Amazon shares dip on growth concerns

Amazon shares dip on growth concerns

Stock Market Predictions

(Global Markets) - Amazon.com Inc shares fell to their lowest level since late March on Thursday on concern about sales growth during the online retailer's crucial fourth quarter.

Goldman Sachs analysts said in a note from Wednesday that Amazon has typically bested overall online sales growth by 23 points.

comScore reported earlier this week that online holiday spending in the U.S. rose 15 percent to a record $35 billion from November 1 to December 26, versus the comparable period last year.

That would suggest a 38 percent increase in Amazon sales this season, below the 40 percent increase Wall Street expects, wrote Goldman, which expects 44 percent, including Kindle sales.

"While the comScore numbers are just one data point which does not capture international sales or breakout individual companies' sales, taken alone they seem to suggest the potential for downside risk to consensus forecasts for 4Q 2011," the analysts said.

Shares of Amazon fell as low as $166.97 in early trading on Thursday, the lowest level since late March. The stock recovered by midday to $173, down 0.5 percent.

Amazon shares reached almost $250 in October, but have dropped by about 30 percent since then. Shares of rival e-commerce company eBay have lost roughly 10 percent in the same period.

Amazon said on Thursday it has sold "well over" 1 million Kindle e-reader and tablet devices per week this month.

Goldman's 44 percent sales growth forecast for the fourth quarter, versus a year earlier, includes three to four percentage points of growth from Kindle device sales that the analysts said are not currently incorporated in Wall Street consensus estimates.

(Reporting By Phil Wahba and Alistair Barr; editing by Mark Porter and Tim Dobbyn)

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E*Trade shares tumble 11 percent after soft results

E*Trade shares tumble 11 percent after soft results

Stock Market Predictions

(Global Markets) - Shares of E*Trade Financial (ETFC.O) tumbled 10.7 percent after the company reported a surprising loss late on Wednesday, due to higher-than-expected loan provisions in its troubled banking unit and a slowdown in trading levels.

The online brokerage and financial services company's shares tumbled 11.6 percent, or $1.09, to $8.25 in morning trading

E*Trade reported a net loss of $6.3 million, or 2 cents a share in the fourth quarter, compared with a loss of $24 million, or 11 cents, a year earlier.

Analysts on average expected the company to earn 20 cents a share, according to Thomson Global Markets I/B/E/S.

The company said it has been transitioning since the second half of 2011 to a new banking regulator, and to bring its programs in line, it took a $15 million writedown to adjust for loans that were currently in foreclosure, and it added $67 million to its reserves.

In total, E*Trade said it set aside $123 million for loan losses in the quarter, compared with $194 million a year earlier.

David Chiaverini, an analyst at BMO Capital Markets, said he had been expecting the company to record $48 million in loan loss provisions.

E*Trade took billions of dollars in losses on risky loans in the mortgage portfolio of its banking unit following the collapse of the U.S. housing market. It has made progress with its debt and credit issues, chalking up its first full-year profit since 2006, but the loan book continues to drag on earnings.

Separately, the company paid about $11 million in the quarter to settle a class-action lawsuit as a result of losses in its mortgage and home equity loans portfolio in 2007.

Minus the one-time charges, E*Trade would have likely earned just under 17 cents a share, Richard Repetto, an analyst at Sandler O'Neill Research, said in a note to clients.

Daily client trades at the brokerage were down 7 percent from a year ago as investors pulled back from choppy markets. E*Trade also said its net interest margins would fall below its earlier forecasts in 2012 due to the ongoing soft interest rate environment.

While Repetto said he believes E*Trade management "is doing all the right things," he downgraded the stock to "hold" from "buy" due to the difficult trading environment and net interest margin compression.

Goldman Sachs cut E*Trade to "neutral" from "buy," while Macquarie cut its price target for the firm to $8 from $10, and BMO Capital Market cut its price target to $8 from $9.

(Reporting By John McCrank in New York; Editing by Derek Caney and Maureen Bavdek)

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Google shares slide but analysts stay upbeat

Google shares slide but analysts stay upbeat

Stock Market Predictions

(Global Markets) - Shares of Google Inc fell 8 percent after the Internet giant posted a rare quarterly earnings miss and said money paid by marketers for its search ads decreased for the first time in two years.

The search giant underperformed on both revenue and earnings, despite record U.S. online commerce during the holiday season, prompting several brokerages to cut their price targets on the stock.

Google shares were down $50.77 at $588.80 in late morning trade on Friday on the Nasdaq. They had touched a low of $584.81. It was the stock's biggest percentage fall in 9 months.

