NEWS AT A GLANCE
Morgan Stanley, AIG join subprime club
Morgan Stanley said it is writing down $3.7 billion in subprime mortgage-related assets, or $2.5 billion after tax. The loss was less than investors were expecting, and the bank’s stock—down 24 percent over the past five days—rose 2 percent in extended trading. (Reuters) AIG, the world’s largest insurer, also booked a $2.68 billion after-tax write-down on subprime-related assets, and reported a 27 percent drop in profits in the third quarter. (The Wall Street Journal) “We’re getting through the process of these people admitting they have a problem,” said Jon Fisher at Fifth Third Asset Management, and “we’re going to spend the first half of ’08, and maybe all of ’08, figuring out how bad the problem is.” (Bloomberg)
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Cisco profits jump, stock falls
Cisco Systems posted a 37 percent jump in profits in its first quarter, to a higher-than-expected $2.2 billion, but its stock dropped more than 9 percent in after-hours trading. (AP in Yahoo! Finance) Investors had been expecting Cisco to raise its long-term forecasts, and were disappointed when it held steady at 12 percent to 17 percent growth in 2008. (The Wall Street Journal) “Looks pretty solid,” said analyst Shaw Wu at American Technology Research, but “investors were expecting more.” (MarketWatch) In other earnings news, European aeronautics giant EADS reported a greater-than-forecast $1.14 billion net loss today, fed by delays at Airbus and the weak dollar. (Reuters)
The old new kids in town, with an assist
The Eagles’ new studio album, Long Road Out of Eden, hit the top of the Billboard charts this week, thanks in part to a last-minute change regarding chart eligibility. The album is sold only at Wal-Mart, and Billboard on Tuesday scrapped a rule from the early ’90s that barred records sold exclusively through one retailer. Billboard said the change was needed to reflect a changing market in which 39 percent of album sales come via mass merchants like Wal-Mart. But record stores derided the change. “Somebody went through some arm-twisting, or negotiations at least, to have themselves reflected on the industry chart,” said Don Van Cleave of the Coalition of Independent Music Stores. (The New York Times, free registration required)
