FLINT, Mich. – People who want to help Flint, Michigan, cope with its water crisis are flocking to GoFundMe to create campaigns and donate money.
More than 5,000 donors had given over $200,000 to more than 65 campaigns by Saturday afternoon.
The money will go toward things like purchasing bottles of water, water filters and even bags of fresh fruit and vegetables.
One account is even raising money to offset the costs incurred by the Virginia Tech researchers who first tested the water and found unsafe levels of lead.
Many of the campaigns even plan to deliver the water themselves to those who can’t make it to distribution sites.
In response to the outpouring of support, GoFundMe itself is making its own contribution — the campaign that raises the most money will get an extra $10,000.
The contest period started Friday and will last until January 29.
Dan Pfeiffer, GoFundMe’s director of communications, said the purpose of the contest was to stage a friendly competition among the campaigns and encourage them to raise more money.
On Saturday afternoon, the campaign to beat was the “Water Aid for Flint, MI,” which raised more than $47,000 in 15 days.
Pfeiffer said this is the first time GoFundMe has held a donation-raising contest since its founding in 2010.
It’s not the first time the company has given to campaigns, however. After the shootings in San Bernardino, the company gave a gift of $10,000 to a crowdfunding effort started by the city’s mayor.
The $10,000 is GoFundMe’s response to charitable campaigns that have asked it to waive the 5% fee it charges on every donation. (GoFundMe won’t be waiving the fee.)
“We’ve already seen a huge uptick in donations since we started the contest,” Pfeiffer said.
Filing a tax return isn't exactly fun for many people, but it doesn't need to be too difficult. With some smart planning, as well as some software-provided assistance, you can make the process as painless as possible. Here are five suggestions that can help you do just that.
Get organized If you haven't done so already, gather all of the documentation you may need before you sit down to prepare your tax return. This includes any mail you received that had the designation "tax document enclosed," as well as any necessary receipts you may need.
This is by no means a complete checklist, but here are some items you should gather before starting your return.
W-2 and 1099 forms, including those for dividend and interest income
Mortgage interest (Form 1098), mortgage insurance, and property tax information
Student loan interest information (Form 1098-E)
Tuition and fees documentation
Cancelled checks that can back up any donations you claim (see this article for a thorough discussion on charitable donation documentation requirements)
Medical bills exceeding 10% of your income
Documentation of contributions to your traditional IRA or similar retirement account
All receipts to document unreimbursed business expenses and other deductible items
Get a playbook Let's face it -- there is no way you're going to memorize the entire United States tax code before you file your 2015 tax return, but you still need to be able to find relevant information.
Because of this, one smart way to make your life easier at tax time is to download a copy of IRS Publication 17, called "Your Federal Income Tax." This publication explains the tax law, and provides all of the general rules for filing your return that you are likely to need.
In this guide, you can find such information as:
Who needs to file a tax return
Which tax form you should use
When your return is due, and how extensions work
An explanation of the various tax deductions you may qualify for
How you can get help from the IRS
Important addresses, websites, and phone numbers
Now, I realize that a 288-page document may seem odd to include in a list of things that can make your life easier. However, think of Publication 17 like a dictionary: You're not going to use all of the information in there, but when you need even one small tidbit of information, you'll be glad you got it.
Decide how you want to prepare your return Most people these days file their returns electronically, and there are several excellent tax preparation software programs such as TaxACT, TurboTax, and H&R Block that can make the process easier.
If you earn less than $62,000 per year, it may not cost you a dime to use one of these, thanks to the IRS' Free File program. The Free File program is a public-private partnership between the IRS and tax-prep software providers, designed to allow low- and moderate-income taxpayers to file their Federal returns at no cost.
As of this writing, there are 13 providers listed on the IRS website, and each one has different eligibility criteria. For example, TaxACT's Free File is available to taxpayers with adjusted gross income of $50,000 or less, and who are either under 57 years old or eligible for the Earned Income Tax Credit. Taxpayers residing in certain states can also file their state return for free. Jackson Hewitt's software is available for Free File taxpayers who earn up to $62,000, but the maximum age of eligibility is 49.
