Economy > Business >
Results > Loss
loss UK / USA
post a quarterly loss
the biggest quarterly loss in history > A.I.G. Reports $61.7
Billion Loss USA
a $13bn operating loss
UK > The worst business loss in UK history
26 February 2009
Royal Bank of Scotland
came a step closer to full-scale nationalisation today
as the bank unveiled a record £24.1 billion loss
and plans to raise up to £25.5 billion from the taxpayer
writedown / write-down USA
be written down
for Chapter 11 bankruptcy protection / file for
Reports $2.1 Billion Quarterly Loss
December 17, 2008
The New York Times
By BEN WHITE
Goldman Sachs’s long run of profitable quarters came to an end Tuesday as the
bank announced a fourth-quarter loss of $2.12 billion, driven by big markdowns
on its large portfolio of proprietary investments in everything from Japanese
golf courses to Chinese banks.
It was the first losing quarter since Goldman went public in 1999 and
demonstrates that even some of Wall Street’s most skilled operators have not
been able to overcome historically tough markets and sagging economies across
Goldman sidestepped earlier losses by staying out of the high-risk subprime
mortgage market and taking an early bet against the United States housing
industry. But it has been unable to avoid taking big markdowns following nearly
30 percent declines across global equity markets in its fiscal fourth quarter,
which ended in November.
Goldman’s quarterly loss, which amounted to $4.97 a share, kicks off a run of
what are expected to be poor banking results. Morgan Stanley will report its
earnings on Wednesday, and is expected to announce a loss of around $400
Revenue in Goldman’s big trading and principal investment business was negative
$4.36 billion compared with $6.93 billion in the fourth quarter of last year.
Goldman slashed compensation and expenses and benefits by 46 percent in 2008 to
$10.93 billion, reflecting lower payments because of poor performance. None of
Goldman’s top seven executives will take a bonus for this year. Morgan Stanley
has made a similar decision.
Employment at the firm, which had been 32,569 at the end of the third quarter,
decreased 8 percent. Goldman has said it will reduce head count by a total of 10
percent, but some analysts believe it will need to make deeper cuts to reflect
declining revenue and a slowing global economy.
After the announcement, Moody’s, the debt rating agency, downgraded the
long-term senior debt ratings of Goldman Sachs to A1 from Aa3. Other ratings
were affirmed but the outlook on them remains negative. Goldman shares, down 70
percent this year amid the financial crisis, rose nearly 8 percent, to $71.68 in
David Viniar, Goldman’s chief financial officer, said it an interview that about
$1 billion in losses came in real estate investments while $600 million came in
its stake in the shares of the Industrial and Commercial Bank of China.
“Over time, a lot of those are great investments,” he said, reiterating the
belief within Goldman that these were largely unavoidable losses that will be
reversed as market conditions improve. The same cannot be said for banks with
huge holdings in subprime mortgages and related securities that may never
recover much of their value, according to Goldman executives.
Mr. Viniar said it was too soon to say when markets might recover but that huge
efforts by governments in the United States and around the world should begin
having positive effects.
“Economies around the world are quite slow but governments around the world are
throwing in enormous resources,” he said. “You don’t know when they will kick
in. They may already have kicked in, or they may kick in in a year.”
Mr. Viniar reiterated the view privately expressed by Goldman officials that he
does not believe the bank needs to make a major acquisition to help its balance
sheet. He noted that the bank reduced its balance sheet to about $885 billion at
the end of the quarter from $1 trillion last quarter. He added that $111 billion
of that is free cash that does not need to be funded.
Both Goldman Sachs and Morgan Stanley have transformed themselves into
deposit-taking bank holding companies that have direct access to borrowing from
the Federal Reserve but must also take less risk by law.
Speculation has centered on Goldman’s buying a retail bank or a trust bank that
manages money for large institutions and wealthy individuals.
Goldman executives have looked at many possible acquisitions but found none that
were both cheap and strategically useful.
Goldman Sachs Reports
$2.1 Billion Quarterly Loss,
Ford Plans More Cuts
as It Posts a $129 Million Loss
November 7, 2008
The New York Times
By BILL VLASIC
and NICK BUNKLEY
The Ford Motor Company, battered by the weak economy and a shift in consumer
preferences, announced more cost cuts on Friday and reported a third-quarter
Ford said it lost $129 million, or 6 cents a share, less than the $380 million,
or 19 cents a share, in the third quarter a year ago.
