UBS Breaks Hearts, Yahoo! Speed-Dates
UBS reports the biggest quarterly loss ever for a bank. Yahoo! entertains a new suitor, News Corp. And chocolate makers could be in for dark days ahead.
EWS AT A GLANCE
UBS reports record losses
UBS AG, Europe’s biggest bank by assets, reported a quarterly loss of $11.3 billion, the largest loss ever for a bank, after writing down $13.7 billion in investments tied to the U.S. subprime mortgage sector. (Bloomberg) For the full year, UBS posted its first annual loss, of $4 billion, since its creation through the 1997 merger of Swiss Bank and Union Bank of Switzerland. (AP in International Herald Tribune) UBS also revealed $26.6 billion in exposure to so-called Alt-A mortgages in the U.S., adding to roughly $27 billion in subprime exposure. (Reuters) “UBS expects 2008 to be another difficult year,” the bank said in a statement. (MarketWatch)
News Corp. enters Yahoo! fray
Yahoo! is in talks to trade about 20 percent of itself to News Corp. for social networking site MySpace, in a gambit to scuttle or bid up Microsoft’s hostile takeover offer, according to published reports. (The Wall Street Journal) The Microsoft offer is currently at $42.1 billion, and the News Corp. deal would likely push Yahoo!’s taking price up toward $50 billion. (AP in Yahoo! Finance) But most analysts were skeptical of a Yahoo!-News Corp. deal working out. “It’s still at the fanciful rumor stage,” says analyst Jeffrey Lindsay at Sanford C. Bernstein & Co. “We couldn’t make the numbers add up.” (BusinessWeek.com)
Comcast gets a boost from cable TV trade-ups
Comcast, the largest U.S. cable operator, reported a 54 percent rise in quarterly profits, to $602 million, and said it would pay a dividend for the first time in almost a decade. Comcast also said it will buy back $6.9 billion in stock over two years. (Bloomberg) The results, which beat analysts’ forecasts, were driven by higher spending on cable TV. The average Comcast customer spent $61.72 a month on cable TV last year, compared with $58.19 in 2006. Basic cable subscriptions fell, but more expensive cable packages rose, as did broadband Internet and digital phone service subscribers. (AP in Yahoo! Finance)
Dark days for chocolate makers
It’s a bittersweet Valentine’s Day for chocolate makers, as raw cocoa futures hit a 23-year high in New York yesterday. The run-up in cocoa prices is attributed to a strike in Ivory Coast and a shortage of rainfall in West Africa, where 70 percent of the world’s cocoa beans are grown. Chocolate lovers are driving up demand, too, buying a new breed of “ultra-dark” chocolate that contains 99 percent cocoa; the typical chocolate bar contains 25 percent. More prosaically, however, cocoa prices are benefitting from a bullish stance among investors on a range of commodities. “We’ve seen quite a bit of speculative buying,” said A.G. Edwards analyst Dan Vaught. (MarketWatch)
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