NEWS AT A GLANCE
Toll Brothers loses ground
Luxury home builder Toll Brothers reported its first quarterly loss in 21 years, a shortfall of $81.1 million, or 52 cents a share. Analysts had forecast a loss of 77 cents a share. Toll Brothers, which had earned $173.8 million a year ago, called the current market the worst in its 40 years in business. “1974 was perhaps rougher,” said CEO Robert Toll, “but the difficult times only lasted one year.” (AP in Yahoo! Finance) In a report released this morning, Moody’s Economy forecast that the housing market slump will last through early 2009, and that housing prices nationwide will effectively drop more than 15 percent from their peak. (Reuters)
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RBS writes down $2.5 billion
Royal Bank of Scotland, Britain’s second-largest bank, said it is writing down a lower-than-expected $2.5 billion in subprime mortgage-related assets, sending its shares up more than 7 percent in London early today. It also said its 2007 earnings will be “well ahead” of the nearly $20 billion analysts expected. The write-down includes $600 million at an ABM Amro unit it acquired in October. (MarketWatch) RBS shares are still down 25 percent on the year (Bloomberg), as investors had expected it to need to tap the markets for more capital. But the bank’s report “has knocked quite a few of the worries on the head,” said Pali International analyst Bruce Packard. (Reuters)
Bush to detail subprime deal
President Bush will lay out today the details of a subprime mortgage aid package. (Reuters) The nonbinding deal, hammered out between the Treasury Department, mortgage servicers and lenders, and investors, is designed to help at-risk homeowners avoid foreclosure and prop up sagging housing prices. A key provision is a five-year freeze on the low introductory mortgage rates of up to 500,000 borrowers who would be unable to continue making house payments when their mortgages reset upwards. (Bloomberg) The deal is important because the housing slump “is a threat to the broader economy,” said Moody’s cheif economist Mark Zandi. “The risks of a recession are very high.” (AP in Yahoo! Finance)
Fingerprints and finger-pointing at the start-up
Pay by Touch, a San Francisco start-up, has gone from a sure thing to bankruptcy court in five years. Bolstered by $300 million in venture capital, the company has developed fingerprint scanners for payment verification at major retailers. But according to employees lawsuits, CEO John Patrick Rogers has nearly ruined the company through mismanagement, erratic behavior, drug binges, and sexual harassment—charges he calls “character assassination.” Now Rogers, a Connecticut hedge fund, and a court-appointed caretaker are all fighting for control of Pay by Touch. Despite the turmoil and drama, “there’s a real company under all of this,” said Todd Lumsden, the caretaker. (Los Angeles Times, free registration required)