About 5.2 million shares changes hands by 1120 ET, more than their daily average volume.

The broader Nasdaq composite index was down 0.25 percent.

Google executives blamed the decline in search ad rates on forex fluctuations and ad format changes but analysts wondered whether mobile advertising -- which has lower rates -- played a more important role than the company admitted.

The fall in cost per click (CPC) had led to a barrage of questions from analysts during the post-earnings conference call on Thursday.

The market needs to shift expectations to paid click growth and lower its estimates for CPC, Goldman Sachs analysts said in a note.

Google's heavy investments in mobile and social network initiatives -- to stave off competition from rivals Apple Inc and Facebook -- and its planned $12.5 billion acquisition of smartphone maker Motorola Mobility Holdings have also raised investors' concerns.

Larry Page, who took over as CEO in April, said in July that the company was moving to put "more wood behind fewer arrows."

Analysts said the company has seen growth in display advertising, its Android mobile platform and Google+.

Google+ -- its recently-launched social network -- has 90 million users now, up from 40 million three months ago.

SOLID CORE

Wall Street analysts called the selloff an overreaction; Barclays said it presents a buying opportunity.

"Don't judge a book by its cover," Goldman Sachs titled its research note on Google.

The company's core results were solid as paid click growth accelerated by more than a third, margins improved, and display and mobile businesses performed well, analysts said.

The acceleration in paid clicks suggests that underlying demand for Google ads is quite healthy across devices, JP Morgan said, adding Google is best-positioned for the shift to new media.

Goldman Sachs analysts said, "We expect the growth in mobile to be 146 percent in 2012 and represent 15 percent of gross sales as we exit fourth-quarter of 2012."

The company still has strong earnings power that will reappear during 2012, Canaccord Genuity said, reiterating its "buy" rating.

Barclays, Baird, Jefferies and JP Morgan also maintained their top ratings on the stock.

(Reporting by Aditi Sharma and Soham Chatterjee in Bangalore; Editing by Tenzin Pema, Don Sebastian, Unnikrishnan Nair)

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AllianceBernstein disappoints again

AllianceBernstein disappoints again

Stock Market Predictions

(Global Markets) - Money manager AllianceBernstein LP (AB.N) turned in another disappointing financial report on Friday, with fourth-quarter profit and revenue falling short of Wall Street expectations as clients continued to pull money out of its stock funds.

Shares of the New York-based company, which is controlled by French insurer AXA (AXAF.PA), were down 6 percent in morning trading.

Since becoming chairman and chief executive in December 2008, Peter Kraus, a former Goldman Sachs partner, has struggled to revive a company that was reeling when he arrived. AllianceBernstein's assets under management and stock price are down 12 percent and 14 percent, respectively, during his tenure.

"In a year of extremely volatile markets and risk aversion on the part of investors, it was a difficult year for active managers to outperform," Kraus told analysts and investors on a conference call on Friday. "Performance in our largest equity services disappointed and we ended up with greater net outflows in 2011 than in 2010."

The company also took a noncash charge of $587 million related to unrecognized deferred incentive compensation.

Earnings excluding one-time items dropped to $37 million from $139 million a year earlier. That gave the company earnings per unit of 7 cents. Analysts on average had expected 19 cents, according to Thomson Global Markets I/B/E/S.

Net revenue fell 20 percent to $625 million. Analysts had expected $650 million.

Sandler O'Neill analyst Michael Kim said the stock seemed to be reacting to the earnings miss driven by the revenue shortfall. Though he had forecast earnings of just four cents per share and said AllianceBernstein's flow trends were a touch better than he expected, Kim said the firm still has work to do to bring investors back to its stock funds.

"They're still dealing with performance issues on the large-cap core equities franchise, and that is likely to remain a real drag on overall growth," Kim said in an interview.

The company reported $406 billion in assets under management at the end of 2011, compared with $478 billion at the end of 2010. Net outflows in the fourth quarter were $13.2 billion.

Assets under management rose 1 percent from the end of the third quarter, and showed a 4 percent improvement in January from the end of 2011.

Shares of AllianceBernstein were down six percent to $15.53 in morning trading.

The company has been hurt somewhat by moves made by AXA.

During 2011, AXA sold its Canadian and Australian businesses. AllianceBernstein managed about $16 billion for them and expects to lose most of these assets over time.

In the fourth quarter, it had outflows associated with those dispositions of nearly $4 billion, representing about $5 million in revenue.

The company said it expects to see another $6 billion in outflows related to the AXA asset sales in the first half of 2012.

