Botoxed-Off, Toyed-Off and Great Whites Great For Tourism

In this week’s pharmaceutical saga…

Image courtesy of patpitchaya/FreeDigitalPhotos.net

Image courtesy of patpitchaya/FreeDigitalPhotos.net

Allergan, the company behind the super-important and super glam, Botox, is making news while erasing wrinkles. How ’bout that. The company announced its plan to cut 1500 jobs – roughly 13% of its work force  – hoping it will make things more efficient and productive. In the meantime Valeant, together with Pershing Square Capital, has been trying to buy(out) Allergan for $53 billion and has been tattle-telling on Allergan to regulators -and anybody else who’ll listen, about alleged rumors and other comments it made. More like the stuff of playgrounds than boardrooms but at least it keeps things interesting. The Irvine, California-based company is trying to fend off Valeant’s offers for a (hostile) takeover which Allergan says “substantially undervalues” the company. Unfortunately for Allergan, its biggest shareholder Capital Research Management just sold off its own 6.3% stake in the company, which seems to suggest that it doesn’t feel Allergan’s value is going much higher than what Valeant is offering.

Not feeling very playful…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Hasbro, maker of some of America’s most beloved board games, like Monopoly and Twister, is finding that America is not so much loving them anymore. The company that also makes Play-Doh and Nerf toys took a hit in its earnings even though sales in its boys division pulled off a 32% surge to the tune of $335 million in sales. Despite their super-hero status, there was only so much Marvel Superheroes and Transformers could do as no force seems to be greater than Wall Street which hoped for $842 million and a profit of $.37 per share. Sadly, Hasbro was only able to reign in $829 million and a penny less in earnings per share. My Little Pony and her and perfectly coiffed equine friends also helped with a $163.8 million in sales but those board games took a 12% beating. However, this time last year, the toy company pulled in over $766 million, so at least it wasn’t a total bust.

Great Escapes…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

Instead of filling would be beach goers with fear, Great White Sharks have been causing a tourist spending frenzy. The carnivorous ocean denizens are creating quite a stir in the retail arena with sales of shark paraphanerlia surging. Sure, the sighting of a fin might evoke fear and panic, but don’t rule out the need for shark hoodies, shark-themed candies and the ever cuddly great-white shark plush toy. Since 1916, there have been over a hundred unprovoked attacks – thirteen of them deadly. From Cape Cod down to the Florida coast and beyond, you can count on one thing – Sharks are good for the economy.

 

Drug Company Ex-pat? Suspicious Packages and License to Bitcoin

Isn’t that a tax relief?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Chicago-bsed drug giant AbbVie, maker of the very popular Humira,  is buying fellow company Shire Pharmaceuticals for close to $55 billion. Wall Street seems to be happy about the strategically financial move. Too bad the Obama administration and some members of Congress don’t share the joy. And why whouldn’ they? Tax inversion my friends.  Basically, it’s shifting the tax residence of the company abroad, in this case the UK. AbbVie will now have a much more manageable tax rate of 13% instead of an onerous 22% which will free up the company to do all sorts of new and exciting things, although its headquarters will still remain in Chicago. It’s the largest inversion deal. Ever. But Treasury Secretary Jacob Lew is particularly miffed and said, “We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.” However, others argue the US government ought to make the tax laws more hospitable to these big companies.

Do I need to sign for that?

Image courtesy of posterize/FreeDigitalPhotos.net

Image courtesy of posterize/FreeDigitalPhotos.net

FedEx isn’t having the best day. It probably has something to with that indictment on drug-trafficking charges. Hard to believe (or not) but the shipping company was indicted by a San Francisco grand jury for conspiracy to deliver prescription drugs for illegal internet pharamcies. Whoops. The indictment also says that FedEx knew about this for a decade and even took precautions to protect itself. To be fair, FedEx says it asked the US government on several occasions for a list of the illegal pharmacies but the government apparently never got around to it. So there. However, the DEA and FDA said FedEx was repeatedly warned. Couriers in Kentucky and Tennesee, among other places, feared for their lives as packages were delivered to empty parking lots, vacant homes and of course the occasional school. Because, after all, what alleged crime would be complete without involving the use of a school? FedEx delivers over 10 million packages a year and pulled in $44.3 billion in revenue for 2013. FedEx was charged with 15 counts of conspiracy but no officers have been charged. The company could face fines of over $800 million.

