Editor’s Note: This is the Paw Print Rewind, a daily recap at the top news stories.
Google’s online ad sales drive revenue higher
Google reported higher quarterly revenue and profit as rising online ad volume offset a hit from the strong dollar.
“The concern was that the first quarter results could have been much worse. There’s a certain degree of relief rally happening.”
– Colin Gillis, BGC Financial analyst
Revenue for the quarter that ended in March rose 12 percent to $17.26 billion, from $15.42 billion a year earlier.
The rising dollar took a toll on Google’s results, which generates about half of its revenue overseas.
“Excluding the net impact of foreign currency headwinds, revenue grew a healthy 17 percent year on year.”
– Patrick Pichette, Google Chief Financial Officer in a statement
The number of ads (paid clicks) rose 13 percent, while the average price of online ads (cost per click) declined seven percent.
Google’s ad revenue has been pressured as more consumers access its online services on mobile devices like smartphones and tablets, where ad rates are typically lower.
“We are experiencing real strength in mobile search.”
– Patrick Pichette
The contribution of ad revenue from video platform YouTube “continues to grow at a strong rate year-over-year,” according to Pichette. Brands are embracing YouTube’s TrueView service, where advertisers pay only when users opt not to skip an ad.
Google’s advertising sales in the first quarter rose 11 percent to $15.51 billion
Net income rose to $3.59 billion ($5.20 per share) from $3.45 billion ($5.04 per share).
Excluding items, the company earned $6.57 per share.
Microsoft profit, revenue beat the Street
Microsoft reported revenues and profits above Wall Street expectations, as sales of its hardware and cloud-computing services helped offset a decline in the company’s Windows business.
“The company beat across the board. The Street will cheer these results as it appears Microsoft is back on the right track after a head-scratching performance last quarter.”
– Daniel Ives, FBR Capital markets analyst
Sales of Windows to computer manufacturers to install on new PCs fell 19 percent in the quarter, reflecting a sharp dip from a year ago when Windows got a boost from consumers buying new machines after Microsoft stopped support for Windows XP.
However, that decline was offset by higher revenue from its Surface tablet line, back-end server software and cloud-related offerings such as its Office 365 application suite.
Microsoft’s commercial cloud-related revenue for the quarter more than doubled, according to the company, and is now running at $6.3 billion a year.
The company’s overall revenue rose six percent to $21.7 billion.
Earnings per share declined to 61 cents per share from 68 cents a year ago.
Starbucks’ strong results quash growth woes
Sales at Starbucks’ Americas coffee shops grew more than expected, boosted by sales of breakfast sandwiches, lunch items and new drinks.
The company’s sales at stores open at least 13 months were up seven percent in the Americas for the fiscal second quarter that ended March 29.
The Americas’ quarterly same-store sales included a two percent traffic rise. The Americas region includes the United States, Canada and Latin America, contributes the majority of company revenue.
Starbucks’ quarterly net earnings grew 16 percent to $494.9 million (33 cents per share) up from $427 million.
Total revenue was up almost 18 percent to $4.56 billion.
Ford laying off about 700 Michigan plant workers as sales of small cars dip
Ford will lay off about 700 workers at the Michigan Assembly Plant in Wayne, MI making compact cars, responding to a dip in demand for those vehicles because of lower gas prices.
The plant is cutting a shift and will run on two shifts starting June 22, according to Ford spokesperson Kristina Adamski.
The Michigan Assembly Plant makes three versions of the Ford Focus compact car, C-Max compact hybrid and C-Max plug-in hybrid car.
Focus U.S. sales were down 14.5 percent in March and its about 53,000 unit sales were only up two percent compared with last year. C-Max US sales were down 23 percent from last year with about 4,300 unit sales.
Ford will offer summer replacement jobs to some workers and work to find all of them full-time employment at company plants, according to the company. The automaker has “high confidence” that they can find new jobs for all laid off workers within a year.
GM first-quarter profit misses estimates on South America, Russia weakness
General Motors posted a smaller-than-expected quarterly profit Thursday because of weakness in South America and Russia and a higher tax rate.
“Clearly the macro environment in South America, and it’s primarily Brazil, deteriorated versus even where we thought it was going to be.”
– Chuck Stevens, GM Chief Financial Officer
The region will be “reasonably challenged” through the first half of the year, according to Stevens, but GM is targeting second-half profits similar to the same period last year.
