Financial News from The Wall Street Journal

  • Housing Market's Foiled Spring The Wall Street Journal - 20 hours ago

    It is getting harder to maintain a belief that the recent softness in the housing market is mostly due to the tough winter. Wednesday brought another batch of bad news on housing's health: The Commerce Department reported seasonally adjusted new-home sales hit an annual rate of 384,000 in March, down from 443,000 a year earlier and well below economists' median estimate of 450,000. Worse, the weakness was broadly based, with sales in the South and West—where weather doesn't provide much of an excuse—falling. Also Wednesday, Meritage Homes reported first-quarter results that fell short of estimates.

  • Tobacco's Vapor Wager Looks Good on Paper The Wall Street Journal - Wed, Apr 23, 2014 5:29 AM AEST

    That line was famously attributed to early Facebook Inc. backer Sean Parker in "The Social Network." Nowadays, what he thinks is cool is a possible replacement for smoking: "vaping." So are U.S. tobacco giants Lorillard Inc., Altria Group Inc. and Reynolds American Inc. Expect plenty of discussion about their vapor-product strategies during earnings calls this week by investors excited about e-cigarette startup Njoy Inc.'s $1 billion valuation. Retail cigarette sales of $90 billion are about 90 times as much as the e-cig market. Lorillard, the smallest of the three in tobacco sales, is the leader with a 47% share nationally in e-cigs—slightly ahead of Njoy.

  • Tesla CEO Pledges to Build Up Support Network in China The Wall Street Journal - Wed, Apr 23, 2014 12:45 AM AEST

    BEIJING—Tesla Motors Inc. Chief Executive Elon Musk pledged to enhance the auto maker's support network in China to help broaden use of the company's niche electric car, and offered new details about a $5 billion battery factory Tesla plans to build in the U.S. Tesla CEO Elon Musk appears in Beijing to deliver the company's first cars there – and to address the concerns of some dissatisfied customers. Speaking in Beijing Tuesday at a ceremony marking the first handover of a Tesla vehicle to a customer in China, Mr. Musk said U.S.-based Tesla is building out hundreds of service centers around China but didn't offer a time frame for their completion. "It's more [about] scaling up production and ensuring the charging and service infrastructure in China and elsewhere is in good shape." Reuters A man looks at Tesla Motors' Model S P85 at its showroom in Beijing in January.

  • Colombians Are Tired of People Misspelling Their Country's Name as 'Columbia' The Wall Street Journal - Tue, Apr 22, 2014 12:37 PM AEST

    BOGOTÁ, Colombia—"Just landed in Columbia. On my way to the hotel," Paris Hilton tweeted last year as her plane touched down in Bogotá for the opening of one of her handbag shops. Big outfits including Virgin Mobile, P.F. Chang's and Lufthansa—and performers including Justin Bieber and Ozzy Osbourne—have all in the past year committed this boo-boo, which really annoys Colombians. They have spelled the country's name with a "u" the way you would spell Columbia the university, or the sportswear company, or the U.S. capital, Washington, District of Columbia.

  • Retired in Nicaragua, and Loving It The Wall Street Journal - Tue, Apr 22, 2014 12:14 PM AEST
    Retired in Nicaragua, and Loving It

    My wife and I moved here, to Granada, Nicaragua, three years ago after living in Costa Rica for two years. Located on the northern shore of Lake Nicaragua, Granada is a flat city of narrow streets and endless, brightly colored walls, some of which are hundreds of years old. Often referred to as the "City of Doors," Granada is a wonderful town for walking and bicycling, as it features restaurants, shops and markets down every street. Our decision to move to Central America in 2008 was tied in large part to health care.

  • The Dirty Secret of Black Friday 'Discounts' The Wall Street Journal - Tue, Apr 22, 2014 12:12 PM AEST

    Retailers like J.C. Penney Co. who try to get out of the game get punished. "I don't even get excited unless its 40% off," said Lourdes Torress, a 44-year-old technical designer, as she browsed the sale racks at Macy's Inc.'s flagship store in New York on a recent afternoon. The number of deals offered by 31 major department store and apparel retailers increased 63% between 2009 to 2012, and the average discount jumped to 36% from 25%, according to Savings.com, a website that tracks online coupons. The holidays barely made a dent, with margins dipping to 27.8% in the fourth quarter of 2012 from 28% in the third quarter of that year. Claudio Papapietro for The Wall Street Journal Customer discounts are way up.