Bitcoin to go mainstream?

Image courtesy of cuteimage/FreeDigitalPhotos.net

Image courtesy of cuteimage/FreeDigitalPhotos.net

The New York  Department of Financial Services is showing some bitcoin love by attempting to create a license for the crypto-currency. Sounds too good to be true, huh? But really it’s an attempt to make the virtual currency more mainstream. People engaged in criminal and other questionable activities tend to like bitcoin for its anonymous aspect. Who wouldn’t. But this new system might just make those shady transactions a little bit more challenging to complete. Policies and procedures would also be established to assist with the inenvitable consumer complaint and also to outline what happens in the case of a problem ala Mt. Gox and its hacker issue that caused the bitcoin trading exchange to go bust. Ben Lawsky, Superintendant of Financial Services said, “We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity – without stifling beneficial innovation.” Sounds fair.

 

Heads Will Roll At Microsoft, Morgan Stanley Shows the Other Banks How It’s Done and, Barbie’s Not Looking Too Fabulous This Quarter

Giving the (pink) slip…

Image courtesy of jscreationzs?FreeDigitalPhotos.net

Image courtesy of jscreationzs?FreeDigitalPhotos.net

Things are looking…well…not so good over at Microsoft, particularly for those working for the Nokia division which Microsoft bought back in April for the not-so-modest sum of $7.2 billion. Over 12,000 head are expected to roll. Another 6,000 Microsoft employees – give or take – will also get pink their slips. And while folks at Microsoft are not too happy, Wall Street actually celebrated the news by sending shares of the company up 3%. CEO Satya Nadella, in his post just five months, announced that the time has come (actually it came awhile ago) for Microsoft to step up its “A” game to compete with Google and Apple. So he wants to help shift things from its mostly software centered business to more online services, apps and devices. A respectable endeavor, no doubt. Nadella is Microsoft’s third CEO and this is the company’s largest round of lay-offs in its 39 year existence.

On top of the world…

Image courtesy of hywards/FreDigitalPhotos.net

Image courtesy of hywards/FreDigitalPhotos.net

Looks like Morgan Stanley’s Chairman and CEO James Gorman doesn’t need to polish his resume. The last of the big banks to announce their earnings this week, Morgan Stanley reported boffo numbers for its second quarter with major props going out to its wealth management and investment banking divisions. Net income rose to $1.86 billion – a 131% increase over last years $803 million. Its clients’ assets exceeded $2 trillion (note the “t”). Its earnings gain was helped by a $609 million tax benefit amd its profit margins for the first time hit 21%. All while rivals Citigroup, JP Morgan Chase and Bank of America posted lower than expected profits. Boohoo.

Toy-ing with earnings…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like Barbie is not enjoying her fabulous fifties. The iconic buxom blond doll, which turned 55 this year, and its parent company, Mattel, are having a very bad second quarter with a 60% drop in revenue. It might have been worse were it not for Mattel’s Disney Frozen toys and its American Girl products. But Barbie, well she was down 15%. Apparently she’s not as relatable as her Monster High competitiors. Hot Wheels and Fisher-Price brands were also down. Net income for the toy company was $28.3 million – a far far cry from last year’s $73.3 million. But it wasn’t all Barbie’s fault. Mattel’s purchase of MEGA Brands, its attempt at competing with the Lego powerhouse, also put a dent in those figures.

Dissing 21st Century Fox, BofA Not Feeling the Legal-ease and Hershey’s Not So Sweet News

Rejected…

Image courtesy of Ohmega1982/FreeDigitalPhotos.net

Image courtesy of Ohmega1982/FreeDigitalPhotos.net

Looks like Time Warner has no love for Rupert Murdoch. The media tycoon, who reigns over 21st Century Fox, put out an offer last month to buy its rival for $80 billion, or about $85 a share in stock and cash. He even graciously offered to sell off CNN, to avoid any anti-trust and regulatory issues. But he was still denied since it was “not in the best interests of Time Warner.” Many feel, however, that Murdoch was unfettered by this rejection and will likely come at Time Warner with an even better offer , especially because Murdoch is such a big fan of HBO. I’m sure he likes the hit show Girls, but it’s probably more about HBO’s $20 billion value that really makes him a super fan. That, and the fact that a “merger” like this could pull in $65 billion a year in revenue. Wall Street also appreciated news of the rejection and sent Time Warner shares up over 15%.

