Tuesday, February 3, 2009

Financial Headlines 2/3/2009

Some lackluster earnings results:
  • Dow Chemical swung to a fourth quarter loss on restructuring charges.  Dow reported a fourth quarter net loss of $1.55 billion on a 23% decline in revenue to $10.9 billion.  Analysts were expecting a profit of 7 cents on $13.37 billion in revenue.  The company announced 5,000 job cuts and plans to close 20 plants.  Doesn't this make you wonder how on earth this company planned to complete a $15 billion acquisition?  Nevertheless Rohm & Haas is mad and has filed a breach-of-contract suit seeking to force Dow to complete the merger.  Dow claims the credit crisis has "made it impossible" to seal the deal without "jeopardizing the very existence of both companies."  Yikes.
  • GMAC posted a miraculous profit on a $11.4 billion gain from convincing its bond holders to swap their worthless debt for some worthless equity so it could limp along a little bit longer.  Rest assured nothing fundamental has changed at the finance company, it is still bleeding cash out the wazoo.  Fourth quarter net income was $7.46 billion.  The auto-finance unit swung to a $1.31 billion loss while ResCap's loss widened to $981 million.  Oh, and GMAC received $5 billion in TARP funds.  Because why would Cerberus, the private equity fund that owns GMAC, need to pony up any more money when it can just get it from the government?  Awesome. 

No comments: