NEWS AT A GLANCE
Yahoo! narrowly beats expectations
Yahoo! said its quarterly profit more than tripled, to $542 million. But most of the gain, $401 million, was related to the IPO of Chinese e-commerce site Alibaba, in which Yahoo! holds a majority stake. Without the Alibaba gain, Yahoo!’s profits were flat versus a year ago, which still narrowly beat analysts’ expectations. (BusinessWeek.com) Analysts said the results, while positive, were probably not good enough to fend off a takeover offer from Microsoft or force a rise in the bidding price. “Microsoft is breathing a sigh of relief,” said Cowen & Co. analyst Jim Friedland. Microsoft has set Saturday as the deadline for Yahoo! to decide. (Reuters)
Bond insurer Ambac hit by subprime losses
Ambac Financial Group, the No. 2 bond insurer, reported a $1.66 billion loss in the first quarter, fed by $3.06 billion in charges tied to losses on credit derivatives. The loss was much greater than analysts were expecting. (AP in Yahoo! Finance) Ambac said it had been “severely impacted” by the subprime mortgage meltdown. The company narrowly avoided a credit rating downgrade by Moody’s and Standard & Poor’s last month, but its market value has dropped 93 percent in the past year and Ambac said its new business has plummeted 87 percent. (Bloomberg)
VW profit rises before Porsche’s bid
Volkswagen, the largest automaker in Europe and No. 4 worldwide, posted a 26 percent rise in quarterly profit, to $1.48 billion. (MarketWatch) The earnings, slightly ahead of analysts’ expectations, were helped by job cuts in Germany and strong sales in emerging markets. (Reuters) “VW is showing an ongoing trend of business and efficiency improvement,” said Normura Securities analyst Michael Tyndall. But he said VW’s stock price, up 20 percent this year, is inflated by expectations of a takeover by minority shareholder Porsche. Porsche is submitting a bid at VW’s annual general meeting tomorrow to take a majority stake in the company. (Bloomberg)
U.S. traffic eases as gas rises
The number of cars on U.S. roads has steadily increased for decades. But preliminary numbers from the Federal Highway Administration show traffic down 1.4 percent last year, and with record gas prices, the goverment sees a modest drop not only in traffic but also gas consumption this year. And some people think those estimates are conservative. Auto sales back that up. U.S. car sales fell 8 percent last quarter, with SUV sales dropping 27 percent. And public transportation ridership is at a 50-year high. But some analysts see the decline as temporary. “Consumer habits are pretty sticky,” says Lehman Brothers analyst Adam Robinson. (BusinessWeek.com)