Banking on lawyers…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Bank of America came out with its earnings today and yeah…they had profits. Too bad they were down over 40% from a year ago, which means there was nothing for them to brag about today. Unless it wanted to brag about how its legal bills went up from $471 million last year to $4 billion this year. BofA can thank its lawyers for its $2.3 billion profit which was down from $4 billion a year ago. The Charlotte-based bank gained $0.19 a share instead of analysts’ predictions of $0.29 a share. Mortgage revenue was also down  but man, it was those legal bills that really put a crimp in profits. Good thing (or not?) that it reached a $650 million settlement with AIG for some outstanding mortgage bonds. However, the bank’s legal bills are far from coming to a halt. If it could just hammer out a deal with the DOJ for all the damage it caused leading up to the financial crisis by selling bad mortgages…

 

Not so sweet on this…

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Hershey’s is about to induce a migraine. With commodities like cocoa and dairy going up, the number one candy maker in the United States is hiking up its prices by 8%. It’s the first time in three years that they’re doing this and who can blame them (well, I can) since cocoa and its fellow chocolate making ingredients are almost at three year highs. You can expect other companies like Nestle SA and Kraft to follow (though maybe they wont, but they probably will). At least you’ll have some time to prepare as you won’t feel it in your wallets until next year, when the hikes are set to take effect.

Yellen at Congress, JP Morgan Chase-ing Earnings and Johnson & Johnson Sits Pretty at the Top

Cooing Wall Street…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Fed Chairwoman Janet Yellen graced Congress today with her presence and arguably dovish remarks during her semi-annual report on monetary policy. True, her comments  may not have been the stuff HBO series are made of but they did rattle Wall Street and sent its stocks and indexes south for a bit. The Fed Chairwoman wouldn’t offer up a time-table on any plans to raise short-term interest rates and still wants help from the Central Bank. “The economic outlook is very uncertain,” she said. Ugh. Not exactly the words you want to hear from the Fed. She also was not moved by the improving unemployment numbers yet she wasn’t too concerned about the slightly increasing inflation. “We have seen false dawn,” Yellen said, probably not meaning to be as dramatically poetic as the statement sounded. She’salso not too happy about the housing sector and again inadvertently sounded slightly poetic when she referred to the biotechs and social media sector as “stretched.” She apparently feels their stock values are very un-poetically inflated.

Bank’d

Image courtesy of 2nix/FreeDigitalPhotos.net

Image courtesy of 2nix/FreeDigitalPhotos.net

The country’s second largest bank (by assets), the almost indomitable JP Morgan Chase graced the world with its second quarter earnings today. It beat Wall Street’s predictions. Yay! But wait a minute…its earnings and revenue both took a dive this year with an 8% decline in second quarter profit which I know has you all broken up inside. The bank’s shares gained $1.46 a share when Wall Street predicted $1.29 but its revenue fell $5.99 billion from $6.5 billion a year ago. Just like its banking pal Citigroup – who also released its earnings yesterday and also reached a multi-billion dollar settlement with the Department of Justice over its bad mortgage practices – JP Morgan Chase saw its trading revenue fall.

Unbeatable?

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I double dare you to go to your local pharmacy/supermarket with your full shopping list in hand and try NOT to walk out with a brand that isn’t part of the Johnson & Johnson family. Or then again, don’t bother because it simply is not possible. The company owns…well everything. Almost. Which explains why its second quarter earnings trumped Street estimates jumping 9% in its revenue to $19.5 billion and gaining 13% on its profits. Sure sales of stuff like Tylenol and baby oil helped. And don’t forget about Neutrogena and Aveno (yeah, it owns those as well). But Johnson & Johnson also made some nice chunks of cash with help from its Hepatitis C drugs Olysio and Sovarid. Yeah it has those too.

