Penney CEO says company needs time to climb out of ‘abyss’

PLANO, Texas, Fri May 17, — J.C. Penney Co. Inc. CEO Myron Ullman told Wall Street on Thursday that the department store chain is emerging from what he called an abyss but warned he needs time to fix the issues of the retailer.
Penney reported another steep quarterly loss on weak sales and heavy clearance deals, but Ullman said the company has taken steps in recent weeks to reassure vendors, shore up its finances, and win back shoppers that defected after a move last year away from coupons.
“This won’t happen overnight,” Ullman said on a conference call with analysts, of Penney’s efforts to recover lost revenue. “Rest assured, we recognize the magnitude of the challenges that we face.”
Under Ullman, who returned as CEO last month to replace his successor Ron Johnson, Penney has secured a new $1.75 billion loan and brought back brands such as St. John’s Bay.
That brand alone brought in $1 billion in sales a year before Johnson dropped it for more fashionable lines.
The department store chain suffered a net loss of $348 million for the quarter ended May 4, or $1.58 per share, more than twice the $163 million, or 75 cents per share it lost last year. Gross profit margin fell 6.8 percentage points to 30.8 percent of sales as it slashed prices to move inventory.
Total sales fell 16.4 percent to $2.67 billion, in line with the company’s warning last week.
Despite the wider loss, shares slipped only 2 percent to $18.42 as analysts dismissed it as a remnant of the Johnson era.
The shares have climbed nearly 40 percent since Ullman returned to the chain, which is showing signs of getting back on track. Ullman was CEO from 2004 to 2011.
“Trends are improving — this is still a year of change. But things are stabilizing and traffic is improving,” said Marie Driscoll, an independent retail analyst, referring to the volume of visits by shoppers.
In addition to a new pricing strategy, Johnson’s vision was to roll out dozens of boutiques within Penney’s larger stores over the course of four years to showcase hipper, but affordable brands and offer exclusive merchandise.

Wal-Mart profit misses Wall Street forecasts as U.S. sales weak

BENTONVILLE, Ark., Thu May 16, 2013 — Wal-Mart Stores Inc.’s quarterly profit just missed Wall Street expectations on Thursday, with sales down 1.4 percent at its Walmart U.S. stores open at least a year.

The world’s largest retailer said U.S. sales suffered from a delay in income tax refund checks, cool weather, less grocery inflation than expected, and the payroll tax increase.
Shares of Wal-Mart fell 2.3 percent in premarket trading to $78. The stock had hit a new high of $79.96 on Wednesday.
Wal-Mart earned $3.78 billion, or $1.14 per share, in the first quarter ended on April 30, up from $3.74 billion, or $1.09 per share, a year earlier.
The analysts’ average forecast was $1.15 per share, according to Thomson Reuters I/B/E/S. In February, Wal-Mart had forecast a profit of $1.11 to $1.16 per share.
First-quarter revenue rose 1 percent to $114.19 billion.
Same-store sales at Walmart U.S. fell 1.4 percent, while the company had earlier expected such sales to be about flat. Visits to Walmart U.S. stores open at least a year fell 1.8 percent, while the average amount spent per visit rose 0.4 percent.
Wal-Mart forecast earnings of $1.22 to $1.27 per share for the current second quarter, up from $1.18 a year earlier.
The company said it expected second-quarter same-store sales, excluding those of fuel, to be flat to up 2 percent at Walmart U.S. and up 1 percent to 3 percent at its Sam’s Club warehouse store chain.

PayPal kills the cash register — and offers completely free payment processing for 2013

SAN JOSE, Calif., Wed May 15, 2013 — PayPal’s killing the cash register and offering free credit, debit, check, and PayPal processing to qualifying U.S. businesses that adopt its PayPal Here solution — for the rest of 2013.

In other words, PayPal is all in.
PayPal Here, which offers a triangle dongle to compete with a certain rival’s Square, offers a mobile dongle that you can attach to smartphones or tablets to take payments on the go. But it’s also now a pre-integrated solution for existing point-of-sale machines from multiple vendors such as ERPLY, Leaf, Leapset, NCR Silver, ShopKeep, and Vend.
“The cash register has been a familiar sight for generations, but it’s time to replace it with a modern solution,” PayPal says.
While PayPal was late to this particular game, it has quickly added partners like Home Depot and Abercrombie & Fitch, and, after being available just in North America for some time, recently entered the UK. And the company absolutely crushes all other competitors — including Google, MasterCard, and Visa — in consumer awareness for its digital wallet services.
But the real juice in this latest program is the free payment processing for the rest of the year. That’s huge to merchants who are looking to squeeze a few extra percentage points of profit out of typically skinny retail margins. Payment processors can easily take one to three percent of a company’s gross sales, right off the top.

