25 February: Washington Post income rises, many woes remain
- Branko Brkic
- 25 Feb 2010 (South Africa)
Also today: Toyota’s Japanese workers take some comfort over Toyoda’s grilling; AIG may be back on track, but maybe not; Apple wants bite of other devices; Honda launches sporty hybrid; Australian economy booming back on mining.
Washington Post income rises, many woes remain
The Washington Post Company’s fourth-quarter profit quadrupled, but the markets shouldn’t get too excited because profits today all too often come from non-revenue streams. In this case, the publisher benefited from a big reduction in accounting charges, despite its education division doing okay and the publishing segment making money off the back of staff cuts. Like everybody else in the industry, the company’s dealing with an advertising slump, so it’s offered buyouts to employees of The Washington Post newspaper and Newsweek magazine, and also consolidated its printing facilities. Most of its revenues now come from its cable television and education services businesses. It saw profit of $82.2 million in the quarter, compared with $18.8 million a year ago, so things are looking better. In the same quarter of 2008, the company’s net income was hit by one-time restructuring charges and reductions in the value of its newspapers, so while revenue rose from $1.16 billion to $1.24 billion this quarter, analysts still have to look hard at the details of the accounting.
Toyota’s Japanese workers take some comfort over Toyoda’s grilling
Japanese workers in Toyota City, the car maker’s home town, were heartened by their president’s appearance before hostile US lawmakers over the company's safety problems. They felt he answered the tough questions earnestly, but many still fear the crisis is not over. Some employees say they’ve been left in the dark, while critics outside the company claim family loyalists at Toyota are self-absorbed and lack management focus. Many in Toyota City rely directly or indirectly on Toyota’s seven car plants and more than 1,400 other factories for jobs. It’s a big company and makes things other than cars. Many agree that standards have slipped, saying this would make the city of more than 400,000, including Toyoda himself, even more focused on future excellence.
AIG may be back on track, but maybe not
American International Group took the lion’s share of US government bailouts. The $182.3 billion in public funds made it the poster-child for all that was wrong with America’s battered economy. But now the company’s showing signs of a turnaround, according to Business Week, despite an expected fourth-quarter loss derived from more than $5 billion in charges for paying down debt. There’s evidence that the insurance business is coming back. Revenue at its property units rose for three straight quarters last year after plummeting 23% at the height of the October 2008 crisis. And sales of life insurance and retirement products are rising for the first time since the bailout. But its decision to keep some derivatives assets that are said to have fomented its near-collapse, has come under fire. There’s some way to go yet.
Google feels the heat of global expansion
It’s not just China that’s hurting Google. Europe’s got in on the act too. Investors in the world’s largest search-engine company are now starting to appreciate that global expansion has its costs, after EU regulators said they were investigating complaints by firms that Google downgraded links to their sites. Simply put, that negatively affected Google’s share price. And when an Italian court found Google responsible for privacy violations caused by user-submitted videos on YouTube, the dangers of world domination became even more apparent. Google says it’s not responsible for external content on its sites and is already fighting complex battles over copyright and censorship issues with authors and Chinese authorities. International markets make up 52% of Google's revenue, and while China is said to make up just 4% of sales, the UK brings in 12% of total revenues. So, who’s your mama?
Apple wants bite of other devices
Apple wants a big bite of the mobile-phone business and is seeking to put its software on devices other than its own. How does anybody know this? It posted an ad on its website for an engineering manager to find new platforms for its iPhone operating system. Now, reports say Apple chief operating officer Tim Cook is calling the firm “a mobile device company". Big boss Steve Jobs went even further in January, saying it was the “largest mobile device company in the world". The reality is that Apple needs other products and bandwidth to proliferate its own products. If it could buy the world’s largest telecom and cellphone companies, it probably would. The iPhone and related products now account for 36% of total sales, up from 25% a year earlier. So mobile is the only way to go. Just ask users of the iPod Touch.
Honda launches sporty hybrid
Honda’s making waves in the hybrid car market, launching the sporty CR-Z two-door hatchback in Japan. The boss of Japan’s second-largest car maker, Takanobu Ito, says Toyota's woes highlight the challenges of new technologies and expanding markets, admitting that when Honda grew globally in the 1990s, it received increased complaints from customers. Ito is acutely aware of such issues, as Honda has recalled some of its Jazz models for possible faulty door locks, a problem illuminated last year by the death of a South African two-year old in a vehicle fire. The CR-Z will be sold in the US and Europe by the middle of the year. Starting prices in Japan range from some $25,000 for the basic model, to about $28,000 for the top-end sportster. It’s got clean lines, and is “green” and mean.
Australian economy booming back on mining
Australian business investment in the fourth quarter may cause the country’s central bank to raise interest rates for the fourth time in six months. Capital spending was up 5.5% on the previous quarter, well above an expected 2% gain. Demand from China for Australian iron ore, coal and gas is fuelling a boom in mining investment, helped by the government’s $38 billion economic stimulus package. The nation’s businesses are expected to push investments to some $99 billion in the year ending June, the highest level in five years, with similar investment for the year ending June 2011. This has led some analysts to predict a quarter-point increase in the benchmark interest rate to 4%. BHP Billiton is a benchmark, saying it’ll increase capital spending on iron-ore mines and oil fields by 63% next year.
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