Financial thoughts

Oracle’s Sun integration got off to a fast start, as the company on Thursday reported an 18% sales increase from the year-ago quarter.

"The Sun integration is going even better than we expected," Oracle President Safra Catz said in a prepared statement. "We believe that Sun will make a significant contribution to our fourth quarter earnings per share as well as meet the profitability goals we set for next year."

The Redwood Shores, Calif., company posted income for the three months ended February 28 that rose to $1.9 billion, or 38 cents per share, after adjustments for one-time expenses. That compares with net income of $1.8 billion a year ago.

Analysts surveyed by Thomson Reuters were expecting income of 37 cents per share.

Oracle (ORCL, Fortune 500) sales rose 18% to $6.5 billion, up from $5.5 billion last year, which beat analysts’ forecast of $6.3 billion. Excluding the effects of Oracle’s $7.4 billion Sun Microsystems takeover, sales were up 7%.

A 13% jump in new software licenses and 12% rise in software maintenance sales were the main drivers behind Oracle’s strong performance. Analysts were looking for a boost in new licenses as an indicator of a recovery in business software spending.

Amid a deep recession and credit crunch, businesses sharply cut back their tech spending in 2009, but technology research company Forrester Research (FORR) predicts U.S. tech spending will rebound 6.6% and global IT spending, will rise 8.1% this year.

Analysts consider Oracle a bellwether for the software industry, and while the company’s results showed improvement over last year, they were perhaps not as positive as the Street had hoped. Oracle shares fell in after-hours trading after the announcement.

"The bulls were looking for an absolute blowout quarter, and what they got was a good quarter," said Richard Williams, a senior software analyst with Cross Research pay day loan lenders. "It was an improving quarter, but the enterprise software stocks have been run-up in anticipation of a robust recovery, and what we’re seeing thus far is, at best, a recovery — not a robust recovery."

Oracle leads the market for business database software. Its Sun deal, completed Jan. 26, marks the company’s first push into the IBM-dominated hardware business. Oracle announced in January that the company would hire 2,000 sales and engineering employees to support this new unit.

Oracle vs. SAP

On a call with investors Thursday, Oracle landed jabs against SAP, its arch rival and the world’s largest business software company. Executives said they intended to grab "huge chunks" of market share from SAP because the company "is vulnerable and we can take them on in a variety of industries," they said.

The dig comes about a week after SAP co-CEO Bill McDermott told reporters that Oracle’s model was outdated and that SAP would be launching new on-demand.

"The 20th Century model that Oracle has chosen to replicate is one of the past," McDermott said during that meeting.

In a press release, Oracle’s Ellison also poked fun at SAP’s trouble staffing their chief executive spot. "SAP is well ahead of us in the number of CEOs for this year, announcing their third and fourth, while we only had one."

SAP CEO Léo Apotheker, who had served as chief executive for only seven months, resigned last month, and co-CEOs McDermott and Jim Hagemann Snabe now lead SAP’s C-suite. 

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Five Guys Burgers and Fries, which has four Raleigh-Durham locations, ranked as the fastest-growing restaurant chain in the nation in 2009, according to data compiled by restaurant consulting firm Technomic.

Five Guys had $453 million in 2009 sales, a 50 percent increase over 2008 revenue, led by rapid expansion of its franchise locations. That ranks it No. 1 for sales growth among chains with sales over $200 million.

Tim Hortons ranked No. 2, with $446 million in 2009 revenue, a 23 percent increase. Buffalo Wild Wings Grill & Bar ranked No. 3, with $1.5 billion in sales, up 22 percent from 2008.

The revenue gain among the top 10 chains was 19 percent, an impressive showing when cast against Technomic’s overall report on the restaurant industry in 2009. The 500 largest chains saw annual sales decline an average of 0.8 percent last year after growing by 3.4 percent in 2008.

Five Guys, which opened its first restaurant in Arlington in 1986, grew slowly in its first few years, with just a half dozen Washington, D no fax cash loans.C., locations by 2001. It began franchising regionally in 2002 and then nationally in 2003.

The chain now has 550 locations in 35 states, and opened 300 of those locations in less than five years.

Five Guys Burgers and Fries has two stores in Raleigh and two in Cary.

The rest of the 10 fastest growing restaurant chains in 2009 were Jimmy John’s Gourmet Sandwich Shop, Wingstop, Noodles & Company, BJ’s Restaurant and Brewhouse, Chipotle Mexican Grill, Firehouse Subs and Potbelly Sandwich Works.

