Paw Print Rewind #029

Editor’s Note: This is the Paw Print Rewind, a daily recap of the top news headlines.

IBM revenue down for 13th straight quarter

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IBM’s revenue fell for the 13th consecutive quarter, as the Armonk, NY-based company continued to shed low-margin businesses and influence from the strong dollar.

Revenue from the company’s “strategic imperatives,” which include cloud and mobile computing, data analytics, as well as social and security software, rose about 20%.

Software business revenue fell 10% to $5.8 billion from a year earlier.

Revenue from global technology services like outsourcing fell 10%, because of weak discretionary IT spending by clients.

“Traditional software and services remain under pressure across IT, and we believe M&A remains one of the only glimmers of hope to restore growth back to these traditional tech giants that are starving for growth.”

-Daniel Ives, FBR Capital Markets analyst

IBM’s total revenue fell to $20.81 billion in the second quarter that ended June 30th, from $24.05 billion a year earlier.

The company’s quarterly results were also hurt by the strong dollar.

Consolidated net income dropped to $3.45 billion ($3.50/share) for the second quarter, from $4.14 billion ($4.12/share) a year earlier.

Excluding items, IBM earned $3.84 per share.

Blackstone, Corsair clinch $4 billion First Eagle deal

first-eagle-investment-management-77880411

Private equity firms Blackstone and Corsair Capital have agreed to acquire a majority stake in First Eagle Investment Management, valuing the company at around $4 billion including debt, according to First Eagle.

The New York-based company manages approximately $100 billion in investment assets. First Eagle has seven mutual funds with $74 billion in assets under management, according to Morningstar.

“We will support First Eagle’s management and employees as they seek to provide outstanding investment performance and service to their clients.”

-Joseph Baratta, Blackstone global head of private equity

Under the deal’s terms, private equity firm TA Associates is selling its entire First Eagle stake and the family of First Eagle chairman and chief investment officer John Arnhold will remain shareholders. TA Associates owns a minority stake in First Eagle.

Morgan Stanley revenues jump 27% in Q2 2015

The Morgan Stanley logo is displayed on its Times Square building, Tuesday, Oct. 18, 2011 in New York. Morgan Stanley said Wednesday, Oct. 19, 2011, it earned $2.2 billion in the third quarter, largely on accounting gains and increased investment banking revenue.  (AP Photo/Mark Lennihan)
The Morgan Stanley logo is displayed on its Times Square building, Tuesday, Oct. 18, 2011 in New York. Morgan Stanley said Wednesday, Oct. 19, 2011, it earned $2.2 billion in the third quarter, largely on accounting gains and increased investment banking revenue. (AP Photo/Mark Lennihan)

Morgan Stanley reported stronger profits as its bond and equities trading businesses outperformed its Wall Street rivals.

“The quarter [for Morgan Stanley] looked really good, uncomplicated and straightforward across all the board, which is what really stood out.”

-Marian Kessler, Becker Value Equity Fund co-portfolio manager

Revenue in the New York-based bank’s equities trading business shot up 27% to $2.27 billion on an adjusted basis. This strength was driven by derivatives and prime brokerage, which offers services to hedge funds and other professional investors, according to Morgan Stanley CFO Jonathan Pruzan.

The bank also received “positive feedback” from clients on a Moody’s upgrade of their credit ratings in May, according to Pruzan.

Morgan Stanley’s revenue from trading fixed-income, currency, and commodities rose 25% to an adjusted $1.27 billion in the three months before June 30th.

The bank’s institutional securities business, which includes both bond and equity trading, accounted for 52.2% of the quarter’s overall revenue in the quarter (up from 49% a year ago).

Revenue from equities trading accounted for about 24% of total adjusted revenue, while bond trading accounted for about 13%.

Lockheed buying Sikorski for $9 billion

lockheed-martin

Lockheed Martin has bought Sikorsky Aircraft, maker of Black Hawk, from United Technologies for $9 billion.

The Bethesda, MD-based company will also review the possible sale or spinoff of $6 billion in other information technology and services businesses.

Sikorsky is “a national icon,” according to Lockheed. The deal’s net cost is around $7.1 billion, taking tax benefits into account.

“Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies.”

-Marillyn Hewson, Lockheed Martin CEO

The deal gives Lockheed access to a $30 billion annual military and commercial rotorcraft market, according to Hewson.

The company will continue to return cash to shareholders through dividends and reduce outstanding shares below 300 million by the end of 2017.

