Bears Attack Amazon, Subprime Socks MBIA
Amazon has a good holiday season, but its outlook spooks investors. MBIA reports big losses on subprime-backed securities. And Starbucks is going to smell like coffee again.
EWS AT A GLANCE
Amazon beats the street, gets pummeled
Online retailer Amazon reported that fourth-quarter profits more than doubled, to $207 million from $98 million a year earlier, and forecast brisk sales growth for 2008. The results beat the analyst consensus, but Amazon shares dropped 12 percent in extended trading because its operating profit guidance fell short of Wall Street expectations. (BusinessWeek.com) Amazon's profit margins are squeezed by shipping, which it offers cheaply to attract shoppers. Amazon is “eating every one of their competitors’ lunches,” said American Technology Research analyst Tim Boyd, but “a lot of old Amazon bears are going to be growling.” (AP in Yahoo! Finance)
MBIA loses big
MBIA, the world’s largest player in the troubled bond insurance business, reported a record $2.3 billion loss for the fourth quarter, including a previously unveiled $3.5 billion in writedowns. MBIA traditionally insures municipal bonds, but it faces steep losses from its recent foray into backing securities tied to subprime mortgages. (Reuters) The insurer says it is working to convince Moody’s to let it keep its top Aaa credit rating; a downgrade would really hurt MBIA and throw $652 billion worth of securities into doubt. According to JP Morgan, the bond insurance industry faces up to $41 billion in losses from the $2.4 trillion in debt it guarantees. (Bloomberg)
Starbucks drops sandwiches, closes stores
Starbucks Coffee reported a modest 2 percent profit growth, to $208 million, slightly above expectations. (CNNMoney.com) But the coffee purveyor said it would close 100 U.S. stores, slow its domestic expansion, and stop selling hot breakfast sandwiches as it pushes to reinvigorate sales and increase lagging customer traffic. The aromatic sandwiches, which customers said clashed with the pleasant smell of coffee, added about $35,000 to a typical store’s annual revenue. (AP in Yahoo! Finance)
Vows of hospitality
Glendale, Ariz., is getting ready to welcome 125,000 football fans for the Super Bowl, and with accommodations scarce, even the nuns are getting in on the act. The Benedictine monastery of Our Lady of Guadalupe is offering no-frills rooms in its retreat house for $250 a night. The guests can’t smoke or drink on the premises, and spiritual guidance is available as a side benefit only for those who ask. The rate is higher than the usual $105 a night, but it’s much more reasonable than the $500-and-up for even modest hotel rooms in the area. “A Super Bowl doesn’t happen in a city very often,” notes Sister Linda Campbell, the prioress. (The New York Times, free registration)
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
MOST POPULAR ON THE WEEK
- 43 TV shows to watch in 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- 3 horrific inaccuracies in Homeland's depiction of Islamabad
- Here comes the Pentagon's newest space plane
- The real story behind Deliver Us From Evil
- 6 things the happiest families all have in common
- What is Molly? Everything you need to know about the party drug
- Extreme haunted houses: Inside Halloween's most terrifying new trend
- The U.S. is about to sell weapons to Vietnam. That's bad news for China.
- How foreign aid screwed up Liberia's ability to fight Ebola
Subscribe to the Week