In total, the 10 fastest-growing chains had $5.9 billion in 2009 sales. The 500 largest restaurant chains had total 2009 revenue of $230 billion, down almost $2 billion from 2008.

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Three of every four chief financial officers are willing to offer pay raises, improve benefits or even approve bonuses to keep high-performing and much-coveted employees – when the economy recovers, according to a just-released report.

Almost half of CFOs say they would approve pay raises and promote top performers when the economy is humming. About three of five would enhance benefits – such as health care insurance or retirement plans – and one of every four would offer bonuses, according to Accountemps, a division of Robert Half International.

About 1,400 CFOs participated in the survey. Many business experts and economists say companies need to address compensation-related issues with top employees now, otherwise those workers will leave when the economy improves.

“Indispensable workers who helped businesses stay afloat during tough times will have new career options as conditions improve,” said Max Messmer, chairman of Accountemps and author of “Motivating Employees for Dummies, 2nd Edition fast payday loan.” “Employers need to make retention of top performers a high priority or risk losing these key players and, possibly, their competitive advantage. Let your top performers know they have a clear path within the organization and re-evaluate compensation levels to make sure they’re in line with what other firms in your industry are paying for similar positions.”

Of course, when the economy improves remains uncertain. Currently, about 125,000-plus Sacramento-area residents are looking for work. And the four-county region’s jobless rate is a modern-day record 13.1 percent, with about six available employees for each open position.

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Though home prices moderated nationally in January, home prices in the Nashville-Davidson-Murfreesboro-Franklin area continued to decline, according to data released today by First American CoreLogic.

Nashville-area home prices declined by 4.21 percent in January compared to one year ago, a deepening of the 3.94 percent reduction witnessed in December 2009. Excluding distressed sales, the January year-over-year decline was 2.46 percent, compared to December’s 3.04 percent decline. First American CoreLogic forecast that Nashville-area home prices, including distressed sales, will tick up 0 cheapest personal loan rates.10 percent over the next 12 months.

National home prices declined by 0.7 percent in January, compared to the national decline of 3.4 percent in December. Nationally, First American CoreLogic expects home prices to rebound 4.5 percent over the next 12 months.

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BankUnited wants to seize two stalled residential projects in southern Miami-Dade County.

The Miami-based bank filed a foreclosure action March 9 against Lucky Start at Lake Frances, NewSouth LLC and managing members Antonio Balestena and Jorge Fernandez, according to Miami-Dade County Circuit Court records. It concerns a mortgage last modified at $19.2 million in October 2008.

The failed BankUnited FSB issued the loan, so most of the losses would be shouldered by the Federal Deposit Insurance Corp. under its loss-sharing agreement with the new BankUnited.

Lucky Start was building the Lake Frances single-family home project near Homestead Air Force Base. It owns 135 lakefront home sites at the southeast corner of Southwest 280th Street and Southwest 132nd Avenue. Only eight homes have been sold.

NewSouth owns 20.3 acres of industrial and agricultural property at 13700 S.W. 248th St., in the Princeton area. The developer received approval to build 126 townhouse units, 268 apartment units and 8,523 square feet of retail space, but construction never began.

Miami attorney Andrew C. Hall, who represents BankUnited in the lawsuit, did not immediately return a call seeking comment.

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The Philippine central bank cut the amount of money available for loans to lenders through its so- called rediscounting facility to reduce cash in the economy, even as it kept interest rates at a record low.

Bangko Sentral ng Pilipinas reduced the budget for the facility to 40 billion pesos ($875 million) from 60 billion pesos, effective March 15, it said in a statement in Manila today. Policy makers kept the benchmark interest rate at 4 percent for a sixth straight meeting, as expected by all 15 economists surveyed by Bloomberg News.

Asian nations from China to Malaysia have started withdrawing monetary stimulus as growth accelerates and inflation returns amid the global economic recovery. Philippine exports, which account for about a third of the nation’s $167 billion economy, rose at the fastest pace in more than 14 years in January, a report showed yesterday.

“Upbeat export readings would nudge policy makers’ priority away from downside risks to growth, and more into emerging inflation risks,” Jun Trinidad, an economist at Citigroup Inc. in Manila, said in a report yesterday. It “would support the phase out of accommodative liquidity measures.”

