Compare and contrast…
Ford and GM announced their second quarter earnings. Guess who fared better? Here’s a hint: Recalls. GM’s profits got massacred by its massive recall issues in its second quarter pulling in only $190 million. While that seems like nothing to scoff at, it is when it’s an 85% drop from the same period a year ago. Ford pulled in a profit of $1.31 billion – a 6.3% increase. GM on the other hand had a $1.2 billion charge over its recalls – about 22 million of them. In the meantime, the company has set aside a fund with $400 million in it (so far) for victims of the faulty vehicles while it undergoes both Federal and Congressional investigations. But not Ford, whose numbers were lifted with a little help from Europe – which saw a profit for the first time in three years.
Nothing like a $275 million settlement with the SEC to put a damper on the day – well for Morgan Stanley, anyway. But after all, the settlement was over fraud allegations, never a flattering thing for a company, especially when it’s the second largest investment bank in the country. Apparently Morgan Stanley committed these fraudulent acts over some mortgage-backed securities when it misled investors about the delinquency status of loans. It gets a bit more convoluted than that but basically it’s a big Federal no-no when banks don’t bother to disclose delinquency information. The SEC said Morgan Stanley did it on purpose so that it could get out those sub-prime loans to borrowers with, shall we say, sub-prime credit. The $275 million will be paid back to those investors who lost money over Morgan Stanley’s allegedly fraudulent actions.
Prime miss. Or prime diss? Hmmm.
Amazon is not having a good day, we assume, as it came out with earnings which were a colossal Wall Street miss. What does a colossal miss look like? Well, when a giant online company like Amazon posts $0.15 earnings per share when Wall Street expected a $0.27 per share gain then you’ve got yourself a colossal miss. However, many experts (me not being one of them – an expert, that is) attribute that loss to the launch of its new “Fire” smartphone which makes its auspicious and apparently very expensive debut on Friday. Also, it should be duly noted that the company also pulled in $19.34 billion in sales – a 23% growth, so investors and those “experts” aren’t too worked up over that earnings per share miss. If you do find yourself jonseing for one of those new Amazon “Fire” phones it’ll only set you back $649, that is, if you don’t want a contract. If you don’t mind the whole strings attached/contract concept, you’ll only need to shell out $199 for AT&T to provide you with the phone. Either way, Amazon’s going to throw in a one-year “Prime” membership.