weakness in older products, the company said.

The company increased its 2018 earnings forecast to $13.30 to $14 per share, up from its previous view of $12.80 to $13.70.

Amgen shares rose 1 percent in extended trading to $196.

Overall revenue for the quarter revenue rose 4 percent to $6.06 billion.

Sales of rheumatoid arthritis drug Enbrel fell 11 percent to $1.3 billion.

Sales of the potent but expensive cholesterol drug Repatha have begun to take off, increasing 78 percent to $148 million. They have been held back since the drug’s 2015 approval by an unwillingness of insurers and pharmacy benefit managers to authorize its use for most patients.

Prolia sales rose 21 percent to $610 million.

Amgen did not report early sales of Aimovig, the new migraine preventer that won U.S. approval in May. Amgen offered all new patients two free months of the medicine.

The company is trying to get around barriers large insurers are setting for patients prescribed the costly new headache treatment. Amgen said it had already negotiated contracts with payers covering around 30 percent of commercially-insured patients in the United States.

Amgen announced that longtime research chief Sean Harper is stepping down and will be replaced by David Reese, currently head of translational sciences and oncology at the company.

Murdo Gordon, who left his role as Bristol-Myers Squibb’s (BMY.N) chief commercial officer earlier this week, will replace Tony Hooper as executive vice president of global commercial operations in September, the company said.

Reporting By Michael Erman and Robin Respaut; editing by Bill Berkrot

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