The deal will reduce the number of competitors in the helicopter business, and Lockheed’s plans to sell or spin off $6 billion in other businesses meant the company’s overall size will not grow substantially.

“Between those two elements, it is very positive.”

“Between those two elements, [the Pentagon’s initial reaction] is very positive.”

-Marillyn Hewson

The company, advised on the acquisition by Credit Suisse and Fried Frank, expects to close the Sikorsky transaction by late in the fourth quarter or early 2016.

Lockheed Martin will complete a strategic review of its government IT infrastructure services business and the technical services business within its missiles and fire control segment by the end of the year, potentially affecting 17,000 employees.

The company will retain services businesses focused on defense and intelligence customers, including its extensive cybersecurity work for the U.S. government.

Proceeds from the Sikorsky sale would fund more share buybacks, according to United Technologies. Its board authorized a share buyback of up to 75 million shares, worth about $8.3 billion.

Two killed as blasts, gunfire rock Burundi elections

A policeman and an opposition official died in violence during Burundi’s presidential election, triggered by protests over President Pierre Nkurunziza running for a third term and an opposition boycott.

Blasts and gunfire echoed around the capital Bujumbura in the country’s worst crisis since a civil war ended in 2005. Calm returned to the capital during the day but dozens have been killed in weeks of demonstrations, a failed coup, and clashes between rebel soldiers and the army.

Voters lined up outside polling stations in some rural areas and Bujumbura districts that are strongholds for Nkurunziza. In other areas, there were only trickles of voters.

One policeman and a civilian were killed in overnight violence, according to presidential adviser Willy Nyamitwe.

“People do it to intimidate voters. They don’t want the voters to go to the polls.”

-Wally Nyamitwe, presidential adviser

Residents in the capital’s Nyakabiga district identified a body found there as an official in the opposition MSD party and accused the government of killing him.

Crowds blocked a thoroughfare with rocks and women chanted “We need justice and truth” near the body, before the Red Cross took it.

“We see the shooting last night as a kind of intimidation. There will be chaos after this election because the government that will follow will not be recognized by all the people.”

-Desire Kabaya, Nyakabiga resident

Citi ordered to pay $770 million over credit card practices

A Citibank sign on bank branch in midtown Manhattan in New York

Citi, Citigroup’s consumer bank, has been ordered to pay $700 million in relief to borrowers for illegal credit card practices, according to the U.S. Consumer Financial Protection Bureau (CFFB).

The New York-based bank will also pay civil penalties of $35 million to both the consumer finance watchdog and the Office of the Comptroller of the Currency.

“[The CFFB] are just marching through the industry.

“The CFFB loves to have big numbers like this, especially when the largest percentage of the fine goes back to customers because there’s a lot of [political] push-back about the cost of the CFPB and the way they’re funded.”

-Edward Mills, FBR financial policy analyst

Facebook must hand over New York users’ info to prosecutors: court

Facebook_Logo

Facebook cannot challenge search warrants New York prosecutors used to get information from its site on hundreds of users suspected of Social Security fraud, according to a state appeals court.

The warrants, which apply to 381 users’ photos, private messages, and other account information, could only be challenged by individual defendants after prosecutors gathered evidence, according to the Manhattan-based court.

Noridian Healthcare Solutions paying $45 million to avoid heat over health exchange website

Noridian Healthcare Solutions, the prime contractor hired to build Maryland’s health exchange website will pay $45 million to the state and federal governments to avoid legal action over its performance, according to the state’s attorney general.

The Fargo, ND-based company will pay $20 million up front and an additional $25 million in annual installments of $5 million over five years, according to state officials.

The payments represent a 61% recovery of the total paid to the company for the failed website development and 2013 launch.

“This company never delivered on what it promised, and, as a result, tens of millions of taxpayer dollars were wasted, and thousands of Marylanders suffered delays and frustration.

“This settlement sends a message that the performance was unacceptable, and that those responsible will be held accountable.”

-Brian Frosh, Maryland attorney general

The agreement, which is subject to regulatory approvals, will lead to the recovery of funds for both Maryland and the federal Centers for Medicare and Medicaid Services, which provided significant funding to develop the exchange.

Noridian Mutual Insurance, Noridian Healthcare Solutions’ parent company, has agreed to guarantee at least $40 million of the settlement payment. The settlement agreement also releases Maryland from all contractual obligations with Noridian Healthcare Solutions. Investigation of claims against other companies involved in the development and implementation of the Maryland exchange is continuing.

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