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Don’t look now: $1 gas may be close

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Don’t look now: $1 gas may be close

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Gasoline prices may soon dip below $1 per gallon at some stations in the Midwest, putting the price of unleaded fuel in the same category as a pack of gum or a bag of pretzels from the vending machine.

"The cheapest gasoline prices in over 12 years are showing up in some lucky states in the heart of the nation, with previously unthinkable 99-cent gasoline becoming a strong possibility as wholesale gas prices plunge amidst growing supply," GasBuddy.com senior analyst Patrick DeHaan said in an email.

Prices have plunged to 12-year lows in Michigan, Wisconsin, Illinois, Minnesota, North Dakota, Oklahoma, Indiana, Ohio and Kansas, according to GasBuddy.

To be sure, 99-cent gas "still will be isolated," DeHaan said — likely because of the highly regional nature of refining costs, oil inventories and shipping.

But the plunging price of gasoline is beginning to conjure nostalgic 20th Century memories of rock-bottom fill-ups at the corner station, where lollipops and licorice were also prized commodities.

For U.S. consumers, it's fantastic news, providing instant savings — particularly for low-income consumers for whom gas represents a high percentage of their budget.

The nationwide average is $1.721 per gallon as of 1:15 p.m., down 6.8 cents from a week ago, 25.6 cents from a month ago and 45.5 cents from a year ago.

But for oil companies, it's a mess, fueled principally by the global surplus in oil production.

The benchmark U.S. crude oil, known as West Texas Intermediate (WTI), fell 3.2% in mid-day trading to $28.75. The global benchmark, Brent crude, fell 5.2% to $31.16. Both commodities traded below $30 simultaneously at one point in January, reaching lows not seen since 2003.

The stocks of Chevron, BP and Exxon Mobil slipped 4%, 3.3% and 1.8%, respectively, in afternoon trading Tuesday.

An International Energy Agency report released Tuesday projected a downturn in global oil demand growth in 2016 from a five-year high of 1.2 million barrels per day in 2015 to 1.2 million barrels per day, primarily because of economic sluggishness in Europe, China and the U.S.

Lower demand could exacerbate low prices. Compounding matters is that the Organization of the Petroleum Exporting Countries (OPEC) increased production in January by 280,000 barrels per day to 32.6 million.

"A sanctions-free Iran, Saudi Arabia and Iraq all turned up the taps," IEA reported.

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Viacom, in Midst of Leadership Shake-Up, Reports Drop in Profit

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Viacom, in Midst of Leadership Shake-Up, Reports Drop in Profit

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Viacom’s headquarters in New York. The company’s total revenue fell 6 percent last quarter.

Viacom reported on Tuesday that its profit plunged 10 percent and revenue fell 6 percent during the latest quarter. Still, the entertainment company’s top executive came out fighting.

Philippe P. Dauman, Viacom’s chief executive, defended his recent promotion to executive chairman of the company and challenged an analyst’s depiction of its “exceedingly poor performance” over the last several years. He blamed some of Viacom’s recent decline on “a lot of noise” around the company, and said that “no one should doubt” his resolve in resuscitating the company’s stock price.

“Our outlook and the facts have been distorted and obscured by the naysayers, self-interested critics and publicity seekers,’’ Mr. Dauman said during a conference call. “We will not be distracted or deterred as we build for the bright future ahead of us.”

The combative statements delivered by the usually calm and mild-mannered Mr. Dauman, along with Viacom’s weak results, heightened the tension surrounding the company. Shares in Viacom fell as much as 15 percent during morning trading on Tuesday. Viacom’s stock has fallen about 47 percent in the last year.

Viacom reported earnings during a major shake-up — and a looming power struggle — at the very top of the company, which includes the MTV, Comedy Central and Nickelodeon cable television networks and the Paramount Pictures studio.

Last week, the ailing 92-year old media mogul Sumner M. Redstone resigned as executive chairman of the company (while also yielding the executive chairman’s post at CBS). The board named Mr. Dauman his successor. Yet Mr. Redstone’s daughter, Shari Redstone, did not support Mr. Dauman’s appointment, and other shareholders have voiced concerns about Mr. Dauman’s ability to lead the company.

“I don’t think there was anything in his remarks that would give shareholders confidence that Viacom is any closer to a turnaround today than they were yesterday or a year ago,” Eric Jackson, an activist investor with SpringOwl Asset Management, said on Tuesday. “I think the stock reaction this morning reflects the same.”

During the call on Tuesday, Mr. Dauman called Mr. Redstone his “colleague, mentor and friend” and thanked him for “his vision, his guidances and his inspiration.” He said the two had more than a 30-year history building Mr. Redstone’s media empire.

“He and the board of Viacom believing in my abilities and my character have entrusted me with weighty responsibilities, none of which are inconsistent or incompatible,” Mr. Dauman said.

“They know our operational plans,” he added, referring to board members. “They endorsed them, they have confidence in them and I will repay back that confidence by producing the results without shirking our obligation to make the changes that are necessary to make Viacom the leading content company of the future.’’

Mr. Redstone, who Viacom executives said listened to the call from Los Angeles, continues to hold about 80 percent of the voting stock in Viacom and CBS through his theater chain company, National Amusements. Mr. Redstone’s stake in National Amusements is to be held by a trust after he dies or is found to be incapacitated, in which case voting control passes to seven trustees, including Mr. Dauman and Ms. Redstone, setting up a potential showdown over who would lead the company into the future.

Viacom’s results for the three months that ended Dec. 31, the company’s first fiscal quarter, were dragged down by weak results across its television and film groups.

Quarterly profit was $449 million, or $1.13 a share, compared with $500 million, or $1.20 a share, during the same period the previous year.

Total revenue fell 6 percent to nearly $3.2 billion compared with the year-earlier period.

Revenue in the company’s media networks segment, which includes its TV networks, dipped 3 percent to $2.57 billion because of declines in advertising sales in the United States and internationally. Negative foreign exchange effects also affected results.

Domestic advertising sales declined 4 percent, with ratings declines at some networks offsetting price increases. The results represented a sequential improvement from the previous quarter, when domestic advertising sales declined 9 percent. During a conference call in November, Mr. Dauman said that the company expected continued improvement in domestic advertising sales in the next quarter and year.

In addition to turmoil over succession, another major issue affecting Viacom’s stock has been the company’s discussions to reach a carriage renewal with Dish Network, the satellite provider. Mr. Dauman said Tuesday that Viacom had entered into a short-term extension with Dish while it worked out the details of a long-term renewal.

The company reduced expectation for growth in affiliate revenue — the money it receives from cable, satellite and other digital distributors — to the “low mid-single-digit range” after previously stating that it would be in the high single digits. Several factors were responsible, including the company’s recent agreement with AT&T.

“While ad trends and ratings are likely to improve, all eyes remain focused on the looming Dish affiliate fee renewal and headlines about Redstone family dynamics,” Michael Nathanson, a media analyst with MoffettNathanson, said in a research note.

Also on Tuesday, Viacom announced a partnership with Snapchat, the ephemeral messaging app. As part of the deal, Viacom has the right to sell Snapchat’s owned and operated advertising space in the United States, expanding the digital offerings it peddles to television advertisers. The agreement also includes creating new channels on Snapchat’s Discovery platform for Comedy Central International and MTV in the United States.

Mr. Dauman said the Snapchat deal and other similar deals still to come should help the company revitalize its brands and “move into the future.”

Todd Juenger, an analyst with Sanford C. Bernstein, said the Snapchat partnership carried its own risks. Snapchat does not provide affiliate fees, and if teens watch MTV on Snapchat, there will be fewer affiliate fees and advertising sales from traditional television, he said.

“We continue to hold the view that the old business of serving kids/teens with linear TV networks is doomed, and the new business of serving kids/teens with on-demand, digitally delivered entertainment is unlikely to be won by Viacom,” Mr. Juenger said in a research note. “We don’t believe this morning’s Snapchat deal changes that.”

In Viacom’s filmed entertainment segment, revenue plunged 15 percent to $612 million in the quarter, with a decline in theatrical and home entertainment sales offset by an increase in licensing fees. Worldwide theatrical revenue declined $75 million in the quarter, largely because of a tough comparison to the previous year, when the company benefited from the “Teenage Mutant Ninja Turtles.” The results also were affected by the adverse impact of foreign exchange.