  • Facebook Plans Mobile-Ad Network The Wall Street Journal - Tue, Apr 22, 2014 11:56 AM AEST

    Facebook Inc. is planning a mobile-ad network that will allow the company to tap its vast reservoir of data about users to help marketers target ads on other services, according to people familiar with the matter. The network will let brands, retailers and others place ads on multiple mobile apps and games, targeting people who have provided their real identities to Facebook. Dozens of companies provide similar services, but Facebook is well-positioned because its more than one billion users tell Facebook so much about themselves, from their age and gender to their location and interests. If successful, the network could boost Facebook's revenue while establishing it as a key intermediary between advertisers and publishers, and ultimately, the rapidly growing universe of smartphone and tablet users.

  • Mulally's Legacy: Setting Ford on a Stronger Course The Wall Street Journal - Tue, Apr 22, 2014 10:45 AM AEST

    Alan Mulally arrived at Ford Motor Co. in 2006 with no experience in the auto industry. Ford is making more money than ever in its history—$42 billion in the past five years. The company's cars and trucks sell well around the world and Mr. Mulally's management style is widely studied and copied. It wasn't immediately clear where Mr. Mulally might land next, but recently he has been looking West—away from gears and metal and toward the technology industry.

  • Federal Plans That Forgive Student Debt Skyrocket The Wall Street Journal - Tue, Apr 22, 2014 10:21 AM AEST

    Government officials are trying to rein in increasingly popular federal programs that forgive some student debt, amid rising concerns over the plans' costs and the possibility they could encourage colleges to push tuition even higher. Enrollment in the plans—which allow students to rack up big debts and then forgive the unpaid balance after a set period—has surged nearly 40% in just six months, to include at least 1.3 million Americans owing around $72 billion, U.S. Education Department records show. At issue are two federal loan repayment plans created by Congress, originally to help students with big debt loads and to promote work in lower-paying jobs outside the private sector. The fastest-growing plan, revamped by President Barack Obama in 2011, requires borrowers to pay 10% a year of their discretionary income—annual income above 150% of the poverty level—in monthly installments.

  • Netflix Price Increase Doesn't Fit Growth Puzzle The Wall Street Journal - Tue, Apr 22, 2014 8:36 AM AEST

    Netflix thinks it offers subscribers bang for their buck. The Internet video service said Monday it would raise prices later this quarter by $1 to $2 a month, depending on the country. Domestic subscriber net additions of 2.25 million were in line with Netflix's previous guidance. A price increase should boost Netflix's bottom line.

  • Tesla's Delays Upset Some China Customers The Wall Street Journal - Tue, Apr 22, 2014 3:48 AM AEST

    BEIJING—A group of disgruntled Tesla Motors Inc. customers in China is protesting delayed deliveries of their cars one day before the electric-vehicle maker is set to make its first China delivery. The furor underscores the challenges facing auto makers in marketing new-energy vehicles in China, which so far hasn't delivered on the promise of becoming a major new market for electric cars. Tesla's launch had been heralded as a possible catalyst that could push China farther down the electric-car path. The Palo Alto, Calif., company said in January that it would sell its Model S for $121,000 in China and compete with luxury brands like BMW AG and Volkswagen AG's Audi.

  • Chinese Car Makers Struggle to Lure Buyers The Wall Street Journal - Mon, Apr 21, 2014 3:40 PM AEST

    BEIJING—With growth slowing, and foreign manufacturers gaining share, many of China's auto industry players could face extinction. Some Chinese car makers are looking to the Beijing auto show, which opens to the media Sunday, as a chance to fight back by forging stronger bonds with Chinese car buyers through branding or woo them with popular products. Zhejiang Geely Holding Group said Friday it was scrapping its three separate brands—Emgrand, Gleagle and Englon—in favor of a single Geely brand. Chairman Li Shufu said multibrand strategy had stretched Geely beyond its capabilities by forcing it to develop vehicles in three different categories.