Dell committee seeks information on Icahn offer

ROUND ROCK, Texas — Mon May 13, 2013 8:22am EDT
(Reuters) – The special committee of Dell Inc.’s board on Monday asked Carl Icahn for details of his plans for the computer maker, including how he would finance his offer and who would run the company.
Last week Icahn and Southeastern Asset Management Inc. offered $21 billion in cash for Dell, challenging founder Michael Dell’s $24.4 billion bid to take the company private.
Michael Dell and private equity firm Silver Lake want to take the company private for $13.65 per share, but stockholders, including Southeastern and T. Rowe Price, have complained that the offer severely undervalues the company.
Instead, Icahn and Southeastern, two of Dell’s biggest investors, proposed to give stockholders $12 of cash for every share they own, as well as allow them to keep their stock.
But in a letter to Icahn, the committee said it was not clear if he intended to make “an actual acquisition proposal that the Board could evaluate” or if he intended his offer as an alternative in the event the pending sale to Silver Lake and Michael Dell is not approved.
The committee also asked for information on the terms of the debt financing required for Icahn’s proposal and “contingencies available if cash on hand or stockholder rollovers are less than anticipated,” as well as financing commitment letters.

Facebook in talks to buy Israel’s Waze for up to $1 billion: report

MENLO PARK, Calif., Fri May 10, 2013 — Facebook Inc. is in advanced talks to acquire Israeli mobile satellite navigation start-up Waze for $800 million to $1 billion, business daily Calcalist reported.

The deal, which would be Facebook’s largest acquisition, would give the social networking company a mapping service and allow it to better compete with Google Inc. and Apple Inc.
Maps and navigation services have become a key asset for technology companies as consumers increasingly adopt smartphones and other mobile devices.
Waze uses satellite signals from members’ smartphones to generate maps and traffic data, which it then shares with other users, offering real-time traffic info.
Due diligence between Waze and Facebook is underway after a term sheet was signed, Calcalist said, adding that talks began six months ago.
Officials at Waze and Facebook declined to comment on the report.
Facebook’s largest deal to date is the September acquisition of photo-sharing app, Instagram. Facebook agreed to buy the company for $1 billion in cash and stock, though the actual price it paid was $715 million due to declines in Facebook’s share price.
The four-year-old Waze, which has 47 million users, has raised $67 million in funding to date from firms including Kleiner Perkins Caufield & Byers, Blue Run Ventures and semiconductor company Qualcomm Inc.

Fannie Mae to send $59.4 billion to Treasury

WASHINGTON, Thu May 9, 2013 — Fannie Mae, the nation’s biggest mortgage finance company, said on Thursday it will pay $59.4 billion in dividends to the U.S. Treasury after a record profit in the first quarter that reflecting a multibillion dollar gain from reversing an earlier writedown of tax benefits.
The government-controlled company reported pretax income of $8.1 billion for the quarter and booked an additional gain of $50.6 billion on the tax assets, resulting in net income of $58.7 billion. That compared to a $2.7 billion profit in the same three months a year earlier.
Since its return to profitability, Fannie Mae has been considering when to start counting potential tax credits as part of its net worth.
“After evaluating the recoverability of Fannie Mae’s deferred tax assets … the company determined that the factors in favor of releasing the allowance outweighed the factors in favor of maintaining it,” Fannie Mae said in a statement.
Fannie Mae has received about $116 billion in taxpayer funds since September 2008, when it was seized by regulators along with Freddie Mac. By the end of June, Fannie Mae will have paid $95 billion in dividends to Treasury for the government’s stake, leaving the net cost of its bailout at about $21 billion.
Fannie Mae and sibling Freddie Mac buy home loans and package them into securities, ensuring that investors receive payments even when borrowers default. Both the Obama administration and Congress want to eventually wind them down.