Mr. Dauman has said that Paramount’s output would increase to a 15-film slate in the current fiscal year, including Ben Stiller’s “Zoolander 2,” “Whiskey Tango Foxtrot,” starring Tina Fey, and J.J. Abrams’s “10 Cloverfield Lane.”


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Sears warns Q4 worse than expected, accelerates store closures

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Sears warns Q4 worse than expected, accelerates store closures

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Sears (SHLD) will accelerate planned store closures and continue to purge other assets to keep its business turnaround afloat after reporting Tuesday that the holiday season will fall short of expectations.

Sears expects sales to come to $7.3 billion for the quarter ended Jan. 30, compared with $8.0 billion in the year-ago quarter and below analyst estimates for $7.4 billion, according to S&P Global Market Intelligence. Sears reports fourth-quarter and full-year results on Feb. 25.

Sears estimates sales at stores open at least a year, a key measure for retailers, fell 7.1% in the quarter at Sears and Kmart U.S. stores as the company's apparel business dragged down store performance. The company attributed its weak showing to unseasonably warm weather and "intense competition."

As a result of its falling sales, Sears plans to speed up 50 planned closures of unprofitable stores this year and look at other ways to cut costs by between $550 million and $650 million, including evaluating staffing levels. The company has not disclosed which stores are set to close.

Sears will also sell at least $300 million worth of additional assets in the first half of the year and is considering a sale of the Sears Auto Center business. That will be on top of moves the company made last year to start selling off its significant real estate portfolio into a real estate investment trust in order to raise cash.

The Hoffman Estates, Ill.,-based retailer has been struggling for years to regain traction with customers who no longer feel compelled to walk through the door, lured away by online retailers, more exciting apparel at brands such as Target and H&M and appliance deals at places like Lowe's and Home Depot. Its shares have lost roughly half their value in the past year. The stock was down 4.4% in morning trading Tuesday.

Sears has been heavily pushing a transformation toward what it calls a "member-centric" model based on a loyalty program and more personalized promotions for customers. In today's announcement, the company also said it plans to improve its apparel offering with changes to product sourcing, assortment and pricing.

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NC regulator fines Duke Energy nearly $7 million for coal ash spill – Winston-Salem Journal

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NC regulator fines Duke Energy nearly $7 million for coal ash spill – Winston-Salem Journal

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RALEIGH — North Carolina environmental regulators say they're fining the country's largest electric company nearly $7 million for pollution related to a big spill of liquefied coal ash in 2014.

The Department of Environmental Quality said Tuesday that Duke Energy's $6.6 million fine is for violations surrounding the February 2014 coal ash spill at the company's Dan River power plant in Eden.

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Goodyear Says Results are Outstanding Despite 4Q Loss

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Goodyear Says Results are Outstanding Despite 4Q Loss

[ad_1]"We delivered 18% growth in full-year segment operating income," says Kramer.Goodyear Tire & Rubber Co. posted net income of nearly $307 million on net sales of 16.4 billion for fiscal 2015 ended Dec. 30, 2015. That compares to income of $2.4 billion on sales of $18.1 billion for fiscal 2014.

Segment operating income increased 18%, from $1.7 billion to $2 billion. The company's net income-to-sales ratio was 1.8%.

"I’m extremely pleased with our outstanding results as we delivered 18% growth in full-year segment operating income, exceeding $2 billion for the first time in our 117-year history,” says Richard Kramer, chairman and CEO. “Our success has enabled us to execute on all facets of our capital allocation plan, delivering long-term shareholder value."

On a general accepted accounting principles basis, Goodyear’s 2015 adjusted net income, excluding certain significant items, most notably the deconsolidation of the company's Venezuelan subsidiary, was $906 million. (The deconsolidation also affected fourth-quarter results.) Full-year 2015 adjusted net income was also impacted by $165 million of U.S. tax expense following the release of the company’s U.S. tax valuation allowance.

Tire unit volumes totaled 166.2 million, up 3% from 2014, due in part to the acquisition of Nippon Goodyear Ltd. in Japan. Replacement tire shipments were up 2%. Original equipment unit volume was up 3%.

Fourth-quarter results

Goodyear recorded a net loss of $380 million on net sales of $4.1 billion for its fourth quarter ended Dec. 30, 2015. That compares to on sales of $4.4 billion in 4Q 2014. Goodyear says sales were impacted by $339 million in unfavorable foreign currency translation.

Fourth-quarter segment operating income was $476 million, up nearly 33% from the previous year. Goodyear says the increase was driven by favorable price/mix net of raw materials and higher volume, partially offset by cost inflation and unfavorable foreign currency translation.

Tire unit volumes totaled 42.1 million, up 7% from 2014. Replacement tire shipments were up 9%, while OE unit volume was up 2%.

"Fourth-quarter earnings grew 16% in our North America business and 20% in Asia Pacific, both records," says Kramer. "Earnings in Europe, Middle East and Africa recovered in the quarter despite a challenging environment.

"Our record results reflect strong demand for our high-value-added Goodyear-brand tires and our focus on capturing the value of these products in the marketplace.”

Shareholder Return

Goodyear's board of directors has declared a quarterly dividend of 7 cents per share payable March 1, 2016, to shareholders of record on February 1, 2016. The company paid a quarterly dividend of 7 cents per share of common stock on Dec. 1, 2015.

As a part of its previously announced $450 million share repurchase program, the company repurchased 3 million shares of its common stock for $100 million during the fourth quarter.

On February 4, 2016, the company’s board of directors authorized a $650 million increase in the share repurchase program, bringing the total to $1.1 billion.

Goodyear says its record performance has resulted in "significant stock price appreciation during the three-year period ended Dec. 31, 2015." The company’s total shareholder return over this period totaled nearly 175%.

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CVS Health fourth-quarter profit, revenue rise

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CVS Health fourth-quarter profit, revenue rise

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GTY 477244346 A CGO FIN HTH MEC USA CA

Drug-store giant CVS Health's fourth-quarter net income rose 13% to $1.5 billion and its net revenue rose 11% to $41.1 billion, compared to the same period a year earlier.

The company's fourth-quarter earnings per share, excluding one-time items, were $1.53, equaling S&P Global Market Intelligence estimates.

CVS got a revenue boost from the completion in August of its acquisition of pharmacy services provider Omnicare.

But sales at the company's drug stores open at least a year — often used as a gauge to track a retailer's health — rose 1.7% for the full year and 3.5% for the quarter.

For the full year, same-store drug sales rose 4.5% while retail sales, known as front-end store products, fell 5% primarily because of the company discontinued the sale of tobacco products.

For the quarter, same-store drug sales rose 5% while retail sales declined 0.5%.

"We enjoyed a successful year in 2015, highlighted by excellent performance across our enterprise and two key acquisitions that support our strategy for growth," CVS CEO Larry Merlo said in a statement. "Overall, our leadership in multiple competencies enables us to provide superior value for patients, payors, and providers. We firmly believe that we have the right strategy for success in the evolving health care marketplace.”

The company now operates 9,655 stores after its $1.9 billion acquisition of big-box chain Target's 1,672 in-store pharmacies, a deal completed in December. CVS plans to renovate and rebrand those locations over the next six to eight months.

Excluding the Target locations, CVS opened 53 new stores in the fourth quarter and closed 19.

The company's pharmacy services segment posted increases in operating profit and revenue to $1.2 billion and $26.5 billion, respectively. The retail and long-term care division recorded increases in operating profit and revenue to $2.1 billion and $19.9 billion, respectively.

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Waste Connections Tops Q4 Expectations, Guides in Line for 2016 Revenue (NYSE:WCN)

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Waste Connections Tops Q4 Expectations, Guides in Line for 2016 Revenue (NYSE:WCN)

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Waste Connections Inc

Waste Connections (NYSE:WCN) reported Q4 revenue of $532 million, better than the analyst consensus of $525 million on Capital IQ. Adjusted earnings were $0.49 per share, vs. expectations of $0.47 per share. For the full year 2016, the company expects revenue of $2.20 to $2.22 billion, in line with the Street view of $2.21 billion.

The stock decreased 1.91% or $1.11 during the last trading session, hitting $57.09. About 1.17M shares traded hands. Waste Connections, Inc. (NYSE:WCN) has risen 23.12% since July 2, 2015 and is uptrending. It has outperformed by 32.60% the S&P500.

