Citing global anxiety, DuPont gets cautious on 2012

WILMINGTON, Del., Tue Jul 24, 2012 – DuPont expects 2012 earnings to come in at the bottom of its prior forecast range, due in part to economic uncertainty circling the globe, the maker of chemicals, hybrid seeds and Kevlar bulletproof fiber said on Tuesday.
The updated forecast, for earnings at the “lower end” of a range of $4.20 to $4.40 per share, came after the company posted a higher-than-expected profit for the second quarter.
Analysts on average expect earnings of $4.25 per share this year, meaning DuPont could fall short of Wall Street’s expectations.
Higher taxes and currency conversion should also weigh on results, said Chief Executive Ellen Kullman.
“We’re seeing sequential improvement in many markets that have been very sketchy in the first half of the year,” Kullman said on a conference call with analysts and investors. “Our ability to forecast is not as great as we used to think it was.”
DuPont reported second-quarter net income of $1.18 billion, or $1.25 per share, down from $1.22 billion, or $1.29 per share, a year earlier.
Excluding one-time items, the company earned $1.48 per share. By that measure, analysts expected $1.46, according to Thomson Reuters I/B/E/S.
Revenue rose 8 percent to $11.28 billion. Analysts had expected $11.27 billion.
Sales jumped the most in North America and Latin America, helped largely by strong sales of seeds and other agricultural products. Kullman said she would closely watch North American sales to industrial, commercial and housing customers.

Boeing targets 1,000 civil jet orders in 2012, CEO Albaugh says

CHICAGO, Mon Jun 11, 2012 – Boeing Co. expects to sell 1,000 commercial aircraft in the calendar year 2012, including the 737 and wide-body models, the head of the company’s commercial division told Reuters on Monday.

“I think we are going to get there, there’s a lot of demand for big aircraft out there,” Boeing Commercial Airplanes CEO Jim Albaugh said.

He was speaking on the sidelines of an IATA airlines meeting in Beijing.

CEO salary suggests Wall Street may be waking up

NEW YORK – Capital markets in 2012 are better than they were in 2011, Morgan Stanley Chief Executive James Gorman said on Wednesday, adding that his bank is in a “very good position for Basel III standards.”

Gorman, speaking to CNBC from Davos, Switzerland, said confidence will rise after euro zone stability improves, while stressing that Morgan Stanley is in a very solid position. “If you had all sovereigns, all corporates and all financial institutions blow up in Europe at the same time, Morgan Stanley would still be fine,” he said.

Gorman also said Morgan Stanley would not need to raise capital in the near term. Morgan Stanley’s capital levels have been a concern for investors because it will need to comply with new, stricter rules set by the Basel Committee and U.S. regulators.

The Basel III accord, agreed to by the Basel Committee, an international group of regulators, will require banks to hold at least 7 percent of core Tier 1 capital in the form of retained earnings or pure equity.

There are also concerns because Morgan Stanley may need a big chunk of cash to purchase the next stake of its Morgan Stanley Smith Barney venture from Citigroup Inc.

Morgan Stanley currently owns 51 percent of the wealth management business and has the option to buy another 14 percent in May at fair market value. Gorman reiterated his commitment to buy the business on Wednesday, a purchase he said will take a priority over stock buybacks or dividends in the near-term.

Apple 2012: Smooth sailing, for the most part, with a strong wind

SAN FRANCISCO ― Apple Inc. coasts into 2012 with a strong wind in its sails, a clutch of envelope-pushing products in its hold, a record share price, and a steady hand at the tiller.

But its very success ― with the market-leading iPad and the voice-enabled iPhone 4S ― is luring cheaper rivals to the surface.

Google Inc’s. Android, launched a few years ago and taking aim squarely at the high-end iOS, continues to attract cellphone makers. Amazon.com Inc’s. Kindle Fire, half the cost of the iPad, is expected to have chipped away at the lower end of the tablet market.

Finally, though many on Wall Street, betting that an iTV and 4G iPhones and iPads will again pack its stores, continue to bank on a share-price climb to as high as $700, some begin to question the sustainability of Apple’s torrid growth pace.

Apple tacked on $43 billion to its top line in fiscal 2011, lifting it to $108.25 billion ― a 65 percent increase from the previous year.

Barry Jaruzelski, a consumer hardware business expert and partner at consulting firm Booz & Co., said to sustain that is effectively to conjure a Fortune 500 company out of thin air ― year after year.

“You become a victim of your own success,” he said. “Can you grow the existing products that much, or can you create a new category that creates $10 billion to $20 billion? That is the challenge.”

When Apple reports earnings Jan. 24, many investors for the first time might be watching for chinks in the armor, especially given Apple’s first miss since 2004 for the October quarter.

