Tuesday, March 31, 2009

Macy's Loses $11.40 per share

Macy's revised its fiscal 2008 results to a net loss of $4.8 billion, or $11.40 a share, from a net income of $280 million, or 66 cents a share. The dramatic revision is due to a pre-tax goodwill charge of about $5.5 billion which it had previously detailed in its fourth-quarter earnings report. The department store company said the goodwill impairment estimate may be further adjusted in the first quarter. "The non-cash write-down of goodwill is expected to have no impact on the company's business, bank credit agreement or bond indentures. The primary causes for the goodwill impairments are the deterioration in the general economic environment and the resulting decline in the company's share price and market capitalization," Macy's said in a statement.

Thursday, March 26, 2009

Ticking Time Bomb

From today's WSJ: Commercial real-estate loans are going sour at an accelerating pace, threatening to cause tens of billions of dollars in losses to banks already hurt by the housing downturn. The delinquency rate on about $700 billion in securitized loans backed by office buildings, hotels, stores and other investment property has more than doubled since September to 1.8% this month, according to data provided to The Wall Street Journal by Deutsche Bank AG. While that's low compared with the home-mortgage delinquency rate, it's just short of the highest rate during the last downturn early this decade.

Monday, March 23, 2009

BE to sell off substantially all of its business

BearingPoint (the former KPMG Consulting), which had submitted its required quarterly financials late for six consecutive quarters and filed for Chapter 11 bankruptcy protection on February 18, 2009, announced that it reached an agreement to sell most of its Public Services practice to Deloitte. It also signed a non-binding letter of intent to sell most of its Commercial Services practice to PricewaterhouseCoopers. For those unfamiliar with BearingPoint's business, those are the two largest of the company's three operating units. Only global services remains, and it will probably be carved up between the Big Four.

Monday, March 16, 2009

Berkshire Hathaway and General Electric lose AAA ratings

Fitch lowered Berkshire's rating and S&P lowered GE's rating (which it had held since 1956!) last week. There are only four untainted AAA ratings left: ADP, Johnson & Johnson, ExxonMobil, and Microsoft. (Pfizer's rating is on review for possible downgrade due to borrowing related to its purchase of Wyeth).

I don't think "thriving" means what they think it means

More than 24 million Americans shifted in 2008 from lives that were "thriving" to ones that were "struggling," according to a massive study by Gallup and Healthways. At the start of 2008, as the recession was beginning, slightly more people were "thriving" than "struggling." By the end of the year, after an economic meltdown that began with the subprime mortgage crisis, Americans by an overwhelming 20 percentage points were "struggling" rather than "thriving," 58%-38%. The remaining 4% were "suffering," in more dire straits.

[Source: USA Today]