Up-and-down market: Strong bank earnings got the session off to a strong start, but on closer reading the numbers aren't so wonderful after all. Dow is off about 10 in early trading.
More bank profits: This time it's Citigroup and Bank of America, which not too long ago appeared to be on death's door. But the results were driven by billions of dollars in one-time gains -- B of A sold a stake in a big Chinese bank and Citi scored from a new joint venture. From the NYT:
While the results provided another sign that American banking industry is stabilizing somewhat faster than many had expected, they nonetheless underscored how the sagging consumer economy is hurting banks big and small. For the moment, trading and other traditional Wall Street businesses, such as securities underwriting, are powering profits at many big institutions.
Cost-cutting helps Mattel: Sales were way off, but the El Segundo-based toymaker exceeded Wall Street estimates by slashing expenses. That included cutting 1,000 jobs and reduced advertising and distribution costs. (Reuters)
CA could lose financing: State Treasurer Bill Lockyer warns that failure to resolve the budget deadlock could prevent the state from building schools, highways and levees (that's only if the credit rating dips into junk bond status). Meanwhile, there's no real news on the budget negotiations. (AP)
Furlough Friday: Don't expect to do business today at the DMV or many other California agencies. Closing state offices for the day is another way of saving a few dollars.
Not just California: Many other states are crying the budget blues; for the first three months of 2009 state tax revenue fell 11.7 percent, the steepest decline on record. From the WSJ:
The recession has cut into just about every revenue source. States' collections of corporate income taxes were down 18.8% in the first quarter, compared with a year ago; personal income taxes dropped 17.5%; and sales taxes declined 8.3%. With sharp declines in both income and sales taxes, state tax revenues were at 2005 levels in the first quarter, erasing about three years of gains that paid for new programs and salary increases.
Platinum loses Delphi: Not a great week for Bev Hills-based Platinum Equity, which had been pushing to buy the bankrupt auto parts maker. A deal was struck with lenders and onetime parent GM over a new plan to emerge from Chapter 11. From the NYT:
Shortly after the Platinum deal was announced, Delphi's lenders forced Delphi to open its sales process to potential alternative bids. But behind the scenes, G.M., Platinum and the lenders began holding talks about a compromise, in which Platinum would run the company, while the lenders and G.M. would effectively own a majority of the company. The three sides were unable to reach a deal, however, and G.M. and the lenders began negotiating exclusively with each other over the last week, one person briefed on the matter said.
More woes for videogames: Sales of games and consoles fell 31 percent in June, the largest monthly decline since September 2000. Jitters about the economy and lackluster slates of game releases are behind the poor numbers. Summer months are often pretty slow. (LAT)
Boost in DVD rentals: Revenue rose 8 percent for the first half of the year, though sales of DVDs fell 13.5 percent. From the LAT:
Consumers are becoming more receptive to renting DVDs, particularly from Netflix, which saw its subscriber base increase 25% over the last year to 10.3 million, as well as the fast-growing DVD kiosk company Redbox, which rents movies for $1 per night. That's a troubling trend for studios, because rentals generate smaller profits than purchases.