In its statement, Ford said it would cut another 10 percent of its salaried work
force in North America. The company also said that it had used up $7.7 billion
Third-quarter sales were $32.1 billion, down from $41.1 billion a year ago. Ford
said the decline reflected lower sales volume, the sale of Jaguar and Land Rover
units, changing product mix and lower net pricing.
Excluding special items, Ford lost was about $3 billion, or $1.31 a share,
compared with a loss of $24 million, or a penny a share, a year ago. On that
basis, analyst surveyed by Thomson Reuters expected a loss of 94 cents a share.
Rival General Motors will report results later Friday.
Underscoring the dire circumstances facing the industry, the chief executives of
G.M., Ford and Chrysler met with Nancy Pelosi, the House speaker, and Harry
Reid, the Senate majority leader, on Thursday about an emergency loan package.
The meeting focused on a request by automakers for up to $25 billion in loans to
help the companies get through the worst vehicle market in 15 years and avoid
The loan request is in addition to $25 billion in low-interest loans
administered by the Department of Energy to assist automakers in developing more
Automakers have been battered by a weak economy, rising gas prices, a sharp
shift away from their most profitable products and a credit crisis that has
emptied dealer showrooms. The stunning falloff has affected all automakers, as
shaky consumer confidence and the inability of many eager shoppers to get loans
because of tight credit drove sales down 31.9 percent in October compared with
the period a year ago.
Ford lost $8.6 billion in the first half of 2008. Its sales in the United States
are down 18.6 percent this year through October.
Not long ago, it was viewed as being in the worst shape of the three Detroit
automakers, but now, as its two crosstown rivals — G.M. and Chrysler — explore a
merger to avoid running out of cash, Ford has become the most stable. It still
has a large cash cushion — $26.6 billion as of June — from mortgaging most of
its North American assets in 2006, before the credit markets tightened.
“Despite meaningful production declines forecasted for the coming quarters, we
estimate that Ford has enough cash through 2009,” Brian A. Johnson, an analyst
with Barclays Capital, wrote in a report this week.
After losing $18.8 billion in the first six months of the year, G.M., suffered
an even further decline in fortunes in the third quarter.
The company’s global sales fell 11.4 percent in the quarter, with most of the
damage done in the slumping vehicle markets of North America and Europe.
A lack of available credit for consumers has hurt all automakers this fall, but
G.M. has been particularly hard hit by the problems of the finance unit GMAC
GMAC is controlled by Cerberus Capital Management, which has a 51 percent
ownership stake. G.M. owns the remaining 49 percent. GMAC reported a $2.52
billion loss in the third quarter, mostly because its lack of access to
available capital choked off the flow of auto loans to G.M. customers.
As a result, G.M.’s dealers have been increasingly unable to finance sales to
even creditworthy customers. In October, G.M.’s United States sales plunged 45.1
percent, compared with a 31.9 percent drop for the overall industry.
Those declining sales have cut sharply into G.M.’s revenues and crippled its
previously announced turnaround plans.
With the company burning through cash, G.M. said in July that it would increase
its liquidity by cutting costs by $10 billion, and by raising $5 billion through
new borrowing and asset sales.
But the company has been unable to take on new debt, and has been unable to sell
any major assets like its Hummer brand.
With revenues declining and its cash reserves rapidly diminishing, G.M. began
looking for a merger partner this summer, according to people with knowledge of
the company’s actions.
G.M.’s chairman, Rick Wagoner, first approached Ford, but its leadership
rejected the overtures. In September, G.M. began talks with Chrysler, which is
also controlled by Cerberus.
While both sides are committed to merging the two automakers, the deal has
stalled because prospective lenders have been hesitant to support it without
assurances of government assistance to Detroit.
Mr. Wagoner and other G.M. executives have repeatedly vowed that the automaker
will not seek bankruptcy protection.
Analysts, however, believe that without an infusion of capital from the
government, G.M. will exhaust its cash reserves by sometime next year.
For its part, Ford has reacted aggressively in recent months to the downturn,
announcing a plan to convert three truck plants so they can build small cars
instead and to bring six fuel-efficient vehicles to the United States from
Europe in the next few years.
It is beginning a major new-product blitz, introducing a redesigned version of
its stalwart F-series pickup this fall and more revamped models, including new
versions of the Taurus and Mustang, next year. It is counting on strong sales of
the F-series, despite lessened demand for trucks, to lift its short-term
Any momentum that Ford has been building, though, took a big hit last month when
its largest shareholder, the casino mogul Kirk Kerkorian, began selling off his
stake. Mr. Kerkorian had previously expressed confidence in the company and in
the leadership of the chief executive, Alan R. Mulally, and that support pushed
shares of the company to more than $8 in May. But the company’s stock hit a
26-year low of $1.88 last month.