  • Apple, Google Vie to Offer Exclusive Game Apps The Wall Street Journal - Mon, Apr 21, 2014 9:48 AM AEST

    A long-running battle between Apple Inc. and Google Inc. for mobile dominance is spreading to the most lucrative genre of apps: videogames. The two Silicon Valley giants have been wooing game developers to ensure that top-tier game titles arrive first on devices powered by their respective operating systems, people familiar with the situation said. In exchange, Apple and Google are offering to provide a promotional boost for these games by giving them premium placement on their app stores' home pages and features lists, these people said. Last August, for the launch of "Plants Vs. Zombies 2," a highly anticipated sequel to a popular zombie-survival strategy game, publisher Electronic Arts Inc. struck a deal with Apple, which promoted the game prominently in its App Store, according to people familiar with the matter.

  • Chipotle to Raise Prices; Profit Climbs on Better Traffic The Wall Street Journal - Fri, Apr 18, 2014 2:48 AM AEST

    To compensate for the high costs for ingredients like beef and avocados, Chipotle Mexican Grill Inc. said it would raise menu prices companywide for the first time in three years. But executives said higher food costs are weighing on profits, resulting in their decision to increase prices by single-digit percentages starting in the current quarter. For the quarter, food costs were the equivalent of 34.5% of the company's revenue, up from 33% a year earlier. Executives said Chipotle's planned price increases will be in effect in all markets by early in the third quarter, and will help profit margins expand later in the year.

  • Home Depot Lumbers Into E-Commerce The Wall Street Journal - Thu, Apr 17, 2014 10:11 AM AEST
    Home Depot Lumbers Into E-Commerce

    LOCUST GROVE, Ga.—Home Depot Inc.'s newest location is 10 times bigger than its average store, stocks three times more items and has no customers. It's an online distribution center, for a company that seems the unlikeliest of Internet retailers. For decades, Home Depot excelled at the traditional retail model of growing by adding new locations. "The retail model forever was to increase sales through opening additional units, but as you added stores to a finite group of households, each store becomes less profitable," Home Depot Chief Executive Frank Blake said in an interview.

  • Home Depot Joins the Shale Rush The Wall Street Journal - Thu, Apr 17, 2014 9:53 AM AEST

    Home Depot Inc. has all but given up on opening new stores in the U.S., but the home-improvement retailer made an exception in January to open a store in an area it said it couldn't pass up: Minot, N.D., in the heart of the American shale oil and gas boom. "If you had said to me seven years ago, you'll be opening a store in Minot, North Dakota, I would have asked, Why?" Chief Executive Frank Blake said in an interview. The 100,000 square-foot store is more than a four-hour drive from Home Depot's nearest location and is the only U.S. store Home Depot opened in the fiscal year ended Feb. 2. Home Depot is among a number of retailers including Wal-Mart Stores Inc. and GameStop Corp. targeting oil and gas towns in North Dakota, Texas and Louisiana, in an otherwise dour environment for retail real estate.

  • Citigroup Received Mixed Signals On 'Stress Test' The Wall Street Journal - Thu, Apr 17, 2014 9:48 AM AEST

    The Federal Reserve's New York office indicated to Citigroup Inc. that the bank would have more time to fix certain "stress test" planning problems before Fed officials in Washington last month gave it a failing grade, said people close to the company. The divergent messages from different parts of the Fed were a major reason why Citigroup executives were taken aback when the bank's capital plan, which included dividend increases and more stock buybacks, was rejected on March 26, these people said. The surprise move sent Citigroup stock reeling, and the bank will likely miss a key profitability goal for next year because of the rejection. The Federal Reserve Bank of New York had agreed to give Citigroup a 2015 deadline to address a series of shortcomings identified by the regulator in the wake of the 2013 test, the people said.

  • RadioShack Mired in Talks With Lenders Over Closings The Wall Street Journal - Thu, Apr 17, 2014 6:26 AM AEST

    RadioShack Corp. is mired in negotiations with its lenders over plans to close as many as 1,100 stores, complicating the struggling consumer-electronics retailer's turnaround efforts, said people familiar with the talks. The delay also is intensifying tensions with some lenders, who were surprised by the store-closing plan when RadioShack publicly disclosed it on March 4, the people said. The company, which operates about 4,300 stores in the U.S., said at the time that the plan still needed permission from its lenders, adding that its credit agreements allowed it to close only about 200 stores without the approval of lead lenders Salus Capital Partners and GE Capital, a unit of General Electric Co. Meanwhile, RadioShack has continued its store-closing plan but is currently targeting just 200 stores, people familiar with the plan said.

