NEWS AT A GLANCE
Merrill Lynch records third straight loss, cuts 4,000 jobs
Merrill Lynch reported a $1.96 billion loss in the first quarter, as revenue dropped 69 percent and it wrote down at least $6.5 billion in assets. Merrill earned $2.16 billion in profit a year ago. It was the firm’s third straight quarterly loss, and came in worse than analysts had expected. (AP in Yahoo! Finance) Merrill Lynch said it will cut 4,000 jobs, or about 10 percent of its workforce excluding financial advisers and investment associates, to save $800 million a year. (MarketWatch) “Merrill Lynch has to show profitability,” said Ken Crawford at Argent Capital Management in St. Louis. “They can’t have negative return-on-equity quarters and expect to make investors happy.” (Bloomberg)
IBM posts 26 percent jump in profits
IBM reported a better-than-expected 26 percent increase in quarterly profits, to $2.32 billion, on strong results from its global services and software units, and the weak dollar. (The New York Times, free registration) IBM also increased its annual earnings forecast to at least $8.50 a share; analysts expected $8.25 a share. (MarketWatch) The company earns 65 percent of its revenue from outside the U.S., but its U.S. sales rose a surprisingly strong 6 percent. IBM attributed its strength to a business model largely based on recurring revenue streams. That model suggests IBM “can do well in a time of boom as well as in a time of doom,” said Annex Research analyst Bob Djurdjevic. (AP in Yahoo! Finance)
EBay sees profits, eyes changes
Online auctioneer eBay posted a 22 percent rise in quarterly profits, to $460 million, on increased fees for sellers and growing revenue from its PayPal unit. The results beat analysts’ forecasts. (Reuters) The fee changes, designed with buyers in mind and to help eBay compete with Amazon, were unpopular with sellers. New CEO John Donahoe said he expects another “fairly vocal year” as eBay rolls out more changes. (AP in Yahoo! Finance) EBay raised its annual sales and profit targets. “Essentially, they’re doing the small things right and sticking to their knitting,” said Sanford C. Bernstein analyst Jeffrey Lindsay. (Bloomberg)
Springtime has hit Las Vegas, but the gamblers and other visitors have not. The U.S. economic downturn has also cut into casino revenue, and the Las Vegas Strip is reacting with a stimulus package of its own—hotel prices are dropping and perks of all sorts are popping up to lure tourists, including cheap flights and free shows, spa visits, and steak dinners. And Vegas isn’t the only gambling mecca rolling out the red carpet. Atlantic City and casinos throughout the Midwest are also serving up discount packages. Brenda Hernandez and her family got a good deal on a trip to Vegas from Texas, during what is normally the peak season. “It’s weird that it seems kind of dead,” she said. (The Wall Street Journal)
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