“The risk is the sustainability of what they have been doing,” said ISI Group analyst Brian Marshall. “They have put up a huge number and the question is can they continue to penetrate with their current existing product portfolio at these price levels?”

The fear is that the number of people who can afford an iPad or an iPhone is dwindling, he added.

Cities to see job gains in 2012, but many will struggle: report

WASHINGTON, D.C. ― Almost all U.S. metropolitan areas will see job growth in 2012, but for many areas it will still take years for employment to return to pre-recession levels, according to a report released on Wednesday by the U.S. Conference of Mayors.

All but three U.S. metro areas will have job gains this year, led by expected growth of 3 percent in Myrtle Beach, South Carolina, according to the forecast, which was conducted by IHS Global Insight for the mayors’ group ahead of its annual meeting in Washington this week.

Employment will likely shrink the most in Carson City, Nev., falling by 1.1 percent. It will also drop in Odessa, Texas, by 0.1 percent, and in Midland, Texas, by 0.2 percent, IHS forecast.

Health services, trade, transportation, utilities and business services will provide the biggest jobs boost, the report found.

“By the end of this year, the report forecasts that almost every one of our 363 metro economies will see job gains, and the nation will have gained back 48 percent of its lost jobs,” said Los Angeles Mayor Antonio Villaraigosa, who is also president of the Conference of Mayors. “But despite this progress, one thing remains clear: the recovery is slow and it’s uneven.”

In 2011, employment declined in 125 metro areas.

Retailers in for steady, modest growth in 2012

NEW YORK/CHICAGO ― Hopefully, retailers liked 2011, because 2012 is looking like it will offer more of the same.

A consensus is emerging that the new year will again bring a slow but steady increase in business, after moderate growth last year that was capped by a holiday season that saw shoppers spend if stores gave out bargains.

“Consumers are doing everything they can in light of the current environment to be consumers,” Paul Hurley, founder and chief executive of Ideeli, a flash sales website. “We’re not seeing a deflationary spiral where people are putting off purchases.”

The National Retail Federation at the start of its annual convention in New York said U.S. retail sales should rise 3.4 percent this year, down from an increase of 4.7 percent in 2011, which came after weak sales in 2010.

“It’s realistic given the challenges that we face in the economy,” NRF Chief Executive Matthew Shay told Reuters in an interview, noting that improvements in consumer spending would continue to be “incremental” for the time being.

U.S. shoppers have been held back by modest growth in income and high unemployment, currently at 8.5 percent.

ShopperTrak, a data firm that makes sales projections based on foot traffic, expects sales to be “on par” with 2011 levels.

And Customer Growth Partners gave a preliminary forecast of 5 percent to 6 percent growth for 2012, including e-commerce. That compares with an expected 5.6 percent for the year that will end this month.

Last year, e-commerce sales rose 15 percent, according to comScore.

While unemployment remains high, consumer spending growth has outpaced overall economic growth because shoppers who spent freely during the housing boom in the early 2000s were forced to pay down debt during the recession. Also, consumers with jobs are now driving sales growth, said Craig Johnson, president of Customer Growth, a retail consulting firm.

WebMD scraps sale talks, warns of weak 2012 as drug makers pull back

NEW YORK ― Popular health information website WebMD Health Corp. took itself off the auction block and warned investors of lower 2012 profits as its advertisers in the drug industry pull back on spending.

Shares of WebMD, in which activist investor Carl Icahn owns a nearly 10 percent stake, tumbled 29 percent on the news.

WebMD, which had a market value of just over $2 billion as of Monday, also said on Tuesday that its chief executive, Wayne Gattinella, had resigned. Anthony Vuolo, currently chief financial officer and chief operating officer, will serve as interim CEO.

WebMD is one of the best-known websites for consumers seeking health information on everything from allergies to cancer to better eating habits.

The company relies on advertising from drugmakers, who are now trying to curb expenses as they face generic competition to many of their top-selling medicines. WebMD said large advertisers are also facing more competition on their portfolios of consumer products.

“They were growing 20 percent. Now they’re going through a rough patch where revenue is actually declining,” Cowen & Co analyst Kevin Kopelman said. “This isn’t a going concern problem. This is a very strong company with an incredible brand in the U.S. and a huge user base, and they’re generating a lot of money.”

To some extent, WebMD’s status as a premium online brand, and the high advertising rates that it can charge, are forcing more cost-conscious advertisers to look twice at their spending on the site, he said.

A more difficult regulatory environment has also made it tougher for drugmakers to launch new ad programs, Kopelman said, compounding the problems for WebMD.