Ford Plans More Cuts as
It Posts a $129 Million Loss, NYT, 7.11.2008,
Write-Down Is Planned at Merrill
July 29, 2008
The New York Times
By LOUISE STORY
Only 10 days after stunning Wall Street with a huge quarterly loss, Merrill
Lynch unexpectedly disclosed another multibillion-dollar write-down on Monday
and sought to bolster its finances once again by selling new stock to the public
and to an investment company controlled by Singapore.
Moving to purge itself of the tricky mortgage-linked investments that have
brought the once-proud firm to its knees, Merrill said that it had sold almost
all of the troublesome investments, once valued at nearly $31 billion, at a
fire-sale price of 22 cents on the dollar.
As a result, Merrill expects to record a write-down of $5.7 billion for the
third quarter. Such an outcome could push Merrill into the red for a fifth
consecutive quarter if revenue remains weak and would bring its charges since
the credit crisis erupted last summer to more than $45 billion.
The problems at Merrill, the nation’s largest brokerage, underscore how bankers
and policy makers are struggling to contain the damage to the financial system
and the broader economy caused by the collapse of housing-related debt. The
latest news came on a day when the International Monetary Fund said there was no
end in sight to the housing slump, a forecast that depressed financial shares as
well as the broader market.
To shore up its finances, Merrill said it would raise $8.5 billion in new
capital from common shareholders, including $3.4 billion from the investment arm
of the Singapore government, Temasek Holdings, which, with an 8.85 percent stake
as of June 30, is already Merrill’s largest shareholder. Those shares and a
conversion of preferred securities into common stock will dilute the value of
stock held by current shareholders by about 40 percent.
John A. Thain, who has struggled to turn Merrill around since becoming chief
executive in December, said the sale of the worrisome investments, known as
collateralized debt obligations, or C.D.O.’s, was “a significant milestone in
our risk reduction efforts.”
The C.D.O.’s have plunged in value over the last year, forcing Merrill to take
one write-down after another and sapping investors’ confidence. Merrill’s share
price fell 11.6 percent on Monday, before the news of the write-down and stock
sale were announced after the close of trading. Merrill is trading near its
lowest level in a decade.
But the sale of the C.D.O.’s, to an investment fund based in Dallas, may enable
Merrill to move on, investors said.
“What they sold, from a headline standpoint, is certainly constructive because
they have reduced risk in a very sensitive area,” said Thomas C. Priore, chief
executive of Institutional Credit Partners, a $12 billion hedge fund and C.D.O.
manager in New York.
Merrill had been working on the C.D.O. sale and the effort to raise capital
before its earnings call but did not finalize the actions until recent days.
Merrill’s sales could cause further write-downs at other Wall Street firms with
C.D.O. exposure. If those companies — the likes of Citigroup and Lehman Brothers
— have similar C.D.O.’s valued at prices higher than those at which Merrill
sold, the firms may be forced to take additional charges to reflect the
Merrill recently moved to raise money by selling its 20 percent stake in
Bloomberg L.P., the financial news and data company, for $4.425 billion. Mr.
Thain hinted at the C.D.O. sale in the quarterly earnings call, in response to a
question from Meredith Whitney, an analyst with Oppenheimer & Company.
“Why not, at this point, be the first to purge assets and get it over with? And,
if that means raising capital, raise capital,” Ms. Whitney said.
Mr. Thain responded that Merrill had been selling assets but had not yet sold
“Your question is a very leading one, and that would certainly be something that
we would hope that we could do,” Mr. Thain said.
Merrill sold the investments at a steep loss. The United States super senior
asset backed-security C.D.O.’s that Merrill sold were once valued at $30.6
billion. As of the end of second-quarter, Merrill valued them at $11.1 billion —
or 36 cents on the dollar. And Merrill sold them for $6.7 billion to an
affiliate of Lone Star Funds, the Dallas private equity firm.
Merrill provided 75 percent financing to Lone Star Funds, which means Merrill
lent the private equity fund about $5 billion to complete the sale.
The discounted sales will cause the majority of Merrill’s write-down in the
Merrill also said it had settled a battle with the reinsurance company XL
Capital Assurance, which had insured some of the firm’s C.D.O.’s.
Write-Down Is Planned at
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