Citigroup Pays Its Dues…and Fines, The Tastiest Merger and Samsung Is In Hot Water

Hot in the Citi…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Citigroup was all fiscal smiles today even as it agreed to cough up $7 billion for all the aggravation it caused because of its fraudulent mortgage practices. US Attorney General Eric Holder graciously pointed out, “The bank’s misconduct was egregious…the bank has admitted to its misdeeds in great detail.” Now Holder and the FDIC needn’t bother anymore with its cumbersome civil investigation. It also frees up the AG to sit back, relax and think about how he’s going to pull billions of dollars from Bank of America’s deep coffers. Part of the settlement is supposed to provide relief. That relief could come in the form of loans for affordable housing and changes to mortgages. Too bad those innovative ideas aren’t slated to take place until 2018. And while Citi did post better than expected earnings, trouble still looms for it as a money-laundering investigation is taking place at its Mexican unit.

That’s one sweet pairing…

Image courtesy of Arvind Balaraman/FreeDigitalPhotos.net

Image courtesy of Arvind Balaraman/FreeDigitalPhotos.net

Swiss chocolatier Lindt & Sprüngli is picking up a tasty American treat by purchasing Russell Stover Chocolates. Kansas City, Missouri-based Russell Stover, which also makes Whitman’s (as in “the samplers”), has 2,700 employees and generates a yummy $500 million a year. Lindt & Sprüngli are looking forward to generating revenues of $1.5 billion with its new-found American sweetheart. While the exact price of the purchase hasn’t been disclosed, the estimated figure is $1.4 billion and will make the newly formed venture the third largest chocolate manufacturer in North America. The two companies called it “a perfect strategic fit” and I couldn’t agree more.

Ugly technology…

Image courtesy of nonicknamephoto/FreeDigitalPhotos.net

Image courtesy of nonicknamephoto/FreeDigitalPhotos.net

Things are not looking so smart over at Samsung, the world’s biggest smartphone maker. The company just suspended business with one of its suppliers in China. According to New York-based human rights watchdog group China Labor Watch (CLW), the factory in question employs under-age workers amid a litany of other offenses. Children were allegedly made to work eleven hour days and paid for only ten of them. Even though Samsung maintains a “zero tolerance policy” for such odious practices, CLW also found the factory, Dongguan Shinyang Electronics, had its employees work for excessive and unpaid overtime. This is not Dongguan Shinyang Electronics’ first brush with human right violations either. The company has been audited three times since 2013. In the meantime CLW thinks Samsung is treating its social responsibility as “just advertisements.” Ouch.

 

Blame Portugal (Some More), Amazon’s Latest Legal Tangle and Wells Fargo Sets the Stage (Hopefully)

Busted…

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Amazon is getting busted by the FTC. The e-commerce site is being sued by the government agency for charging parents millions of dollars for unauthorized in-app purchases made by their tech-savvy children. Kids were (are?) able to purchase virtual goods using their parents very real money without very real permission. Not only does the FTC want Amazon to refund all that cash but it also wants the internet company to actually stop. Amazon’s policy on refunding in-app purchases is to NOT refund them. However, Amazon says it has already done otherwise and was “deeply disappointed” about the lawsuit. No kidding. In January, Apple had to refund over $32 million for the same reason while T-Mobile got sued last week for bogus billing charges.

Trouble in Portugal?

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

There is even more reason to blame Portugal today now that country’s regulator suspended trading for Banco Espirito Santo since the price of its shares took a major nosedive. The bank  is part of the Espirito Santo International conglomerate that has been causing so much trouble lately. The problem for us here across the pond is that Wall Street isn’t taking to kindly to these banking problems and the Dow Jones took a .4% hit over these events. Wall Street, the rest of the world (and myself ) start to wonder if European banks are “healthy.” The index of European lenders, appropriately enough called STOXX, already fell to its lowest this year with no thanks to Austria and Bulgaria who contributed to these “wonderings” with their own banking issues. And while Banco Espirito Santo might seem like a minor player in the banking field, its very big problems spread to its neighbors in Greece, Italy and Spain. The Portugese Prime Minister said there is no reason to worry for depositors to worry and the country’s banking practices are a-ok. Isn’t that reassuring?

Now that’s healthy…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

On the flip side, Wells Fargo seems very healthy – especially compared to European banks. It was the first of the big banks to announce its second quarter earnings and kicked off the season with a 4% gain with much help, thanks, and a major debt of gratitude (no pun intended – well maybe just a little) to loans, especially commercial, and deposit growth. The company had a net income of $5.7 billion, up from $5.5 billion from a year ago and gained $1.01 per share. Revenue was over $21 billion which was actually down 1.5% from a year ago but shares are still up over 28% since October.