The No.1 US automaker has cut jobs and will reduce production shifts at Brazilian plants, according to Stevens, generating about $200 million in annual savings. GM lost $214 million in South America during the first quarter.
First-quarter net income rose to $945 million (56 cents a share) from $125 million (six cents a share) a year ago. Last year’s results included charges related to recalls.
Excluding one-time items, GM earned 86 cents a share.
Revenue fell 4.5 percent to $35.7 billion. Sales were hurt by lower volume in Brazil and Russia as the impact of weakening currencies in South America due to the strong U.S. dollar.
In North America, GM earned $2.18 billion and reported 8.8 percent profit margins due to strong demand for large pickups and SUVs, as well as lower costs.
Despite North American and Chinese strength, GM’s global market share slipped to 11 percent in the quarter from 11.1 percent last year.
Deutsche Bank fined $2.5 billion over rate rigging
Deutsche Bank has been fined $2.5 billion by U.S. and U.K. authorities on accusations that Germany’s largest lender obstructed regulators and ordered the firing of seven employees in the eight global settlement of alleged benchmark interest rate rigging.
The penalty takes the total fines imposed to around $8.5 billion. 21 people face criminal charges.
U.S. regulators fined Deutsche Bank $2.12 billion and UK watchdogs imposed a $340 million penalty for its role in a scam running from around 2003 to 2010 to fix rates like the London Interbank Offered Rate (Libor) that’s used to price hundreds of trillions of dollars of loans and contracts worldwide.
As part of the settlement, Deutsche Bank’s London-based subsidiary pleaded guilty to criminal wire fraud and the parent group entered into a deferred prosecution agreement to settle U.S. wire fraud and antitrust charges. U.S. authorities and independent monitors would be installed.
Ford recalling Fiesta, Fusion, Lincoln MKZ on door latch issue
Ford is recalling about 390,000 Ford Fiesta, Fusion and Lincoln MKZs in North America because of a potential door latch malfunction.
The driver’s door can become unlatched while the car is in motion, increasing potential injuries, according to Ford.
The company is aware of two incidents where an unlatched door bounced back and struck the driver and one incident where an unlatched door swung open and struck another vehicle.
Affected vehicles were produced at Ford’s Mexico plants, including 2012-2014 Fiestas, 2013-2014 Fusions, and 2013-2014 Lincoln MKZs.
About 86 percent of recalled vehicles are registered in the United States, with the remainder in Canada and Mexico.
Comcast drops Time Warner Cable bid after antitrust pressure
Comcast abandoned its $45 billion bid for Time Warner Cable on Friday after U.S. regulators raised concerns that the deal would give Comcast an unfair advantage in the cable TV and Internet market.
“The pressure to consolidate in a very competitive industry is going to continue.”
– John Tinker, Maxim Group analyst
HSBC looking at moving HQ from London as tax, regulations bite
Europe’s largest bank, HSBC, has ordered a review into whether it should move its headquarters out of Britain.
“HSBC is just the latest in a long line of companies warning of the dangers of a re-elected Tory (conservative) government taking Britain out of the European Union.”
– Ed Balls, Labor finance spokesman
“No one should be under any illusion that it’s as simple as moving a brass plate from one city to another. It is far more complex than that and involves local, regional and global regulatory frameworks, costs and the future strategic shape of HSBC.”
– Hugh Young, Aberdeen Asset Management global head of equities
Suspected al-Qaeda militants arrested in Italy for Vatican plot
Italian police arrested 10 people and were looking for eight others suspected of belonging to an armed group linked to al Qaeda who plotted attacks in Pakistan and Afghanistan and the Vatican at least at one point on Friday.
Some of the suspects were arrested in early morning raids across the country. Police burst into the home of the group’s suspected spiritual leader in the northern city of Bergamo, according to a video released by them.
Though the 18 suspects were plotting attacks mainly in their native countries, phone taps suggest the Vatican was also a target, according to Cagliari chief prosecutor Mauro Mura.
Officials had indications of a possible plot for an attack against the Vatican in 2010 by members of the group, according to Mura, who continued to operate across Italy for years after that.
There were indications of a plan for a suicide attack in a crowded place, according to Mura.
“We don’t have proof [on the Holy See being a possible target], we have strong suspicion”
– Mario Carta, case police unit head
“We are all afraid because we don’t know what can happen.”
– Pietro Parolin, Vatican Secretary of State