  • GM Chief Can't Shake Recall Furor The Wall Street Journal - Wed, Apr 16, 2014 11:22 AM AEST

    General Motors Co. Chief Executive Mary Barra sought to shift the focus on Tuesday to the auto maker's coming new vehicles and away from investigations of a troubled ignition-switch recall, but struggled amid a barrage of questions about its responses to the probes. In New York ahead of an auto show, Ms. Barra deflected questions about a potential U.S. criminal probe, saying she wasn't aware if the Department of Justice has sought documents from the company, and declined to say when GM expected to answer all questions posed by auto-safety regulator National Highway Traffic Safety Administration. "We are working on those every day," she said of the NHTSA inquiry while surrounded by a media crowd peppering her with questions. GM Global Product Chief Mark Reuss was recruited to help provide crowd control after her speech.

  • Housing Market Slow to Hit Its Spring Stride The Wall Street Journal - Wed, Apr 16, 2014 10:08 AM AEST

    Reports from local real-estate agent groups in some of the markets that were the first to rebound, including Las Vegas, Phoenix and San Diego, show year-over-year declines in March home sales. "Overall, even after adjusting for weather, it has been worse than what most people expected," said Tom Lawler, an independent housing economist in Leesburg, Va. With prices and mortgage rates up, the nation's median monthly home payment—including principal and interest—has risen 20% in the past year to about $900, according to John Burns Real Estate Consulting. At the same time, there has been a continued increase in the number of nondistressed purchases made by ordinary buyers and families, further reducing the inventory of homes for sale.

  • More Yellen to Do on Bank Capital The Wall Street Journal - Wed, Apr 16, 2014 5:05 AM AEST

    When it comes to shoring up bank balance sheets, the Federal Reserve isn't ready to put down its tools and call it a day. Fed Chairwoman Janet Yellen gave bankers and investors a reminder of that Tuesday in remarks to a financial-markets conference. Speaking of the need for additional regulatory work related to wholesale-funding markets and bank liquidity, she referenced a study that found there could be, on net, economic benefits from even higher capital requirements. "This study provides some support for the view that there might be room for stronger capital and liquidity standards for large banks than have been adopted so far," Ms. Yellen said.

  • GE Rethinks the 20-Year CEO The Wall Street Journal - Tue, Apr 15, 2014 2:01 PM AEST

    Jeff Immelt may give up leadership of General Electric Co. sooner than his expected 20-year tenure, as he and fellow directors re-evaluate the right term for its chief executive, people familiar with GE's ...

  • Twitter's Lockup Holds Key to Stock The Wall Street Journal - Tue, Apr 15, 2014 6:33 AM AEST

    Amid the technology sector selloff, Twitter's recent nosedive may be one of the few actually tied to something specific: On May 5, the lockup on 489 million Twitter shares not previously eligible for sale will expire. Certainly, the social-messaging company felt compelled Monday to issue a statement saying that co-founders Jack Dorsey and Evan Williams, along with Chief Executive Richard Costolo, have no "current plans" to sell shares. Another big holder, Benchmark Capital, also doesn't plan to sell or distribute Twitter stock "before or immediately after" the lockup expiration. Altogether, they control about 20% of the company, according to Twitter's last proxy filing.

  • Wal-Mart Cries Foul on China Fines The Wall Street Journal - Mon, Apr 14, 2014 10:38 AM AEST

    Over the past three years, Chinese authorities have fined Wal-Mart Stores Inc. $9.8 million, sanctioning the retailer for using misleading pricing, selling poor-quality products and even peddling donkey meat that turned out to be fox. Wal-Mart has increased testing and inspections. Food testers at Wal-Mart distribution centers in China check more than 600 products daily to catch flaws before the food is sent out to stores. After Wal-Mart found the fox meat labeled as donkey in January, the company said it would start testing its products' DNA.