Waste Connections, Inc., an integrated municipal solid waste (MSW) services company, provides solid waste collection, transfer, disposal, and recycling services primarily in the United States. The company operates in four segments: Western, Central, Eastern, and Exploration and Production (E&P). It offers collection services to residential, commercial, industrial, and E&P customers; landfill disposal services; and recycling services for various recyclable materials, including compost, cardboard, office paper, plastic containers, glass bottles, and ferrous and aluminum metals.

The company also owns and operates transfer stations that receive compact and load waste to be transported to landfills or treatment facilities via truck, rail, or barge; and intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities. In addition, it provides E&P waste treatment, recovery, and disposal services for waste resulting from oil and natural gas exploration and production activity, such as drilling fluids, drill cuttings, completion fluids, and flowback water; production wastes and produced water during a well’s operating life; contaminated soils that require treatment during site reclamation; and substances that require clean-up after a spill, reserve pit clean-up, or pipeline rupture. Further, the company provides container and chassis sales and leasing services to its customers. As of December 31, 2014, it owned or operated a network of 148 solid waste collection operations; 69 transfer stations; 7 intermodal facilities; 35 recycling operations; 58 active MSW, E&P, and/or non-MSW landfills; 22 E&P liquid waste injection wells; 17 E&P waste treatment and recovery facilities; 20 oil recovery facilities; and 2 development stage landfills. Waste Connections, Inc. was founded in 1997 and is headquartered in The Woodlands, Texas.

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Zenefits CEO Parker Conrad Out Amid Compliance Concerns

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Zenefits CEO Parker Conrad Out Amid Compliance Concerns

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There’s a big shuffle happening at Zenefits today — with Zenefits CEO Parker Conrad exiting the company and COO David Sacks taking over. Conrad is also stepping down as a director of the company.

In an email to employees, Sacks noted that compliance issues that have plagued the company contributed to Conrad’s exit. Zenefits has hit significant turbulence, including missing revenue targets according to a Wall Street Journal report, and also running into issues with regulators.

“I believe that Zenefits has a great future ahead, but only if we do the right things. We sell insurance in a highly regulated industry,” Sacks wrote in an email to employees. “In order to do that, we must be properly licensed. For us, compliance is like oxygen. Without it, we die. The fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong. As a result, Parker has resigned.”

Zenefits has also added three new board members: Valor Equity Partners managing partner Antonio Gracias; TPG managing partner Bill McGlashan; and PayPal co-founder Peter Thiel.

Regulatory issues have plagued the company, as has been reported by BuzzFeed. Zenefits allowed unlicensed brokers to sell health insurance, leading to at least one commissioner to investigate the company in Washington State, according to a BuzzFeed report. Most recently, BuzzFeed reported 80 percent of the company’s deals in Washington State were done by unlicensed brokers.

“David is a strong leader who will take Zenefits to the next stage of development, as it evolves from a startup to a large-scale national leader,” Conrad said in a statement. “I am immensely proud of the organization we have built and the industrywide impact we’ve had but recognize that our company’s management infrastructure and policies haven’t kept pace with our meteoric growth. Elevating a strong management hand with successful experience and impeccable credentials is without a doubt in the best interests of the company at this time.”

The company also appointed Josh Stein, a former federal prosecutor and a VP of Legal, as Chief Compliance Officer. Stein will continue to oversee a review that Zenefits began last year to assess the company’s operations related to broker licensing and compliance, the company said.

Sacks, the former CEO of Yammer, is now in charge of another billion-plus-dollar company (with his last company selling to Microsoft for $1.2 billion). Zenefits previously raised $500 million at a $4.5 billion valuation largely on its highly aggressive revenue projections.

“In order to be a great company, integrity must be at the core of what we do. We must have integrity in our business practices, compliance obligations and internal processes,” Sacks wrote. “We must have integrity in our product. We must have integrity in our data and infrastructure. And we must have integrity in the way we treat each other.”

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Apollo Education Group, Owner of University of Phoenix, to Be Taken Private

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Apollo Education Group, Owner of University of Phoenix, to Be Taken Private

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A University of Phoenix campus in Philadelphia in 2004.

The troubled for-profit education company that owns the giant University of Phoenix agreed on Monday to be bought for $1.1 billion by a group of investors that includes a private equity firm with close ties to the Obama administration.

The university and its owner, the Apollo Education Group, have been subject to a series of state and federal investigations into allegations of shady recruiting, deceptive advertising and questionable financial aid practices.

In recent years, many for-profit educational institutions that have received billions of dollars in federal aid, including the University of Phoenix, have been pummeled by criticisms that they preyed upon veterans and low-income students, saddling them with outsize student loan debt and subpar instruction.

Moreover, at many of these schools, enrollment has been falling and profits shrinking, casting doubt on the future health of the industry.

The new owners, who said they are not relying on debt to pay for the acquisition, are promising to lead a clean-up of the for-profit education industry.

Vistria’s founder is Marty Nesbitt, one of President Obama’s closest friends and the chairman of the Obama Foundation. Mr. Nesbitt is also a longtime business partner of Penny Pritzker, the commerce secretary.

A Vistria partner and its chief operating officer, Tony Miller, was deputy secretary of the United States Department of Education between 2009 and 2013. He has been tapped to become the new chairman of Apollo Education Group in August, when the deal is scheduled to be completed.

The acquisition is subject to approval by both the Education Department and the accreditation group the Higher Learning Commission.

“For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices and poor compliance,” Mr. Miller said in a news release. “This doesn’t need to be the case.”

He said the University of Phoenix would operate “in a manner consistent with the highest ethical standards.”

But longtime critics of the for-profit education industry said that the new owners would find it difficult to balance the pursuit of such a high-minded approach with the challenge of reviving high profits for investors.

Barmak Nassirian, director of federal policy analysis at the American Association of State Colleges and Universities, argued that the premium of roughly 30 percent that investors paid over the previous month’s weighted stock average would not seem to be justified by the company’s recent record of anemic earnings and worsening forecasts.

The company in January reported an operating loss for its most recent quarter of $45.2 million, compared to operating income of $64.2 million for the same quarter a year earlier. Excluding special items, income from continuing operations in the most recent quarter was $31.3 million, slipping from $49.9 million a year earlier.

The university has also had to contend with a shrinking number of campuses, layoffs and tumbling enrollment.

In Mr. Nassirian’s view, putting the company “back on steroids” would require the kind of “overpromising and under-delivering” that got the educational company in trouble in the first place. “I don’t know what kind of cold fusion in the kitchen sink they think they can pull off,” he said.

Under the terms of the agreement, the investor consortium would pay $9.50 a share in cash for the outstanding shares of the Apollo Education Group. Its shares closed at $6.95 on Friday.

As of Friday’s close, Apollo Education stock was down 73 percent in the last 12 months. Its market value on Friday was a little more than $700 million. A decade ago, its shares were worth as much as $80 each.

Apollo Education’s stock soared 24 percent to $8.62 at the close of regular trading Monday. Apollo Global fell 4.9 percent to $12.94.

With the publicly traded company going private in an all-cash deal, details on the company’s operations — and challenges — will be much harder to come by.

“The sale of Apollo Education Group under the terms reported today means that the largest for-profit college chain in America is essentially going dark,” Senator Richard Durbin, a Democrat of Illinois, said. “We’ll know less than ever about the operations of one of the most heavily subsidized universities in America.”

Previous reports with the S.E.C. have noted that the Federal Trade Commission is looking into whether the Apollo Education Group engaged in deceptive advertising, while the California attorney general’s office is undertaking a broad investigation, with particular reference to its dealings with members of the United States military and the California National Guard.

A Defense Department ban, prohibiting the company from recruiting on its military bases or gaining access to additional federal tuition assistance, was lifted last month. But the company will be under heightened scrutiny by the Pentagon for another year.

The University of Phoenix and the rest of the industry also will be subject to new federal regulations aimed at cracking down on abusive practices.

Acknowledging “unprecedented volatility within our industry,” Greg Cappelli, the Apollo Education Group’s chief executive, said the new structure offers the company the “flexibility and runway it needs to complete the transformational plan at University of Phoenix.”