While a number of new medicines have received U.S. Food and Drug Administration approval for sale in the United States, WebMD said it does not expect advertising behind those drugs to pick up significantly this year.

WebMD is also grappling with competition from myriad other websites that offer health tips and information on illnesses.

WebMD Chairman Martin Wygod said he expects drugmakers, who have been among the biggest advertisers on more expensive media like television, will eventually recognize the value of using outlets online.

“I believe that the pressures facing the pharmaceutical industry will ultimately prove to be the strong catalyst for a meaningful shift by them to digital marketing solutions,” Wygod, who holds a nearly 2 percent stake, said in a statement. “WebMD offers a cost-effective, efficient and highly measurable alternative to traditional detailing to physicians and mass media to consumers.”

For 2012, the company expects revenue to fall between 2 percent and 8 percent, and it expects increased competition in its consumer products market.

Stocks to rise modestly next year, Reuters poll finds

NEW YORK ­― U.S. stocks are expected to end next year with modest gains, despite the threat of a global downturn brought on by the euro zone debt crisis and a tepid domestic economy that may still need more stimulus, a Reuters poll found.

Strategists polled had solid hopes for the U.S. economy and many cited historically low price-to-earnings ratios. But the euro zone crisis has battered stock markets this year and there was a wide range of views on where Wall Street is headed.

The Standard & Poor’s 500 index is expected to rise about 7.5 percent from Wednesday’s close to 1,340 by the end of next year, according to a median forecast from over 40 respondents polled over the last week.

Forecasts range from a high of 1,550 to a low of 718, almost as low as the nadir of March 2009, when it touched 666. That 832-point spread was the widest in all of the quarterly Reuters polls since the financial crisis began in 2008.

But the benchmark index is expected to be about where it is now by mid-2012, following a tumultuous year that has it down a little under 1 percent since the close of 2010. Last year, it rose 12.8 percent.

Indeed, the S&P 500 has fallen in six of the past seven months, with many investors fearful of a hit to global growth if the crisis in Europe worsens or leads to euro zone breakup.

“The more Europe goes to the back burner, the more the market will rise,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.

But that is a big if. Forecasts are decidedly less bullish than in the recent past, particularly for the big industrials. And U.S. economic growth is expected to be tepid next year at best, according to a recent Reuters poll.

The Dow Jones industrial average .DJI is expected to trade at 12,000 by the middle of next year, lower than Wednesday’s close. It’s expected to rise just 2.8 percent to 12,388 by the end of 2012.

Stocks have vacillated from despair to euphoria in the last two months, although most analysts generally agree that share prices are out of step with worries priced into government bonds.

Global indexes rallied on Wednesday after central banks around the world announced co-ordinated steps to prevent a credit crunch among banks in Europe struggling with the region’s debt crisis.

The S&P surged to its best monthly performance in 20 years in October after euro zone leaders pushed for recapitalization of banks and to bolster the region’s bailout fund.

Part of the reason for the tempered optimism is improving U.S. economic data, even though high unemployment persists and the housing market, ground zero of the financial crisis, remains in the doldrums.

Pace of economic growth seen waning into 2012: Reuters poll

NEW YORK ― An acceleration in the pace of U.S. economic growth in the second half of this year is expected to ebb as 2012 gets underway, although the odds of another recession have receded to one-in-four, a Reuters poll showed on Wednesday.

Encouraged by a recent pick-up in economic data, the consensus from more than 60 respondents showed a better view on the final three months of the year and 2011 overall.

But the pace of is expected to wane from an annualized 2.5 percent in the third quarter, and growth is not expected to get back to that rate again until the final quarter of next year.

More fiscal restraint, uncertainty surrounding the euro zone sovereign debt crisis and lackluster consumer sentiment and spending are all seen taking some of the steam out of growth early next year.

“We have positive momentum to carry us through to the early part of next year, but the headwinds are still going to cap the pace of growth,” said Scott Brown, chief economist at Raymond James.

Apart from a raging euro zone sovereign debt crisis that has a chokehold on global financial markets and that is now gripping Italy, uncertainty over U.S. fiscal policy also clouds the outlook for the start of 2012.

A payroll tax holiday and federal unemployment benefit program are set to expire, while a special committee of lawmakers is meeting to reach a deal on reducing the federal deficit.

“There are a number of things coming together with regards to fiscal policy that makes early next year look very iffy,” said Mark Zandi, chief economist at Moody’s Analytics.

Barring unforeseen shocks, economists believe the economy should avoid another recession, though growth will be slow.

Gross domestic product growth is seen at an annualized 2.3 percent in the fourth quarter, up strongly from the 1.9 percent forecast in the October poll. The Reuters consensus for the year was raised to 1.8 percent from 1.7 percent.