Philippine economic growth accelerated to a one-year high of 1.8 percent last quarter from a decade-low 0.4 percent in the previous three months, lifting prospects for the country’s property and food companies. Jollibee Foods Corp., the fast-food chain that outsells McDonald’s Corp. in the Philippines, is looking forward “to a more robust growth in 2010,” the company said last month.

Capital Flows

The government forecasts the economy will expand 2.6 percent to 3.6 percent in 2010, as President Gloria Arroyo, whose term ends this June, increases outlays on airports, bridges and state programs to a record 1.54 trillion pesos ($34 billion) this year to bolster growth.

Low interest rates in the U.S. and Europe and faster growth in Asia are spurring capital flows into the region, prompting China to start draining excess cash from the economy to prevent asset bubbles free online credit report. Australia and Vietnam have raised borrowing costs as inflation accelerates, and Malaysia last week increased its overnight policy rate, saying it wants to avoid “financial imbalances”.

Bangko Sentral in January announced the year’s first increase in the interest rate that it charges lenders for borrowing money from the central bank through the rediscounting facility. The rediscounting window allows lenders to borrow using loans as collateral.

Inflation Forecast

Deputy Governor Diwa Guinigundo said yesterday the unwinding of liquidity measures is “always on the table” and will happen in “a matter of time.” Still, “the policy rates can be maintained at this point as our inflation outlook remains positive and benign,” he said March 8.

Benchmark four-year bond yields dropped to a three-month low yesterday on optimism borrowing costs will remain low. The Philippine peso traded near an eight-week high today as Asia’s rebound attracts funds to the region’s assets.

Bangko Sentral forecasts inflation may slow to a range of 3.4 percent to 3.5 percent in 2011 from an estimated 4 percent this year, Guinigundo said this week. Consumer-price gains in the Philippines eased for a second month in February to 4.2 percent.

The Philippines’ benchmark interest rate is at the lowest level since central bank data started in 1990. Easing inflation last year allowed Bangko Sentral to slash the overnight borrowing rate by 2 percentage points from December 2008 to July 2009 to support economic growth as exports collapsed.

Policy makers also reduced the proportion of cash banks need to set aside as reserves and raised the amount of money available for the rediscounting facility in late 2008.

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Developer: NorthSide Regeneration LLC/McEagle Properties

Total projected cost: $8.1 billion

Time frame: Spring 2010 through 2030

Size: 1,490 acres

What will it be: A proposed mixed-use development across parts of St. Louis’ downtown and near north side, with an estimated 10,000 new houses, 4.5 million square feet of office space, 1 million square feet of retail plus other services

What’s next: NorthSide must win final city approval to start issuing $390 million worth of tax increment financing bonds, and it plans to start work this spring on rehabs to the Clemens House Mansion on Cass Avenue. The project faces two ongoing lawsuits.

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The Federal Reserve, which is urging Congress to let it keep its bank supervising role, may lose oversight of smaller state banks to the Federal Deposit Insurance Corp., Democratic Senator Jack Reed said.

“What seems to be emerging is the consolidation” of two Treasury bank agencies “with FDIC having some responsibility for state banks as regulator in lieu of the Fed,” Reed, a Rhode Island Democrat and a member of the Senate Banking Committee, said yesterday in a Washington interview.

Senate negotiators are working through proposals to put in place the financial rules proposed by President Barack Obama more than eight months ago, a process stalled by disagreements over the Fed’s role and consumer protection.

Lawmakers are negotiating language that may give the Fed oversight of the largest U.S. financial companies along with a new consumer unit, two Democratic congressional aides with knowledge of the talks said yesterday. The consumer proposal from Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Republican Bob Corker of Tennessee has so far failed to win lawmaker support.

Republicans and the financial-services industry oppose Obama’s Consumer Financial Protection Agency, and Dodd and Corker have scrapped the plan. Banks lobbied against the proposal, with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon calling the agency “just a whole new bureaucracy” on a December conference call with analysts.

The Senate plan under consideration would put the Fed in charge of about 20 or 30 bank holding companies, said one Democratic congressional aide who declined to be identified because the talks are private. The Treasury’s Office of the Comptroller of the Currency, which oversees national banks, and Office of Thrift Supervision would merge, Reed said.

