Market Updates

Ecuador Orders Chevron to Pay $9 Billion; FedEx Warns, Retail Sales Rise

Arthi Gupta
15 Feb, 2011
New York City

    U.S. indexes traded higher on optimism of positive economic data. Berkshire Hathaway sold stake in eight companies including Bank of America and Nike. Ventana accepted Batista''s offer. Chevron plans to appeal adverse Ecuador ruling that may cost as much as $16 billion.

[R]9:00 AM New York – U.S. indexes traded higher on optimism of positive economic data. Berkshire Hathaway sold stake in eight companies including Bank of America and Nike. Ventana accepted Batista''s offer. Chevron plans to appeal adverse Ecuador ruling that may cost as much as $16 billion.[/R]

U.S. retail sales adjusted for seasonality and calendar rose 0.3% to $381.6 billion from December and up 7.8% from a year ago. Monthly sales increased for the seventh month in a row.

November to December unrevised retail sales rose 0.6%.

Asian markets traded mixed and the European markets climbed.

Consumer prices in China rose 4.9% from a year earlier in January, following the 4.6% increase in December, the National Bureau of Statistics said. On a monthly basis, consumer prices rose 1.0%. Food prices rose 10% in the month.

The inflation index rose less than expected after the government agency adjusted weights in the index and decreased the weights to fast rising food prices.

The Bank of Japan raised its assessment of the economy for the first time in nine months on Tuesday, saying exports were showing signs of picking up. However, the BOJ left its benchmark interest rate range unchanged between zero and 0.1% and kept the size of its asset purchase program unchanged at 5 trillion yen or $60 billion.

William C. Dudley, President of the New York Federal Reserve, on Monday defended the Fed''s $600 billion bond buying program, saying that quantitative easing stimulated economic activity.

Ventana Accepts Batista''s Offer

Ventana Gold Corp. agreed to Brazilian billionaire investor Eike Batista''s bid of C$13.06 per share to acquire the company. Batista already owns about 20% shares of Ventana.

The offer represents a premium of 30.2% to the closing price of Ventana''s common shares on November 16, 2010.

Chevron Appeals Ecuador Court Ruling

Chevron Corporation announced there has been an adverse judgment from the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador in an environmental lawsuit involving Texaco Petroleum Company.

The 188-page ruling also asked the company to pay 10% or $860 million to the Amazon Defense Coalition, the group that represents the plaintiffs.

In the lawsuit, Chevron faced allegations that it is responsible for alleged environmental and social harms in the Amazon region of Ecuador.

In a statement, Chevron said, ""The Ecuadorian court''s judgment is illegitimate and unenforceable. It is the product of fraud and is contrary to the legitimate scientific evidence.""

The Provincial Court of Justice of Sucumbíos in Lago Agrio ordered Chevron to pay an $8.6 billion fine, comprising $6.4 billion for a soil and water clean-up and $2.2 billion for a local healthcare system, as well as an equal amount in punitive damages after a trial that took 18-years to settle.

If the company fails to apologize for the environmental damages in fifteen days it will have to pay $8.6 billion in punitive damages.

Berkshire Hathaway Increases Stake in Wells Fargo

Berkshire Hathaway Inc. sold off its entire stake in eight companies in the fourth quarter, according to regulatory documents filed by the company on Monday.

The insurance conglomerate sold stakes in Bank of America, Comcast, Nalco Holding Co., Nike, Nestle, Fiserv, Lowe''s Companies and Becton Dickinson & Co. However, the company increased its stake in Wells Fargo.

Berkshire Hathaway''s U.S. equity portfolio at the end of 2010 was worth $52.56 billion, up from $48.56 billion at the end of the September 2010 quarter.

Marriott Plans to Spin-off Timeshare Business

Marriott plans to spin-off its timeshare operations and development business as a new independent company through a special tax-free dividend to shareholders by the end of the year.

The new timeshare business will become the exclusive developer and operator of timeshare, fractional and related products under the Marriott brand and the exclusive developer of fractional and related products under the Ritz-Carlton brand.

The other part, Marriott International, will concentrate on the lodging management and franchise business, and receive franchise fees from the timeshare company''s use of the Marriott and Ritz-Carlton brands.

Starbucks Contemplates Partnership with Green Mountain

Starbucks Coffee Co. is reportedly in talks with Green Mountain Coffee Roasters, Inc. in order to forge a partnership in the new and fast-growing U.S. single-serve coffee market, which is currently dominated by Green Mountain''s Keurig brewer with a 80% market share.

OECD Jobless Rate Drops

The unemployment rate in the Organization for Economic Cooperation and Development area fell to 8.5% in December from 8.6% in November. There were 46.2 million unemployed persons in OECD nations in December, down 0.9 million from December 2009, according to data from the Paris-based OECD released today.

New data showed that the jobless rate for the United States fell by 0.4 percentage point to 9% in January 2011, while the rate for Canada rose by 0.2 percentage point to 7.8%.

Earnings Review

Agilent Technologies Inc. ((A)), the scientific instruments maker said first quarter revenues rose 25% to $1.52 billion from $1.21 billion in the same quarter last year. Net income in the quarter surged 144% to $193 million or 54 cents per diluted share compared to net income of $79 million or 22 cents per share for the year-ago quarter.

FedEx Corporation ((FDX)), the parcel delivery company lowered its earnings guidance for the third quarter due to loss of revenue and increased expenses on severe winter storms and higher-than-expected fuel prices.

The company currently estimates adjusted earnings, excluding FedEx Freight combination costs, in the range of $0.70 to $0.90 per share for the third quarter compared to the previous guidance in the range of $0.95 to $1.15 per share.

FMC Technologies, Inc. ((FTI)), the technology solutions provider for the energy industry reported fourth quarter revenues edged down 5.2% to $1.10 billion from $1.16 billion a year ago. Net income in the quarter rose 6.5% to $99.3 million or 82 cents per diluted share compared to net income of $93.2 million or 75 cents per share last year.

For the full year, revenues dropped to $4.16 billion from $4.40 billion last year. Net income for the year grew to $375.5 million or $3.06 per share from $361.8 million or $2.88 per share a year ago.

Marriott International, Inc. ((MAR)), the hotels operator and franchisor reported fourth quarter total revenues increased 8% to $3.64 billion from $3.38 billion last year. Net income in the quarter increased 63% to $173 million or 46 cents per diluted share compared to net income of $106 million or 28 cents per share in the previous year.

For the full year 2010, total revenues increased to $11.69 billion from last year. Net income for the period was $458 million or $1.21 per share, compared to a loss in the previous year.

Qwest Communications International Inc. ((Q)), the provider of data, Internet, video and voice services reported fourth quarter operating revenue slipped 3.2% to $2.90 billion from $2.99 billion in the comparable period. Net loss in the quarter was $161 million or 9 cents per diluted share versus a profit of $108 million or 6 cents per share last year.

Walter Energy, Inc. ((WLT)), the coal producer reported fourth quarter revenues rose 70% to $400.80 million from $236.27 million in the same period last year. Net income in the quarter soared 215% to $91.87 million or $1.72 per diluted share compared to net income of $29.18 million or 54 cents per share in the prior-year period.

Revenues for the year were $1.59 billion, up from $966.83 million a year ago. For fiscal year 2010, net income surged to $385.80 million or $7.18 per share from $137.16 million or $2.55 per share in the previous year.

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