The deal represents the end of the company’s control by the family of John G. Sperling, who founded the company in 1973 and oversaw its jaw-dropping growth. He died in 2014. His son, Peter Sperling, who is currently chairman, will be replaced by Mr. Miller.


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Yelp Earnings Out, CFO Steps Down

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Yelp Earnings Out, CFO Steps Down

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Yelp just released its financials for Q4 and full year 2015 with revenue of 153.7 million (up 40% year-over-year) for the quarter.

Cumulative reviews grew 34% to approximately 95 million. Local advertising accounts grew 32% to approximately 111,000.

CEO Jeremy Stoppelman said, “We are pleased with the progress we made on the key initiatives we set at the beginning of 2015. We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us.”

The company also announced that CFO Rob Krolik is stepping down.

“Rob has played a crucial role in Yelp’s successful transition from startup to public company, bringing his professionalism and experience to bear in setting Yelp on a firm financial foundation and headed in the right direction,” said Stoppelman. “I am grateful for his counsel, his leadership and work on our public offerings and five acquisitions, and his efforts in opening facilities around the world to accommodate our more than 4,000 employees. I will miss his passion for Yelp and wish him continued success in his next endeavor.”

“I am a strong believer in the power of Yelp to help consumers and local businesses alike, which is why it has been such a tremendous opportunity and privilege to serve as CFO,” said Krolik. “It’s been a rewarding experience taking Yelp public, diversifying our offerings through acquisitions, and seeing our team deliver significant and consistent revenue growth year after year. After almost five years with Yelp, I am ready to take some time off to spend more time with family, but expect us to seamlessly transition to a new chief financial officer in the meantime.”

Here’s the release in its entirety:

SAN FRANCISCO, Feb. 8, 2016 /PRNewswire/ — Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the fourth quarter and full year ended December 31, 2015.

Yelp logo. (PRNewsFoto)
  • Net revenue was $153.7 million in the fourth quarter of 2015, reflecting 40% growth over the fourth quarter of 2014.
  • Cash flow from operations was $3.8 million in the fourth quarter. Adjusted EBITDA for the fourth quarter of 2015 was $17.5 million.
  • Cumulative reviews grew 34% year over year to approximately 95 million.
  • App Unique Devices grew 38% year over year to approximately 20 million on a monthly average basis1.
  • Local advertising accounts grew 32% year over year to approximately 111,000.

Net loss in the fourth quarter of 2015 was ($22.2) million, or ($0.29) per share, compared to net income of $32.7 million, or $0.42 per share, in the fourth quarter of 2014. Net loss for the fourth quarter of 2015 included an income tax expense of $20.3 million due to the recording of a valuation allowance against our deferred tax assets. Non-GAAP net income, which consists of net income excluding stock-based compensation, amortization and valuation allowance and release, was $9.0 million for the fourth quarter, or $0.11 per share, compared to $14.5 million, or $0.19 per share, in the fourth quarter of 2014.

Net revenue for the full year ended December 31, 2015 was $549.7 million, an increase of 46% compared to $377.5 million in the prior year. Adjusted EBITDA for the full year 2015 was $69.1 million compared to $70.9 million for the prior year. Net loss for the full year ended December 31, 2015 was ($32.9) million, or ($0.44) per share, compared to a net income of $36.5 million, or $0.48 per share, in 2014. Non-GAAP net income for the full year ended December 31, 2015 was $28.9 million, or $0.37 per share, compared to $36.3 million, or $0.47 per share in 2014.

“We are pleased with the progress we made on the key initiatives we set at the beginning of 2015,” said Jeremy Stoppelman, Yelp’s co-founder and chief executive officer. “We have evolved to a mobile-centric company and have successfully completed our transition to a performance-based advertising business. In 2016, our priorities are to continue to build our core local advertising business, further increase engagement and awareness and grow transactions. With our rich, relevant review content and highly engaged consumer traffic, we are well-positioned to capture the enormous opportunity ahead of us.”

“We delivered strong topline growth of 46% year over year as we surpassed half a billion dollars of revenue in 2015,” added Rob Krolik, Yelp’s chief financial officer.

Fourth Quarter Operating Summary

  • Local advertising revenue totaled $125.9 million, representing 35% growth compared to the fourth quarter of 2014.
  • Transactions revenue totaled $14.0 million, compared to $1.4 million in the fourth quarter of 2014, primarily due to the acquisition of Eat24 in the first quarter of 2015.
  • Brand advertising revenue totaled $7.1 million, representing an 18% decrease compared to the fourth quarter of 2014. Yelp has completed the phase out of its brand advertising product and will have no Brand advertising revenue in 2016.
  • Other revenue totaled $6.8 million which was flat compared to the fourth quarter of 2014.

Business Highlights

  • App engagement: Approximately 20 million unique devices accessed Yelp via the mobile app on a monthly average basis in the fourth quarter of 2015, an increase of 38% compared to the same period in 2014. In the fourth quarter of 2015, Yelp app users were more than 10 times as engaged as website users based on number of pages viewed.
  • Performance-based advertising: In 2015, Yelp completed its transition to a performance-based advertising business. As of the fourth quarter of 2015, 61% of local advertising revenue came from CPC advertisers, compared to 32% in the fourth quarter of 2014.
  • Eat24 & SeatMe: In 2015, Yelp acquired leading web and app-based online food ordering service Eat24. In the fourth quarter, Eat24 revenue growth accelerated, with revenue up approximately 80% compared to the fourth quarter of 2014. In the fourth quarter of 2015, over 15 million diners were seated through SeatMe, an increase of approximately 120% over the fourth quarter of 2014.

CFO Transition

The company announced that chief financial officer Rob Krolik will be stepping down and departing the company in the coming months. Krolik, who joined the company in 2011, will continue as chief financial officer until the earlier of the date a replacement is hired and December 15, 2016, and will assist in the search and transition. The company intends to immediately begin a search for a new chief financial officer.

“Rob has played a crucial role in Yelp’s successful transition from startup to public company, bringing his professionalism and experience to bear in setting Yelp on a firm financial foundation and headed in the right direction,” said Jeremy Stoppelman. “I am grateful for his counsel, his leadership and work on our public offerings and five acquisitions, and his efforts in opening facilities around the world to accommodate our more than 4,000 employees. I will miss his passion for Yelp and wish him continued success in his next endeavor.”

“I am a strong believer in the power of Yelp to help consumers and local businesses alike, which is why it has been such a tremendous opportunity and privilege to serve as CFO,” said Krolik. “It’s been a rewarding experience taking Yelp public, diversifying our offerings through acquisitions, and seeing our team deliver significant and consistent revenue growth year after year. After almost five years with Yelp, I am ready to take some time off to spend more time with family, but expect us to seamlessly transition to a new chief financial officer in the meantime.”

Business Outlook

As of today, Yelp is providing its outlook for the first quarter and full year of 2016.

  • For the first quarter of 2016, net revenue is expected to be in the range of $154 million to $157 million, representing growth of approximately 31% compared to the first quarter of 2015 at the the midpoint. Adjusted EBITDA is expected to be in the range of $10 million to $12 million. Stock-based compensation is expected to be in the range of $19 million to $21 million, and depreciation and amortization is expected to be approximately 5% of revenue.
  • For the full year of 2016, net revenue is expected to be in the range of $685 million to $700 million, representing growth of approximately 26% compared to full year 2015 at the midpoint. Adjusted EBITDA is expected to be in the range of $90 million to $105 million. Stock-based compensation is expected to be in the range of $83 million to $87 million, and depreciation and amortization is expected to be approximately 5% of revenue.

Quarterly Conference Call

To access the call, please dial 1 (866) 776-8879, or outside the U.S. 1 (440) 996-5670, with Passcode 29597481, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 4:00 p.m. PT February 8, 2016 and 11:59 p.m. PT February 15, 2016 by calling 1 (855) 859-2056 or 1 (800) 585-8367, with Passcode 29597481.  The replay will also be available on the Company’s website at http://www.yelp-ir.com.

About Yelp

Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Franciscoin July 2004. Since then, Yelp communities have taken hold in major metros across more than 30 countries. Approximately 20 million unique devices1 accessed Yelp via the Yelp app, approximately 75 million unique visitors visited Yelp via desktop computer2 and approximately 66 million unique visitors visited Yelp via mobile website3 on a monthly average basis during the fourth quarter of 2015. By the end of the same quarter, Yelpers had written approximately 95 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists.