Bernanke Setback

A loss of oversight would be a setback for Fed Chairman Ben S. Bernanke, who told the Banking Committee on Feb. 26 it would be a “grave mistake” to remove authority to regulate banks. Giving another agency the power would make it tougher for the Fed to act as the lender of last resort, he said free credit report online.

The Fed won endorsement yesterday from six Washington-based trade groups, led by the American Bankers Association. A letter to the banking committee said “it would be a mistake to limit the Federal Reserve to supervision of only larger, complex institutions headquartered in major financial centers.”

Treasury Secretary Timothy Geithner had asked the leaders to back the administration’s rules overhaul at a Feb. 25 Washington meeting. Later, groups including the Financial Services Roundtable and Securities Industry and Financial Markets Association agreed to write a letter, according to two people with knowledge of the matter, who declined to be identified because the meeting was private.

Small Bankers

The leaders then recruited the Consumer Bankers Association and Independent Community Bankers of America, which represent small banks, the people said. Both support the Fed as overseer of some state-chartered banks. The Senate legislation may give such power to the FDIC, which regulates some state-chartered banks.

A copy of the letter was sent March 2 to Michelle Smith, the Fed spokeswoman and adviser to Bernanke, the people said.

The Fed’s role emerged yesterday as senators negotiated the powers of a consumer unit at the Fed.

“Each of these pieces affects another piece in the bill,” Corker said in an interview. “Today has been by far the very best day we’ve had in the process.”

The plan for the Fed, still under discussion and may change, would abandon the single bank regulator Dodd proposed in his November draft legislation.

Dodd wanted to eliminate the OCC, which regulates national banks, and the OTS, the regulator of savings and loans, and merge their authority into a new Financial Institutions Regulatory Administration that would gain oversight powers of the FDIC and the Fed. The House passed a bill in December that merged OCC and OTS, leaving the Fed’s bank oversight powers intact.

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The number of Americans filing for initial unemployment insurance surged to just below the 500,000 level last week, and have climbed more than 12% over the past two weeks, the government said Thursday.

There were 496,000 initial job claims filed in the week ended Feb. 20, up 22,000 from a revised 474,000 the previous week, the Labor Department said in a weekly report. The prior week, there were 442,000 claims filed.

A consensus estimate of economists surveyed by Briefing.com expected new claims to fall to 460,000.

The 4-week moving average of initial claims was 473,750, up 6,000 from the previous week’s revised average of 467,750.

"This is certainly not surprising given the very adverse weather conditions for the eastern half of the country, especially in the major population areas," said Robert Dye, a senior economist at PNC Financial Services. "Weather has a huge impact, particularly with things like construction, which remains very soft."

Over the past few weeks, the Northeast, particularly the Washington area, has been hit with snow storms, putting people out of work and resulting in a backlog of claims that the Labor Department wasn’t able to process until this week.

Excluding the weather’s impact, Dye would have expected initial claims to decline at "a healthy rate" of 10,000 to 20,000 last week.

Continuing claims: The government said 4,617,000 people filed continuing claims in the week ended Feb. 13, the most recent data available. That’s up 6,000 from the preceding week’s revised 4,611,000 claims.

The 4-week moving average for ongoing claims rose by 4,250 to 4,600,750 from the previous week’s revised 4,596,500.

Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks guaranteed online payday loans. The figures do not include those people who have moved to state or federal extensions, or people whose benefits have expired.

On Wednesday, the Senate passed a $15 billion bill to spur job creation and give businesses tax breaks for hiring the unemployed, but the bill does not extend unemployment benefits.

More than 1 million people will run out of benefits after Feb. 28 if the application deadline is not extended. Lawmakers are trying to pass a short-term extension by the end of the week in order to give them time to enact a longer fix.

State-by-state: Unemployment claims in three states rose more than 1,000 for the week ended Feb. 13, the most recent data available. Claims in North Carolina jumped the most, by 5,897, which the state attributed to layoffs in the construction, furniture and mining industries.

A total of 13 states said claims fell by more than 1,000. Claims in California dropped the most, by 5,540, which the state said was due to fewer layoffs in the service industry.

Outlook: "I would expect that once we get into March and get beyond the weather-related effects, we’ll see continued improvement in overall jobless claims," said Dye.

He expects employment to pick up in the next couple of months as private sector hiring continues and the government boosts its hiring of temporary census workers.

"But bear in mind that the census workers are only temporary workers," said Dye. "The government’s hiring will ramp up through March, April and into May, and then it will ramp back down in the second half of the year." 

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