Barclays cuts Microsoft price target, others await Windows 8 launch

SEATTLE, Wash., Fri Oct 19, 2012 – Barclays Capital cut its price target on Microsoft Inc.’s stock after the world’s largest software company reported a greater-than-expected dip in its quarterly profit.

However, most brokerages maintained their ratings and price targets on the stock ahead of next week’s Windows 8 launch, described by Credit Agricole Securities as the most comprehensive product refresh cycle in Microsoft’s history.

Microsoft reported a 22 percent drop in profit on Thursday due to a fall in sales of computers running the Windows operating system in a weak PC market.

First-quarter sales fell 8 percent to $16.01 billion and some revenue was deferred ahead of upcoming releases of its core Windows and Office products.

Shares of the company, which closed at $29.49 on Thursday on the Nasdaq, were set to open 2 percent lower on Friday.

While the weakness in the Windows business was expected, the poor showing by the Office business and the server and tools division was a surprise, Barclays analyst Raimo Lenschow.

Lenschow lowered his price target on the stock to $34 from $36, but maintained his “equal weight” rating.

“… We still prefer to wait on the sidelines until after the Windows 8 launch next week,” he said in a note.

Barclays downgrades Groupon on shift to low-margin business model

CHICAGO, Tue Aug 21, 2012 – Barclays Capital downgraded Groupon Inc. to “underweight” from “overweight” and cut its price target on the stock as the company faces a slowdown at its core daily deal business, forcing it to rely on its lower-margin discount business.

Shares of the company looked set to open down 2 percent on the Nasdaq on Tuesday morning.

The company is also making changes at the top, but investors have been skeptical that CEO Andrew Mason has the ability to turn the business around.

“The sale of products or “Groupon Goods”, which practically didn’t exist two quarters ago and represented an immaterial amount of first-quarter sales, represented the vast majority of incremental sales growth in the second quarter,” Barclays analyst Mark May said.

A continuation of this trend could hurt Groupon’s margin profile, he added.

Groupon often takes inventory risk with its Goods business, which was launched in the third quarter of 2011, as it buys products in bulk at a discount and sells them to customers at higher prices. However, Groupon Goods may not be as profitable as its original daily deals.

New York lender sues big banks over alleged Libor manipulation

NEW YORK, Mon Jul 30, 2012 – A New York lender has sued a group of large banks on the panel that sets a key global interest rate, saying it was cheated out of interest income through alleged rate manipulation.
The lawsuit, filed last week in District Court in Manhattan, seeks class-action status on behalf of similar lenders.
Berkshire Bank, which is not connected to Warren Buffett’s Berkshire Hathaway, says borrowers were able to take advantage of artificially low interest rates because of the big banks’ “unlawful suppression” of benchmark rates.
Defendants named in the suit include Bank of America Corp., Barclays Plc., JPMorgan Chase & Co. and Citigroup Inc.
At least one other community bank has filed similar legal claims, a sign that the rate manipulation scandal is having a broad impact. The Community Bank & Trust of Sheboygan, Wisconsin, said in a lawsuit several months ago that alleged rate rigging had kept its interest margins artificially low. That lawsuit also is pending in District Court in Manhattan.
Berkshire Bank had $854 million in assets at the end of last year, according to its website. It has 10 branches in New York and one in New Jersey.
The reliability of the London interbank offered rate, or Libor, which underpins transactions worth trillions of dollars, has been rattled by the rate manipulation accusations. Libor is used to set interest rates on credit cards, student loans and mortgages.
Big banks already face an array of Libor lawsuits by some big investors and local governments. Bank defendants have said in court papers seeking dismissal of these lawsuits that plaintiffs have failed to show banks acted to restrict competition, even if rates were improperly stated.

ADP, Paychex to be hit by slow job growth: Barclays

Mon Jun 25, 2012 – Payroll processors Automatic Data Processing Inc. and Paychex Inc. may see slower earnings growth over the next two years because of low interest rates and weak job market recovery, Barclays Capital said, downgrading the stocks.

Both companies could see only moderate core payroll revenue growth given the weak jobs growth, while persistently low interest rates will hurt their float income — interest earned on funds held for clients, Barclays said.

Barclays, which is less optimistic on Paychex, cut its rating on the stock to “underweight” from “equal weight.” It downgraded ADP to “equal weight” from “overweight.”

Earnings growth at ADP is unlikely to return to consistent double digit levels until the economy grows more rapidly and interest rates rise, the brokerage said.

U.S. job growth braked sharply for a third straight month in May, and the unemployment rate climbed for the first time in nearly a year, raising chances of further monetary stimulus from the Federal Reserve to support the sputtering recovery.

Barclays prefers ADP over Paychex, as it expects ADP’s more diversified offerings and aggressive product development investments to yield faster growth.

The brokerage, however, upgraded Iron Mountain to “overweight” rating, saying the document storage company’s planned transformation into a real estate investment trust is likely to prove successful and give a sharp boost to its share price over the next two years.