1 Calculated as the number of unique devices accessing the app on a monthly average basis over a given three-month period, according to internal Yelp logs.

2 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via desktop computer on an average monthly basis over a given three-month period.

3 Calculated as the number of “users,” as measured by Google Analytics, accessing Yelp via mobile website on a monthly average basis over a given three-month period.

Non-GAAP Financial Measures

This press release includes information relating to adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, each of which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.” Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share have been included in this press release because they are key measures used by Yelp management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).

Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of Yelp’s financial results as reported under GAAP. Some of these limitations are:

  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA and non-GAAP net income do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • adjusted EBITDA does not reflect changes in, or cash requirements for, Yelp’s working capital needs;
  • adjusted EBITDA and non-GAAP net income do not consider the potentially dilutive impact of equity-based compensation;
  • non-GAAP net income does not reflect the impact of the valuation allowance release in the fourth quarter of 2014 or the recording of the valuation allowance in the fourth quarter of 2015;
  • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to Yelp; and
  • other companies, including those in Yelp’s industry, may calculate adjusted EBITDA and non-GAAP net income differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider adjusted EBITDA, non-GAAP net income and non-GAAP net income per share alongside other financial performance measures, including various cash flow metrics, net income (loss) and Yelp’s other GAAP results. Additionally, Yelp has not reconciled its adjusted EBITDA outlook for the first quarter and full year 2016 to its net income (loss) outlook because it does not provide an outlook for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of Yelp’s control and cannot be reasonably predicted, Yelp is unable to provide such an outlook. Accordingly, reconciliation to net income (loss) outlook for the first quarter and full year 2016 is not available without unreasonable effort. For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see the non-GAAP reconciliations included below in this press release.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on Yelp’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2016, Yelp’s priorities for 2016 and its ability to execute against those priorities, CFO transition and timing thereof, Yelp’s ability to improve its margins, Yelp’s ability to capture a meaningful share of the large local market, the future growth in Yelp revenue and continued investing by Yelp in its future growth, Yelp’s ability to drive daily usage and engagement (particularly on mobile), increase awareness of Yelp among consumers, and deliver value to local businesses, Yelp’s ability to increase transactions completed on its platform, Yelp’s ability to take advantage of trends toward app usage and native advertising and to become the leading destination for consumers connecting with great local businesses. Yelp’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: Yelp’s limited operating history in an evolving industry; Yelp’s ability to generate sufficient revenue to regain profitability, particularly in light of its significant ongoing sales and marketing expenses; Yelp’s ability to successfully manage acquisitions of new businesses, solutions or technologies, such as Eat24, and to integrate those businesses, solutions or technologies; Yelp’s reliance on traffic to its website from search engines like Google and Bing; Yelp’s ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding Yelp’s base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates; Yelp’s  ability to deal with the increasingly competitive local search environment; Yelp’s need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while Yelp continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; Yelp’s ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

More information about factors that could affect Yelp’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Yelp’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q at http://www.yelp-ir.com or theSEC’s website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to Yelp on the date hereof. Yelp assumes no obligation to update such statements.

Investor Relations Contact Information
Wendy Lim, Ronald Clark, Allie Dalglish
(415) 635-2412
ir@yelp.com

Media Contact Information
Shannon Eis
(415) 635-2478
seis@yelp.com
SOURCE Yelp Inc.

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ES Morning Update February 9th 2016

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ES Morning Update February 9th 2016

 

11041786-2e8a-4b55-9ea0-d508ca578ca1Falling trendline is strong resistance should the market turn back up today.

The line in the sand for the bulls to hold is this rising trendline.

MACD's on the this 2 hour chart still have room to go on the upside but the 6 hour chart has yet to turn back up.

Looking at the various time frame the market could be making a "higher low" today and then reverse back later in the day (it is "Turn-around Tuesday").  But this could also be a wave 4 up with the market completing its' wave 3 down at yesterdays' low.  This suggests a final wave 5 down to possibly the 1780 SPX area of support to complete the pattern from the 1940 area high.

It's too early to know which pattern will play out yet.  It's really about that rising support line... break it and it's likely a wave 5 down we are in.  Hold it and it's likely some kind of B wave down with the A up from the low yesterday into the close.  If this is the case then there should be a C up into a likely top "no later" then this Thursday.

This week is the week prior to the monthly option expiration week, which is always the 3rd week of every month.  It's common to put in a low on the Thurs/Fri of the week prior to that expiration... which is this week.  So, a low of some kind is expected by the end of this week... the question is, will it be a "higher low" or "lower low" then yesterday?

Yesterday we only hit a low of 1828 on the SPX and the next level of support below that was 1818 area, which is a double bottom basically (actual prior low was 1812).  That level would be the next level down should the rising support line break (and since it's so close to a double bottom from yesterday we'll lump that whole range in as the 1st level of support).  The 3rd level of support is the 1780 SPX area... 4th level 1730 area.

This early morning session should really be hard to figure out as the market will likely dance around the first support zone for quite awhile to tease both bulls and bears until it decides on the next move.  Unfortunately, I don't know what the plan is?  Odds are still good for that Thurs/Fri low and next week is usually bullish.  But right now, the bears have the bulls by the horns and they don't want to let go.

Giant Royal Caribbean ship damaged in ‘extreme’ storm

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Giant Royal Caribbean ship damaged in ‘extreme’ storm

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A Royal Caribbean cruise ship with nearly 5,000 passengers is headed to Port Canaveral today after hurricane-force winds and waves battered the vessel off the South Carolina Coast.

One of the world's newest and biggest cruise ships on Sunday was caught in a storm so powerful that the captain ordered passengers confined to their cabins for safety.

Royal Caribbean's 168,666-ton Anthem of the Seas experienced "extreme wind and sea conditions" that were not expected as it was sailing south from the New York area to Port Canaveral, Fla., according to a Royal Caribbean statement sent to USA TODAY.

Four passengers were injured during the event, though none seriously, according to spokeswoman Cynthia Martinez. The ship is returning to Bayonne, N.J., its home port, and the remainder of the voyage is being cancelled.

Passengers tweeting from Anthem describe hurricane-force winds and giant waves that rocked the vessel wildly, overturning furniture, smashing glassware and collapsing part of a ceiling in a public corridor. Photos posted by passengers show damage in several areas.

"I'm not going to lie: It was truly terrifying," said Robert Huschka, executive editor of the Detroit Free Press, part of the USA TODAY Network. Huschka is on board the ship with his family.

"A very nervous cruise director kept coming on. He didn't sound very reassuring. He said, 'We are okay,'" Huschka said.

Huschka said the captain of the vessel made an announcement at about 3:30 PM on Sunday as the storm raged that passengers should remain in their cabins, saying the strength of the storm had surprised everyone and that the ship would hold position and try to turn into it. The captain then was unavailable for announcements as the storm continued into the evening.

The situation began to improve late in the evening, and by 1:00 AM on Monday the ship had resumed sailing.

"The captain told everyone this morning that the day was among his most challenging -- if not his most challenging -- at sea," Huschka said.

A buoy in the Atlantic about 260 miles south of Cape Hatteras reported wave heights of 30 feet and wind gusts of 74 mph late Sunday, according to the National Oceanic and Atmospheric Administration. A screen shot of the wind gauge on Anthem cabin TVs posted by a passenger on Twitter shows wind speeds as high as 106 knots, the equivalent of 122 miles per hour.

A passenger posting on a message board at CruiseCritic.com reported waves crashing as high as the Deck 5 promenade, with water seeping into the ship through the doorways before watertight doors were closed. Another passenger posting at CruiseCritic.com said a large white structure broke off the top of the vessel and landed in a pool.

Still, Huschka said most of the damage to the ship appeared superficial, with "lots of broken glass, especially on the pool deck."  Water came in through some balcony doors and now is being mopped up or dried with blowers, he added.

One thing that was unaffected by the storm: The TV signal bringing in the Super Bowl on Sunday evening.  It was "perfect picture during the height of the storm," Huschka said. "That certainly improved my mood."

