Financial Headlines 2/3/2009

Some lackluster earnings results:

• UPS reported fourth-quarter net income of $254 million on a 5.2% decline in revenue to $12.7 billion.  The shipping company warned of a difficult year ahead, froze management salaries and suspended its 401K matching contributions to cut costs.

• Motorola swung to a fourth-quarter loss on write-downs as the company projected first quarter earnings below analysts views.  Motorola lost $3.58 billion on a 26% decline in revenue to $7.14 billion.  The $1.57 a share loss was significantly worse than the one to two cents the company said it would lose a mere month ago.  Furthermore, Motorola now sees a first-quarter loss of 10 to 12 cents a share.  Motorola is also suspending its dividend.

• 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.

• BP swung to a $3.34 billion loss in the fourth quarter.  Revenue fell 23% to $61.48 billion.  The loss was attributed to, what else, the impact of the falling price of oil on the value of oil inventories.

• 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.