  • Google Tests a Way to Follow You to the Mall The Wall Street Journal - Sat, Apr 12, 2014 7:26 AM AEST

    Now, Google Inc. is testing a way to solve that puzzle. A pilot program begun by the Internet company is helping about six advertisers match the anonymous tracking cookies on users' computers to in-store sales information collected by data providers like Acxiom Corp. and DataLogix Holdings Inc., according to people familiar with the test. "We are running a number of tests to help clients use their own sales data to measure how their search campaigns impact sales," said a Google spokesman. Online advertising has grown into a $117 billion-a-year business, and Google is the industry's leader, with ad revenue of $50.5 billion last year.

  • Citigroup Faces Inquiry in California Over Failure to Report Suspicious Activity The Wall Street Journal - Fri, Apr 11, 2014 12:01 PM AEST

    The Justice Department is investigating whether a Citigroup Inc. unit in California failed to alert the government to suspicious banking transactions along the U.S.-Mexico border that in some cases involved suspected drug-cartel members, said people familiar with the probe. U.S. prosecutors want to know why Citigroup didn't submit so-called suspicious-activity reports flagging the questionable transactions, one of these people said. The focus of the federal probe highlights the breadth of problems faced by Citigroup following the Federal Reserve's recent rejection of its capital plan and revelations of potential fraud in a separate Mexican unit called Grupo Financiero Banamex. Citigroup disclosed in February that it had cut its fourth- quarter and full-year results by about $235 million after the bank investigated its dealings with a Mexican oil-services company, Oceanografía SA de CV, and found an apparent gap of $400 million in an account that owed money to Citigroup's Mexican unit.

  • J.P. Morgan's Dimon Would Like Corporate Cash to Find a New Home The Wall Street Journal - Fri, Apr 11, 2014 6:59 AM AEST

    J.P. Morgan Chase chief James Dimon suggests that may soon happen, at least when it comes to the business of holding idle corporate cash or nonoperational deposits. In his annual letter to shareholders, Mr. Dimon noted these are "hugely unprofitable," especially given new rules governing the amount of liquid assets banks must hold. As a result, Mr. Dimon wrote, "banks probably will minimize this type of deposit, and clients will seek other alternatives, probably in the money markets." That would invite competitors to swoop in with offers to accept the deposits in hope of also winning more profitable business, such as bond issues and transactional banking.

  • Coke Sticks to Its Strategy While Soda Sales Slide The Wall Street Journal - Thu, Apr 10, 2014 9:59 AM AEST
    Coke Sticks to Its Strategy While Soda Sales Slide

    For 13 years running, Americans have been drinking less Coke. Now Diet Coke sales are falling off a cliff. A growing number of industry analysts suggest Coca-Cola should spend less to advertise cola and more to diversify aggressively through acquisitions of companies, like energy-drink maker Monster Beverage Corp. Sales of Coke's nonsodas, including Minute Maid juice, Dasani water and Powerade sports drinks, rose 5% last year by volume. Chief Executive Muhtar Kent has said that last year, when Coke's U.S. soda volume dropped 2%, was an anomaly.

  • It's Really Hard to Be a Whole Foods Clone The Wall Street Journal - Thu, Apr 10, 2014 9:40 AM AEST

    It's harder to be Whole Foods Market Inc. than many companies thought. Fairway Group Holdings Corp., a chain of about a dozen stores in New York and neighboring states, raised $177 million in an initial public offering last April, and its stock jumped 33% on its first day of trading. When Sprouts Farmers Market Inc. followed with an IPO in August, it fetched at least $333 million, and its shares surged 123% in their market debut. In March, Fresh Market Inc., based in Greensboro, N.C., reported a 90% drop in fourth-quarter net income, thanks partly to a write-down of real estate and other assets, and said it would close four of its 155 stores.

  • J.P. Morgan's Dimon Describes Year of Pain The Wall Street Journal - Thu, Apr 10, 2014 8:54 AM AEST

    J.P. Morgan Chase & Co. Chairman and Chief Executive Officer James Dimon acknowledged Wednesday that a series of legal headaches in 2013 evolved into "the most painful, difficult and nerve-wracking experience I have ever dealt with professionally." The comments in Mr. Dimon's annual shareholder letter offer the most revealing picture to date of how the 58-year-old bank chief reacted to a combination of government probes and lawsuits that culminated in payouts of more than $20 billion. In his 32-page letter, Mr. Dimon also presented a more detailed view inside J.P. Morgan's scramble to adapt to heightened scrutiny from its federal overseers and a raft of new U.S. regulations enacted since the financial crisis. A new "state-of-the-art control room" at J.P. Morgan's Park Avenue headquarters is now up and running, and by the end of 2014 the company will have added 13,000 employees over two years to beef up controls in areas ranging from compliance to legal to risk to technology.

