Oracle Gloom, KPMG Audit
Oracle posts a healthy profit, but investors are unimpressed by its software sales. Auditor KPMG is accused of abetting accounting fraud at bankrupt subprime lender New Century. And small TV stations are trying to stop the biggest change to TV since color
NEWS AT A GLANCE
Oracle sees gains, but sales miss targets
Business software maker Oracle Corp. reported a 30 percent rise in quarterly profit, to $1.34 billion, in line with analysts’ projections. However, its stock dropped 8 percent in extended trading, as a lower-than-expected 21 percent jump in sales led investors to conclude that Oracle is more vulnerable than they thought to the slump in U.S. business spending. (AP in Yahoo! Finance) “People have turned to the software sector in general as somewhat defensive,” said analyst Charles DiBona at Sanford C. Bernstein, “but it’s not immune.” Shares of rivals SAP, IBM, and Microsoft also fell after the earnings report. (Reuters)
KPMG fingered in New Century fraud
Accounting firm KPMG was complicit in “significant” accounting fraud at New Century Financial, which was the second-largest U.S. subprime lender before going bankrupt last April, according to a report ordered by the Justice Department. The report, by court examiner Michael Missal, was unsealed yesterday. (Reuters) It found that some KPMG auditors had uncovered suspicious accounting, but that partners at the firm had rejected the concerns so as not to lose New Century as a client. KPMG said it disagreed with the report’s conclusions. The findings could help shareholders sue KPMG and New Century executives whose pay was inflated by the fraud. (The New York Times, free registration)
H&M profits up on new stores
Swedish clothing retailer Hennes & Mauritz reported a better-than-expected 28 percent rise in quarterly profit, to $485 million. Profit growth at Europe’s No. 2 fashion retailer was fueled by new stores, growing online sales, and the weak dollar, which lowered its purchasing costs. (MarketWatch) H&M opened 11 new stores in the quarter, and plans to open 190 this year, including its first outlets in Japan and Saudi Arabia. Its shares rose more than 4 percent in Stockholm early today. “I’m surprised at the amazing strength of the report, considering the weak retail figures we’ve seen recently coming out of the U.S. and Germany,” said Johan Stein at Nordea Asset Management. (Bloomberg)
For small TV stations, a digital kiss of death?
Almost the entire U.S. television universe is going digital next year, and small TV broadcasters are calling the switch a “death sentence.” The Community Broadcasters Association, representing 2,600 low-power stations—which aren’t required to go digital—is asking a federal court to prevent the government from entirely phasing out analog broadcasts, and is specifically seeking a ban on the sale of analog-to-digital TV converter boxes. If granted, the ban could derail the switch to digital service. The government now offers $80 in coupons to buy such boxes. “Every time a person gets a coupon, buys a converter box and plugs it in, we lose that viewer,” said association president Ronald Bruno. (AP in USA Today)
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