The center's first alert was issued on Friday at 1:00 p.m. for "developing hurricane-force winds" for Sunday, according to NOAA spokeswoman Susan Buchanan.Royal Caribbean said in its statement that the wind speeds that Anthem experienced on Sunday were "higher than what was forecasted" for the area. But federal forecasters from NOAA's Ocean Prediction Center had warned of a strong storm in the Atlantic for four days before Sunday.

The first official warning product was included in the offshore waters forecast at 3:34 p.m. on Saturday, Buchanan said. It included a warning for hurricane-force winds increasing to 63-75 mph, in effect through Sunday night.

In a second statement on Monday, Royal Caribbean said the decision to return to the New York area was made due to forecasts of poor weather over the next few days that is likely to impact the ship’s original itinerary.

"We are also sensitive to the fact that our guests have already been through an uncomfortable ride," the statement said. "Returning to Cape Liberty minimizes the risks of further bad weather affecting our guests’ voyage; we are optimistic that they will have a smooth sail home."

Royal Caribbean said passengers will receive full refunds of the fare they paid for the cruise and a credit for a future cruise equal to 50% of the fare.

"We know it was tough day on Sunday and apologize for (passenger) discomfort," the line said. "Safety is our highest priority and ships are designed to withstand even more extreme circumstances than Anthem of the Seas encountered. While the weather was unpleasant, the ship remained seaworthy at all times."

Anthem is carrying 4,529 passengers and 1,616 crew, according to a spokeswoman. It's on a seven-night voyage from its home base in the New York area to Florida and the Bahamas that began on Saturday.

Christened in April 2015, Anthem is tied with sister vessel Quantum of the Seas as the third largest cruise ship ever built.

USA TODAY Cruise was among a handful of U.S. media outlets to get early access to Anthem before its christening in Southampton, England. For our deck-by-deck tour of the vessel's interior areas and cabins, scroll through the carousels below.

INSIDE LOOK AT ROYAL CARIBBEAN'S QUANTUM CLASS Meet Anthem of the Seas 32-foot mascot | 01:05

Gigi the giraffe is stealing the show on Royal Caribbean’s newest Quantum class ship, Anthem of the Seas. The 32-foot tall mascot made quite a journey to get on board the ship!
VPC

Royal Caribbean's Quantum of the Sea set sail from Southampton, Great Britain for its inaugural cruise on Friday, October 31, 2014.

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University of Phoenix parent company to go private

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University of Phoenix parent company to go private

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Apollo Education Group, the publicly-traded owner of the University of Phoenix, has agreed to be taken private by a group of investors in a $1.1. billion deal.

The agreement arrives weeks after the company reported a decline in revenue and another round of layoffs at the for-profit college. Phoenix, like other for-profit schools, has been battered by poor enrollment, government investigations and heightened federal regulation.

In a statement, Apollo chief Greg Cappelli said the takeover will give his team “the flexibility and runway it needs to complete the transformational plan at University of Phoenix, which will enable us to serve our students more effectively during a period of unprecedented volatility within our industry.”

The consortium of investors, including the Vistria Group, funds affiliated with Apollo Group Management and Najafi Cos., are offering $9.50 a share in cash for the outstanding shares of the company. That represents a 44 percent premiums over Apollo’s closing price on Jan. 8, when the board of directors said it was considering its options.

The deal, which is subject to shareholder approval, has been blessed by Apollo’s board. It must also get a thumbs-up from the Department of Education and the Higher Learning Commission, an accreditation group. Apollo expects the deal to close by the end of its fiscal year in August. Once the transaction is completed, Tony Miller, chief operating officer of Vistria, will become chairman of the Apollo board.

“For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices and poor compliance. This doesn’t need to be the case,” said Miller, who served as deputy secretary at the Department of Education from 2009 to 2013.

He added: “We are committed to accelerating and enhancing efforts to establish University of Phoenix as the leading provider of quality higher education for working adults and to continue supporting the organization’s commitment to operating in a manner consistent with the highest ethical standards.”

One of the world’s largest private education companies, Apollo got its start in 1973. The company, based in Phoenix, runs schools that provide undergraduate, graduate and career training throughout the United States, Asia, Africa, Australia, Europe and Latin America.

Profits at Apollo have continued to slide over the last few years, with the company posting an operating loss of $61 million in the quarter ending Nov. 30. Sluggish enrollment at the University of Phoenix has put a damper on revenue. Average enrollment in degree programs tumbled 20 percent to 183,800 during that same quarter.

The university has been at the center of several state and federal investigations into its recruitment and marketing practices. Late last year, the Defense Department suspended the school from recruiting on military bases and accessing federal education funding for allegedly violating an executive order preventing for-profit colleges from gaining preferential access to the military.

Earlier this month, the DOD lifted the ban but said it would continue to monitor the school, the largest recipient of federal student aid for veterans, taking in nearly $1.2 billion in GI Bill benefits since 2009. Phoenix is still under investigation by the Federal Trade Commission for deceptive advertising and marketing. The regulator requested information about the school’s military recruitment, enrollment and student retention, among other things.

Apollo is not the first company to go private in an attempt to save a flagging business. Education Management Corp. (EDMC), which operates the Art Institutes, Argosy University, Brown Mackie College and South University, went private in 2006, using the flush of new capital to grow its online business. The move, however, was not enough to shield the school from a downturn in business. And it went public again in 2009.

“As we’ve seen in the past with EDMC, taking one of these companies private doesn’t always result in better results down the line,” said Ben Miller, senior director for postsecondary education at the Center for American Progress. “On the positive side, [Apollo] going private should mean less pressure for quarterly targets that could have led to bad behavior like pursuing students at all costs. On the downside, it means a lot less transparency.”

Danielle Douglas-Gabriel covers the economics of education, writing about the financial lives of students from when they take out student debt through their experiences in the job market. Before that, she wrote about the banking industry.

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Is that Quicken Loans Super Bowl ad an omen of another housing crash?

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Is that Quicken Loans Super Bowl ad an omen of another housing crash?

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“Here’s what we were thinking: what if we did for mortgages what the Internet did for buying music, and plane tickets and shoes?"

Quicken Loans asked in their 60-second Super Bowl ad Sunday, where the company advertised their new online tool Rocket Mortgage.

Using Rocket Mortgage, future homebuyers can get a mortgage on their phones, according to the ad. And more homebuyers are good for America, the ad suggests, because they encourage patriotic consumption with more people buying more stuff like couches, blenders and lamps.

“What we’re saying is that a strong housing market filled with responsible homeowners is important to the economy,” Quicken Loan’s chief executive Bill Emerson tells The Wall Street Journal.

While some criticized the ad’s promotion of unabated consumerism, most took issue with the way it evokes the environment leading up to the 2007-2009 subprime mortgage crisis, especially punctuated by the ending tagline: “Push Button, Get Mortgage.” That crisis led directly to a global financial crisis, and then to the Great Recession.

Financial experts and pundits alike took to Twitter:

The same global meltdown that was interpreted in a recent film.

Based on the 2010 book by Michael Lewis, "The Big Short" explains in detail what happened in the housing market that led to the 2008 financial crisis. Some have described it as the first film to explain the financial concepts and shortcomings of the housing market to a mainstream audience. Director Adam McKay uses celebrities like Margot Robbie and Selena Gomez to explain confusing investment lingo to viewers.

While the movie is both educational and entertaining, it speaks to the fears and financial failures of American homeowners.

“For those who vividly remember the crisis, the movie can be stressful at times, showing all the points at which safety mechanisms failed to kick in,” Atlantic writers Bourree Lam and Gillian B. White explained. “For those who don’t remember or weren’t paying close attention, it’s a good primer on how the recession started. For both groups, it’s worth watching.”

For some, the Quicken Loans' Super Bowl ad was a harbinger. CNET’s Chris Matyszczyk’s says Quicken Loans’ ad is so strongly reminiscent of pre-2008 behavior that it might “send a shiver down your spine.”

Quicken company officials say the app advertised facilitates the loan application process, but it does not encourage irresponsible lending.

“I don’t see any harm in those who qualify getting a mortgage more easily,” Quicken Loans President and Chief Marketing Officer Jay Farner tells CNET. “We think the American dream is an important thing. And our research tells us it’s an important thing. All we’re trying to say is, That’s good.”

Quicken isn’t going back to pre-2008 lending, Mr. Emerson tells The Wall Street Journal, because “those programs don’t exist anymore.”