(Reporting by Tim McLaughlin in New York and Ross Kerber in Boston; Editing by Lisa Von Ahn, John Wallace and Phil Berlowitz)

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Goldman Sachs subpoenaed for financial crisis role

Goldman Sachs subpoenaed for financial crisis role

Stock Market Predictions

NEW YORK (Global Markets) - New York prosecutors have asked Goldman Sachs to explain its behavior in the run-up to the financial crisis, the latest investigation that has cast a pall over the reputation of the largest U.S. investment bank.

Goldman Sachs Group Inc now faces probes by several government authorities into derivatives trades it executed in late 2006 and 2007. On Thursday, sources close to the matter said Goldman received a subpoena from the Manhattan district attorney, who joins the Justice Department and the Securities and Exchange Commission in examining Goldman's actions.

Separately, New York Attorney General Eric Schneiderman is investigating Goldman as part of a broader probe into the mortgage operations and securitization practices of seven banks. A source familiar with the situation said Schneiderman's office met Goldman executives and attorneys in the past two weeks.

The probes follow a scathing report by U.S. lawmakers that cast Goldman as a central villain of the financial crisis and accused it of misleading clients about mortgage-linked securities.

The report by a Senate subcommittee, headed by Democrat Carl Levin, said Goldman offloaded much of its subprime mortgage exposure to unsuspecting clients as the market for such securities was starting to tank. In some cases, the bank dragged its heels when clients wanted to get out of their losing positions, according to the report.

The investigations do not imply the bank or its top executives will face criminal or civil charges, but they display a growing interest by prosecutors to build a case against Goldman, legal experts said.

"They have subpoena power to get certain records, correspondence, emails and they're trying to find out every last detail that could prove fraud," said Peter Berlin, an attorney who represents defendants in white-collar cases.

The U.S. Department of Justice is also likely to subpoena the bank, The Wall Street Journal reported recently.

The Manhattan district attorney, Cyrus Vance, is not seeking new documents, according to one source, but wants to ask further questions about the information contained in the Levin report.

Vance, the son of former U.S. secretary of state Cyrus R. Vance, said earlier this year he wanted to use a far-reaching 1921 law called the Martin Act to toughen penalties for securities fraud.

The state attorney general's probe is largely being conducted under that statute, according to the source familiar with that case. The state can seek civil or criminal charges, while the Manhattan D.A. can only pursue criminal charges, potentially making its burden of proof more difficult.

Still, the Manhattan D.A.'s office has used the Martin Law to crack down on white-collar crime in the past. High-profile cases the office prosecuted using the Martin Act include brokerage firm A.R. Baron & Co and ex-Tyco chief Dennis Kozlowski.

In a statement, Goldman said: "We don't comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully."

Both Levin's and Vance's offices declined comment on Thursday.

SCATHING REPORT

The probes into the behavior of Goldman and some of its peers signal increasing determination by U.S. government agencies to investigate the actions of banks in the years leading up to the financial crisis and to determine whether misdeeds by executives made the meltdown worse.

One of the first big cases was the Securities and Exchange Commission's civil fraud suit against Goldman last year over the bank's failure to disclose information linked to a complex mortgage security. Goldman settled those charges in July without admitting or denying guilt, but it did express regret for failing to disclose information.

Goldman's shares fell as much as 3.4 percent as news of the subpoena emerged on Thursday, but then took back much of their losses and closed 1.3 percent down at $134.38. The stock has been declining since January, but its sell-off has accelerated since the release of the Levin report and it is now approaching its 52-week low of $129.50.

Even if there is a low likelihood of successful civil or criminal action against Goldman Sachs, continued pressure from politicians and the public could still hurt the firm, Sanford Bernstein analyst Brad Hintz wrote in a note on Wednesday.

"We believe that Goldman's clients will begin to rethink their relationship with the firm and the franchise will ultimately suffer," Hintz wrote, adding the bank would be wise to make amends with the public soon.

But other veteran analysts said recently that concerns about the Goldman investigations are overblown and little will likely come from them.

JPMorgan analyst Kian Abouhossein raised his rating on the bank to "overweight" from "neutral" earlier this week and said possible negative news is already reflected in the bank's share price.

However, some investors take a more negative view.

"When the government has you in its cross-hairs, it takes forever to get out of it," said Matt McCormick, portfolio manager at Cincinnati-based Bahl & Gaynor Investment Counsel.

"Shareholders need to understand, this is going to be an ongoing risk for years."

(Reporting by Lauren Tara LaCapra; additional reporting by David Gaffen, Maria Aspan; editing by Dan Wilchins, John Wallace, Matthew Lewis and Andre Grenon)

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