Lehman to buy remaining Archstone stake for $1.58 billion

NEW YORK, Fri May 25, 2012 – Lehman Brothers Holdings Inc. said it has bought the remaining 26.5 percent of apartment company Archstone that it doesn’t already own from Barclays Capital and Bank of America Corp. for $1.58 billion.

Sources told Reuters on Thursday that Lehman had reached a deal to buy the last portion of the company.

The last slice of Archstone was critical to Lehman in order to block real estate investment trust Equity Residential from controlling Archstone’s fate.

In January, Lehman bought half the banks’ stake, or 26.5 percent of Archstone, for $1.325 billion. That came after Barclays and Bank of America struck a deal to sell the 26.5 percent stake to Equity Residential. Equity Residential was also given the right to bid for the banks’ remaining stake.

But Archstone’s ownership structure gave Lehman the right to match the offer for the first slice. Lehman bought the stake and later filed a lawsuit against the two banks in the U.S. Bankruptcy Court in Manhattan.

Under the ownership structure, unless a party had at least 76 percent stake, all important decisions regarding Archstone needed to be unanimous.

Equity Residential, whose chairman is Sam Zell, will get a total of $150 million as break-up fee, with the two banks paying $80 million and Lehman paying the rest.

The agreement, which is expected to close in about 15 days, releases the parties from all claims relating to Archstone, the companies said.

J.P. Morgan hires Barclays director for Latin American debt

NEW YORK ― In an effort to bolster its Latin American debt capital markets team, J.P. Morgan has hired Carlos Aspillaga away from Barclays Capital to act as its executive director, heading government debt and Colombian, Central American and Caribbean corporate debt offerings, Bloomberg reports.

At the end of the third quarter, J.P. Morgan ranked second only to HSBC, in Latin America corporate bond issuance. However, as of this morning, the bank ranked sixth in the market, leading only $250 million in the fourth quarter as competitors gained market share, according to data compiled by Bloomberg.

For the year, more than $121 billion in Latin America debt has been offered by 75 banks — generating $380 million in revenue for investment banking divisions. Total offerings are up 4% in the region from last year, while fees as a percentage of sales have also increased by half a basis point.

J.P. Morgan is aggressively trying to defend its leadership position in global investment banking, especially after posting disappointing earnings in the third quarter. For the period, fees from debt underwriting fell 37 percent to $496 million.

Aspillaga had worked at Barclays for more than 17 years, most recently as a director heading the company’s Latin American debt division. He will now report to Roberto D’Avola, head of Latin America debt.

Lehman to drop appeals of bankruptcy court ruling over Barclays sale

NEW YORK ― Lehman Brothers Holdings Inc. said it will drop its appeal of a bankruptcy court’s ruling upholding Barclays Plc’s. purchase of its North American business in 2008.

In a statement, Lehman said on Wednesday it will drop its challenge of Judge James Peck’s February ruling denying its attempt to overturn the sale, which was completed in the hectic days following Lehman’s $639 billion bankruptcy filing. The company said pursuing the appeal would put an unnecessary strain on its estate.

Lehman had accused Barclays of securing a windfall by withholding information from the court.

Lehman also said it will not pursue an appeal of Peck’s follow-up decision earlier in September that Barclays had not improperly withheld $500 million it was supposed to pay to employees it inherited in the takeover.

The company said it disagrees with the rulings, but is “cognizant” of the burden litigation would put on the estate.

“We have determined that … the resources of the court and the estate will be better employed at this point to move the bankruptcy toward a conclusion,” Lehman said.

A spokeswoman for Lehman declined to make any further comment. The company is negotiating with creditors in the hope of securing widespread support for a proposed $65 billion bankruptcy exit plan.

Barclays had no immediate comment.

Lehman not owed $500 million in bonuses, bankruptcy court decides

Barclays Plc. is seeking to dismiss claims by Lehman Brothers Holdings Inc. that the British bank owes $500 million in unpaid bonuses to employees of Lehman’s former brokerage.

Lehman asked the bankruptcy court in May to force Barclays to pay the remaining portion of the $2 billion in bonuses it had committed to when it acquired Lehman’s North American business in a firesale days after Lehman collapsed in 2008.

Lehman said Barclays had paid only $1.5 billion in bonuses.

Barclays argued in court papers filed Wednesday that the $2 billion figure in the purchase agreement was an estimate and that it had already paid nearly that amount in bonuses, severance and compensation-related taxes.

Lehman argued that if Barclays does not pay its full commitment for bonuses it should have paid more for Lehman’s investment bank, which in turn would provide more money for Lehman’s creditors.

Barclays bought Lehman’s brokerage business for $1.85 billion in the midst of a market collapse in September 2008. Lehman’s estate later sued Barclays for receiving what it said was an unfair $11 billion windfall from that deal.

The judge ruled against Lehman on those claims, but several disputes have lingered over the deal, which was hurriedly thrown together after Lehman collapsed.