Instead, his company is trying to engage the qualified homeowners who “don’t want to get engaged because they’re afraid of the process” says Emerson. “If we could give them an opportunity to interact with technology, understand the operation, maybe we could get some of these folks who qualify off the sidelines.”

Quicken’s track record should also be noted. The company avoided most subprime products around the turn of the century, making it one of the only large nonbank lenders to make it out of the 2008 crisis alive.

In fact, says Mr. Farner, the convenient new Rocket Mortgage app could actually help raise buyers' education levels.

“I think that everyone is realizing it’s time for the housing industry to advance,” Farner tells CNN, “in our mind that is about transparency.” 

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University of Phoenix owner to be sold amid shrinking enrollment

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University of Phoenix owner to be sold amid shrinking enrollment

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PNI

The owner of the for-profit University of Phoenix will go private in a sale to a group of investors amid shrinking enrollment and revenue.

A group of investors — including The Vistria Group, Apollo Global Management affiliates and Najafi Companies — agreed to acquire the publicly traded Apollo Education Group (APOL) in a $1.1 billion deal.

Apollo Education will become a privately run company in a deal expected to close in August, pending regulatory approvals.

Former U.S. Department of Education Deputy Secretary Tony Miller, who is now partner and chief operating officer of The Vistria Group, will become chairman.

The deal comes as the University of Phoenix grapples with plunging interest in its courses. The school's average degreed enrollment fell 20% to 183,800 in the quarter ended Nov. 30, compared with the same period a year earlier. 

Net revenue for Apollo Education Group declined 18% during the same period to $586 million, and the company swung from a profit of $34 million to a loss of $61 million.

“This new structure will allow Apollo Education Group the flexibility and runway it needs to complete the transformational plan at University of Phoenix, which will enable us to serve our students more effectively during a period of unprecedented volatility within our industry," Apollo Education Group CEO Greg Cappelli said in a statement. "We will also continue to expand our international operations and remain committed to driving principles of operating excellence."

The deal values Apollo Education Group at $9.50 per share, representing a 30% premium over the average price for the 30-day period ended Friday. Shares rose 27.8% to $8.88 in pre-market trading.

The agreement also comes as the company is under investigation by the Federal Trade Commission for potentially unfair or deceptive business practices.

Miller, who served in the State Department during President Obama's first term, said the University of Phoenix can thrive as a "leading provider of quality higher education for working adults" operating with the "highest ethical standards.”

“We are excited by the opportunity to build on the transformational work being done by the company,” he said. “For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance. This doesn’t need to be the case."

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Janet Yellen is finding herself increasingly fenced in

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Janet Yellen is finding herself increasingly fenced in

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Federal Reserve Chair Janet Yellen's task is growing more intractable every day. And believe it or not, Friday's jobs report featuring a drop in the unemployment rate to 4.9 percent has made it only more difficult.

Back in December, encouraged by labor market gains and solid economic data, her policymaking committee raised interest rates by 0.25 percent, the first hike since 2006. What followed has been an embarrassment: Global financial market turmoil, a wipeout in crude oil prices, a stalling U.S. economy and a collapse in bond market expectations about inflation and rate hikes.

The Fed's December rate hike forecast fingered four quarter-point increases in 2016. However, the futures market assigns only a 50 percent chance of any rate hikes this year. As Yellen heads into her semi-annual testimony to Congress on Wednesday, it's an understatement to say she faces a difficult policy environment.

Whether she can navigate it successfully will determine the path of stock prices, oil prices, the dollar, job growth and the strength of GDP growth in the months to come.

The problem is that the labor market seems to be tightening -- despite a comedown in the pace of U.S. economic growth as well as slowing corporate earnings growth. The labor tightness is resulting from falling productivity, fewer qualified applicants and the still-low percentage of Americans in the labor force. Wage inflation is also on the rise.

Taken together, all of this feels a little "stagflation-y" because it suggests the economy could get the job and wage gains we've been waiting for, but in a way that's bad for the stock market and the overall economy.

If that dynamic deepens, Yellen will have no easy policy prescriptions. Should she continue the rate hikes based on job market nearing full employment and the specter of higher wage inflation? Or should she delay based on crude oil's drag on inflation, the stronger dollar's drag on earnings and a volatile stock market's drag on financial conditions and economic growth?

Just look at the jobs report. The unemployment rate has fallen below the 5 percent threshold for the first time since the recession ended, hitting 4.9 percent for January. But nonfarm payrolls increased only 151,000 vs. the 190,000 gain expected and well below the 236,000 average of the last six months. A mixed picture.

Average hourly earnings were a bright spot, rising 0.5 percent on a monthly basis vs. the expectation of a 0.3 percent rise. The annual hourly earnings increased by 2.5 percent from 2.2 percent previously, but this merely returns wage gains to the pace seen over the past year.

citigroup.jpg

And yet, according to the Citigroup Economic Surprise Index, which measures how U.S. economic data is coming in relative to expectations, the economy has slowed to a pace not seen since late 2014. This is down sharply from the highs at the end of 2015 when the Fed decided, based on the economic data, to raise interest rates.

Clearly, the situation has changed.

We'll know more when Yellen makes her testimony. We'll also get another reading on the jobs market when the Job Openings and Labor Turnover Survey is released on Tuesday. Friday will bring updates on retail sales, business inventories and consumer sentiment.

Deutsche Bank analysts expect Yellen to stress patience in waiting to see further improvement on the inflation front given fresh weakness in crude oil prices as well as the tightening of financial conditions from the recent market volatility. Paul Ashworth at Capital Economics believes the Fed won't raise rates until June at the earliest. He sees monetary policy depending on fears about a collapse in China and a U.S. economic slowdown, as well as a leveling off of commodity prices.

But don't discount the rising possibility that the Fed won't hike rates at all this year as Yellen awaits confirmation that job growth, inflation and energy prices are going to stabilize first.

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China’s foreign currency stockpile fell nearly $100 billion last month

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China’s foreign currency stockpile fell nearly $100 billion last month

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China's richest man isn't worried about economic slowdown

China's stash of cash continues to shrink as the country tries to fend off pressure on its currency.

Its foreign exchange reserves dropped $99.5 billion in January to $3.23 trillion, the lowest level since 2012, the central bank said Sunday.

The January decline follows a record fall of around $108 billion in December, and analysts say Beijing can't keep eating into its currency stockpile indefinitely.

The $3.23 trillion China has left "still represents a substantial war chest," said Rajiv Biswas, chief Asia-Pacific economist at IHS Global Insight. But he warned that "the mathematics around this rapid pace of depletion of FX reserves in recent months is simply unsustainable for any length of time."

As the Chinese economy slows down after decades of torrid growth, many investors are trying to move funds out of the country in search of better returns elsewhere. When money leaves China, it means people are trading their Chinese yuan for dollars, euros and other currencies.

That puts pressure on the yuan, which is down about 1.2% against the dollar since the start of the year. It has lost about 5% over the past 12 months.

China appears to be trying to balance that by using its reserves of foreign currencies to buy yuan. It's a strategy many countries use, but it can drain the central bank's "rainy day" reserve fund.

As the Chinese central bank "desperately tries to stabilize the yuan, domestic private investors as well as global currency traders and hedge funds continue to see a one-way bet against the yuan," Biswas wrote in a commentary note.

"This has resulted in large-scale private capital outflows out of the yuan since early 2015, as expectations mount that eventually the [People's Bank of China] will be forced to capitulate once its FX reserves are sufficiently depleted," he said.

Analysts have estimated that hundreds of billions of dollars -- perhaps as much as $1 trillion -- poured out of China last year. Investor confidence hasn't been helped by steep drops in Chinese stocks and a struggling real estate market.

Capital flight is something the government has long been worried about.

China limits the amount of money an individual can move out of the country to $50,000 per year. In response to the increase in money flowing out, Beijing has taken further steps to try to close off ways through which extra funds could leak out. In September, it clamped down on the amount of cash its citizens can withdraw from ATMs overseas.

"The PBOC is caught between the devil and the deep blue sea, facing a choice of either continued slow erosion of FX reserves, or a rapid currency adjustment that could be destabilizing for China and plunge global currency markets into turmoil," Biswas said.