  • Goldman Mulls Closing Dark Pool The Wall Street Journal - Wed, Apr 9, 2014 12:44 PM AEST

    Goldman Sachs Group Inc. is considering shutting down one of the world's largest private stock-trading venues, according to people familiar with the matter. In conversations with market participants over the past several months, Goldman executives have broached the subject of closing its so-called dark-pool trading operation, known as Sigma X, the people said. Goldman executives are weighing whether the revenue that the firm generates from operating Sigma X is worth the risks that have been highlighted by a series of trading glitches and growing criticism of dark pools, the people said. No decision is imminent, and Goldman could keep the business, according to the people.

  • Teaching Children How to Be Entrepreneurs The Wall Street Journal - Wed, Apr 9, 2014 9:51 AM AEST
    Teaching Children How to Be Entrepreneurs

    Jensen Bergman spent weeks preparing to pitch his team's business idea to investors. Jensen was taking part in a program called "8 and Up" that teaches young children about entrepreneurship. As a culmination of the class, which met for six weeks in Princeton, N.J., and cost $350, Jensen and his 15 peers would soon pitch their idea—"Tiger KidsClub," a Friday night hangout space for children—to real, grown-up investors at Tigerlabs, a local seed fund. As startups like WhatsApp and Oculus VR Inc. get snapped up for billions of dollars and others, like Twitter and Facebook, go public for more, younger children are filling classes, camps and other programs that promise to develop entrepreneurial skills in the pre-pubescent set.

  • As Wage Debate Rages, Some Have Made the Shift The Wall Street Journal - Wed, Apr 9, 2014 9:37 AM AEST
    As Wage Debate Rages, Some Have Made the Shift

    SAN JOSE, Calif.—As lawmakers in the nation's capital are mired in debate over likely outcomes from raising the federal minimum wage, businesses hit with local wage increases across the U.S. already are grappling with the reality. A Carl's Jr. franchisee in San Francisco offset the county's higher minimum wage—now $10.74—by using less shortening to make french fries. A White Castle in Illinois cut two jobs to match competitors' costs in nearby Indiana, where the mandated wage is lower. The consequences of a minimum-wage increase cut across everything from the number of hours employees are assigned, to menu prices to how often a drive-through lane is cleaned, according to interviews with more than a dozen businesses.

  • Friends of Fannie and Freddie Flex Their Muscles The Wall Street Journal - Wed, Apr 9, 2014 9:17 AM AEST

    Investors in Fannie Mae and Freddie Mac appear to be building a more sophisticated lobbying apparatus in Washington weeks ahead of a key Senate vote on a bill that would replace the companies. A new tax-exempt group calling itself the Coalition for Mortgage Security launched on Monday to campaign for legislation that would protect the rights of investors in the bailed-out mortgage-finance giants. The group echoed the position of many hedge funds and other investors that are suing the government over its oversight of the companies, arguing that changes to their government-bailout agreements violated property rights. Separately, a conservative senior group, the 60 Plus Association, last week said it had bought $1.6 million in television and radio advertising targeting lawmakers in seven states that have signaled support for the housing-finance overhaul, which they said would harm "ordinary investors" in the companies.

  • Big Banks to Get Higher Capital Requirement The Wall Street Journal - Wed, Apr 9, 2014 7:07 AM AEST

    WASHINGTON—The eight largest U.S. banks will have to add as much as $68 billion in extra capital to comply with a new rule intended to help firms weather losses during periods of market stress, federal regulators said Tuesday. The so-called leverage ratio, approved by the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp., will require the largest banks to maintain well above the global minimum levels of capital held against all assets on their books, not just those deemed risky. The requirement, which will affect banks such as Citigroup Inc., J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., comes as U.S. agencies ratchet up pressure on large, complex firms to ensure they can survive periods of turmoil without a government rescue. The rule will require banks to either shed assets or raise additional cash from investors, a move that some warn could limit their growth but which regulators say will protect their ability to lend during a downturn.