Whole Foods store sales accelerate, shares rise

AUSTIN, Texas, Wed May 8, 2013 — Whole Foods Market Inc. said store sales have rebounded as it expands efforts to lower prices and reach beyond its core of upscale shoppers by adding more locations, and its shares rose more than 8 percent after hours.
The news from the largest U.S. natural and organic grocery chain dispelled concerns that its store sales were slowing due to competition and sluggish U.S. economic growth.
Same-store sales, a key gauge of performance for retailers, rose 6.9 percent for Whole Foods’ fiscal second quarter that ended April 14. So far this quarter, those sales are up 9.4 percent.
“The demand for fresh, healthy foods continues to grow,” John Mackey, co-founder and co-chief executive officer of Whole Foods Market, said in a statement.
About three weeks into the second quarter, Whole Foods had said its same-store sales growth had cooled to 6.4 percent, dampened by winter storm Nemo and a shift in the day of the week of Valentine’s Day. Analysts also attributed the slower growth to the U.S. payroll tax increase that lowered take home pay.
This quarter’s sales results got a 200 basis point boost from Team Member Appreciation Double Discount Day, but still showed the kind of improvement investors were seeking.
“Even though the 9.4 (percent gain) is more like a 7.4 (percent gain), it’s still a pick up,” BB&T Capital Markets analyst Andy Wolf said.

March home prices see biggest yearly gain in 7 years: CoreLogic

NEW YORK, Tue May 7, 2013 — Home prices rose in March, marking the biggest annual increase in seven years, in the latest sign of strength for the recovering housing market, a report from CoreLogic showed on Tuesday.

CoreLogic’s home price index jumped 1.9 percent from the previous month and accelerated by 10.5 percent compared to March last year.

That was the biggest year-over-year increase since March 2006, CoreLogic said.

Prices were even stronger excluding distressed sales, rising 2.4 percent from February and 10.7 percent from the year before. Distressed sales include homes that are in danger of foreclosure and properties that have already been seized by lenders.

Home prices have been rising since last year, helped by investor demand and tighter inventory. The top five states with the biggest gains in prices were Nevada, California, Arizona, Idaho and Oregon.

Prices likely continued to rise in April, CoreLogic said, though at a slower pace. Prices are seen rising 1.3 percent for the month and 9.6 percent on an annual basis.

Warren Buffett says U.S. economy gradually improving

OMAHA, Neb., Mon May 6, 2013 — Warren Buffett said on Monday the U.S. economy is gradually improving, helped by the efforts of Federal Reserve Chairman Ben Bernanke to stimulate it.

Speaking on CNBC television, Buffett said the economy is benefiting from improvement in areas that had not previously performed well, particularly homebuilding.

He also said the improved economy is helping create increased traffic for NetJets, Berkshire’s private plane unit.

“The economy is moving forward, but at a slow pace,” he said. “Demand has come back, but slowly.”

Buffett said low benchmark interest rates, including overnight rates that have been effectively zero since late 2008, can help stimulate demand.

“When interest rates are low, and people expect them to stay low for a while, it pushes up the value of all other assets,” he said. “Interest rates act like gravity for all other asset prices.”

Buffett called Bernanke “a gutsy guy” who has “done very, very well in terms of what he has done for the United States.”

Last week, the Fed said it will continue to buy $85 billion of bonds per month to keep interest rates low and spur growth, and said it will step up purchases if needed.

The economy grew at a 2.5 percent annualized rate in the first quarter.

Buffett spoke on CNBC after Berkshire’s annual shareholders meeting over the weekend here.

US Airways says April unit revenue down 4 percent

TEMPE, Ariz., Fri May 3, 2013 — US Airways Group on Friday said an important revenue measure fell in April, as it grappled with disruptions caused by furloughs of U.S. air traffic control staffers.

Unit revenue, or passenger revenue per available seat mile, fell about 4 percent last month from a year earlier for US Airways and its regional airlines, the carrier said.

US Airways, which plans to merge with AMR Corp. unit American Airlines and form the world’s largest carrier, cautioned last week that business demand was being pressured by federal spending cuts under the U.S. sequestration process.

Staff furloughs at U.S. air traffic control towers began April 21, causing flight delays at some airports. The Federal Aviation Administration suspended the furloughs after passage last week of a bill allowing the agency to shift money within its budget to halt them.

“We are pleased that the situation is resolved and we have returned to a more normal operating environment,” US Air President Scott Kirby said in the company’s Friday statement.

On Thursday, Delta Air Lines Inc. reported a 2 percent drop in April unit revenue due to soft U.S. demand and unfavorable effects from the weaker yen.