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Environmental group wants Indian Point nuclear power plant closed during probe after radioactive water leak

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Environmental group wants Indian Point nuclear power plant closed during probe after radioactive water leak

[ad_1]AN APRIL 27 2007 FILE PHOTOInvestigators are trying to determine how radioactive water spilled into an underground well at the Indian Point nuclear power plant.

Environmental watchdogs are calling for the Indian Point nuclear power plant to shut down while investigators try to determine how an apparent overflow spilled highly radioactive water into an underground well.

“Indian Point had seven different malfunctions since May of 2015 . . . the next one could be a catastrophe,” Paul Gallay, president of Riverkeeper, said Sunday.

“The stakes are just too high,” said Gallay, whose group is dedicated to protecting the Hudson River and the drinking water supply of 9 million city and Hudson Valley residents.

Entergy Corp., which runs the plant, said three monitoring wells out of several dozen at Indian Point showed elevated levels of tritium after the leak, which was discovered Friday.

“There is zero consequence to public health or safety as a result of this matter. Therefore, statements calling for the plants to close do not make any sense,” said Jerry Nappi, a spokesman for Entergy.

“Indian Point is online an average of more than 90% of the time, reliably providing electricity for about 2 million residences in New York City and Westchester County,” he said.

Officials at the state Department of Environmental Conservation said Entergy first collected samples showing elevated levels of tritium on Jan. 26 and Jan. 28. Entergy managers received the lab results on Wednesday.

Gov. Cuomo ordered the state health and environmental conservation commissioners to investigate the incident.Overflow of water with radioactive tritium at Indian Point nuclear power plant has "zero consequence to public health or safety," said owner Entergy Corp.Overflow of water with radioactive tritium at Indian Point nuclear power plant has "zero consequence to public health or safety," said owner Entergy Corp.

“This is not the first such release of radioactive water at Indian Point, nor is this the first time that Indian Point has experienced significant failure in its operation and maintenance,” Cuomo said in a letter to acting Department of Environmental Conservation Commissioner Basil Seggos and Health Commissioner Howard Zucker.

“This failure continues to demonstrate that Indian Point cannot continue to operate in a manner that is protective of public health and the environment,” the governor’s letter said.

Officials at the Nuclear Regulatory Commission said the leak was caused by a drain that overflowed while workers were transferring water containing high levels of radioactive contamination.

“If you are the 45-year-old Indian Point nuclear power plant, you malfunction — it’s just what you do,” said Gallay. “This plant isn’t safe anymore.”

Cuomo and his administration have asked federal officials not to extend the license of the Indian Point plants, noting that there is no effective safety and evacuation plan for the more than 20 million people who live within 50 miles of the site.

The nuclear plant located roughly 35 miles north of the city has a history of groundwater contamination.

A federal oversight agency issued a report after about 100,000 gallons of tritium-tainted water entered the groundwater supply in 2009, and elevated levels of tritium also were found in two monitoring wells at the plant in 2014.

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Super Bowl ads: What financial crisis?

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Super Bowl ads: What financial crisis?

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This image provided by Amazon shows a scene from the company’s spot for Super Bowl 50, with Alec Baldwin, center right, and Missy Elliott, right. (Amazon via AP) (Associated Press)

By Associated Press February 7 at 6:37 PM

NEW YORK — The latest developments in Super Bowl commercials before, during and after the Big Game:

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6:30 p.m.

Does Quicken Loans remember the financial crisis? The game hasn’t started, but its ad has already ruffled feathers on Twitter.

The ad touts the simplicity of getting Quicken’s “Rocket Mortgage” on a mobile phone — a jarring reminder to some of the housing bubble and subsequent financial crisis. The ad was released early online, and is set to air during the first quarter.

A narrator paints a scenario where a “tidal wave of ownership floods the country with new homeowners, who now must own other things.” Then she asks, “Isn’t that the power of America itself?”

It’s one of those ads where convenience blends seamlessly into unabashed consumerism that struck some viewers as tone-deaf after the housing bubble.

The spot ends with the words “Push Button Get Mortgage” flashing on the screen.

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5:00 p.m.

Watch out for celebrities, cute animals and humor. Super Bowl advertisers are turning to a mix of tried-and-true crowd pleasers for the game’s 50th anniversary.

With a 30-second spot costing an estimate $5 million, many advertisers are skipping the crass humor to play it relatively safe.

Uplifting messages and “cause advertising” also give this year’s ads a more grown-up feel. Budweiser features British actress Helen Mirren telling people why drunken driving is a bad idea. SunTrust urges people to let go of financial stress. Colgate Palmolive tells people to “Save Water.”

Many companies also released ads online early in hopes of generating extra buzz. But there are still a few surprises left, with Taco Bell, Chrysler and Coke yet to release their ads.

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German Regulator Orders Halt to Maple Bank Transactions

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German Regulator Orders Halt to Maple Bank Transactions

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Wendelin Wiedeking in November 2008, when he was the chief executive of Porsche. He and the former chief financial officer are on trial on charges that they deliberately misled investors in October 2008 to drive up the Volkswagen share price.

FRANKFURT — German regulators said on Sunday that they had imposed a moratorium on business activity by a niche investment bank in Frankfurt that played a prominent role in attempts by the Porsche family to take over Volkswagen several years ago.

The German banking regulator, known as Bafin, said that it ordered a halt to financial transactions by Maple Bank, the German subsidiary of Maple Financial Group of Canada. With obligations of about 2.6 billion euros, or $2.9 billion, the bank is overly indebted, Bafin said. Maple Bank is also the target of a tax evasion investigation that led to raids on bank offices in September.

It was the first time since December 2012 that German regulators have ordered a bank to close. Maple Bank has about €5 billion in assets and is not big enough to pose a threat to the stability of the financial system, Bafin said in a statement.

No one answered the phone at Maple Bank offices in Frankfurt on Sunday, and bank employees did not respond to emails seeking comment.

Maple Bank was at the center of an attempt in 2008 by Porsche, the sports car maker, and its family owners to take over Volkswagen. The takeover bid is also the focus of a criminal trial underway in Stuttgart, Germany, against two former Porsche executives accused of market manipulation.

Maple Bank, which advertises on its website that it specializes in market transactions, helped Porsche lock up Volkswagen shares using a complex combination of derivatives.

Porsche eventually failed to achieve its goal of acquiring 75 percent of Volkswagen, and Volkswagen wound up buying Porsche instead. However, the deal left the Porsche family with a majority of Volkswagen’s voting shares and four seats on the supervisory board. In addition, the chairman of the Volkswagen supervisory board, Hans Dieter Pötsch, is closely associated with the family.

The Porsche family’s oversight of Volkswagen came under criticism on Sunday from the head of Norway’s Government Pension Fund, which — with $800 billion in assets — is one of the largest sovereign wealth funds in the world.

The fund, which invests Norway’s oil wealth, has a 1.2 percent stake in Volkswagen. The carmaker, based in Wolfsburg, Germany, has been tainted by its admission in September that it programmed 11 million cars to cheat on emissions tests.

Yngve Slyngstad, the chief executive of the Norwegian fund, said in an interview with the Frankfurter Allgemeine newspaper published on Sunday that, in the wake of the scandal, the Porsche family has not been open to suggestions for overhauls.

“I don’t think that the family owners will change anything in the structure” of Volkswagen, Mr. Slyngstad said. “The family does not give us as co-owners the impression that they want to listen to us.”

Wendelin Wiedeking, the former chief executive of Porsche, and Holger Härter, the former chief financial officer, are on trial in Stuttgart on charges that they deliberately misled investors in October 2008 to drive up the Volkswagen share price. Porsche was threatened financially at the time, according to prosecutors, because a sharp decline in Volkswagen shares forced it to post cash to protect Maple Bank from losses.

At the time, Porsche had acquired 42.6 percent of Volkswagen voting shares and options equal to an additional 31.5 percent. News that Porsche had locked up 74.1 percent of Volkswagen shocked investors and provoked a scramble by hedge funds that had bet the shares would fall and needed to cover their positions.

Volkswagen shares soared because only a fraction of the company was available for trading on stock markets.

Mr. Wiedeking and Mr. Härter are contesting the charges. A verdict is expected by the end of February.

Porsche SE, the Porsche family holding company, has not had any business dealings with Maple Bank for several years and has no financial exposure to it, Albrecht Bamler, a spokesman for Porsche, said on Sunday.


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