According to the IRS, 70% of taxpayers qualify for at least one of the Free File software programs, so it's definitely worth looking into if you earn less than the cap. If you don't qualify, you can shop around and find a paid product from one of these software providers for a fee, which many people consider to be well worth it.
Better yet, you may qualify for free help In addition to the Free File program, there are two programs run by the IRS and staffed by volunteers that could provide free tax help if you are over 60 years old or if your AGI is under $54,000.
First, the Volunteer Income Tax Assistance (VITA) program provides free tax help to people who make less than $54,000, as well as people with disabilities and those who speak limited English. Also, the Tax Counseling for the Elderly (TCE) program provides assistance to taxpayers over age 60, and its volunteers are trained to handle senior-specific issues such as pensions and other retirement issues.
There are VITA and TCE sites all over the U.S., and the IRS can help you find one. The volunteers will help you fill out a variety of tax forms, and you just need to bring documentation and identification.
Make time I can tell you from experience that the easiest way to prepare your own tax return is to do it all in one shot. So, set aside a block of time where you'll be doing nothing other than completing your tax return. Depending on the complexity of your specific tax situation, this could mean an hour or an entire weekend. However, by doing it all at once and staying on task, you'll save time in the long run.
If it's still too much... Most of these suggestions are oriented toward individuals without complicated tax situations, such as freelance income or business taxes. If your taxes seem a bit too overwhelming to handle by yourself, the best way to make your taxes easy could be hiring a solid CPA to do them for you.
The main point of this discussion is that no matter whether your taxes consist of a simple 1040EZ form, a complicated small business Schedule C, or something in between, you always have ways of making your taxes a little easier.
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[FILE] A photograph showing a McDonald's sandwich, french fries, and a medium soda on a serving tray.
NEW YORK (CNNMoney) — The Golden Arches are glittering again. McDonald’s may be the Great American McComeback Story.
The fast food giant will report its fourth quarter sales and earnings on Monday. And Wall Street actually has fairly high hopes for McDonald’s in what seems like the first time in forever. (Yes. A “Frozen” reference. Seemed apt given the weather forecasts.)
Analysts are predicting that the company will build on the momentum that began in the third quarter, when McDonald’s reported same-store sales growth of 0.9%. That was its first sales increase in two years.
For the fourth quarter, Wall Street expects that same-store sales in the United States rose 2.1%. And analysts think same-store sales worldwide were up 3.2%
McDonald’s has seemingly turned things around under CEO Steve Easterbrook, who took over as the biggest of Big Macs nearly a year ago.
Easterbrook owned up to many of the big problems facing Mickey D’s — most notably a stale menu that did little to excite the taste buds of its customers.
Many burger gourmands were shunning McDonald’s in favor of places like Five Guys, Smashburger and Shake Shack.
So Easterbrook quickly made some changes. It added some new burgers — such as the Maple Bacon Dijon and Pico Guacamole — and gave diners more choices so they could customize the sandwiches.
It was all part of Easterbrook’s strategy to turn McDonald’s into a “modern progressive burger company” — marketing lingo for a place that makes food you actually want and that doesn’t taste like dirt.
Mickey D’s also took aim at KFC and numerous other popular fried chicken joints with a new Buttermilk Crispy Chicken sandwich.
And McDonald’s introduced all-day breakfast in October. That’s something many McDonald’s fans had long wanted.
So the fourth quarter results will be the first since McDonald’s let you have an Egg McMuffin for lunch. That’s one reason why analysts have high hopes for McDonald’s.
In fact, Mark Kailnowski at Nomura is predicting that McDonald’s will report a 4.1% increase in U.S. same-store sales. If that happens, it would be the company’s best quarter in nearly four years.
Kalinowski wrote in a recent report that all-day breakfast and unseasonably warm weather in November and December probably helped to lift sales in the fourth quarter.
That was based on his survey of 26 McDonald’s franchisees who collectively run more than 200 restaurants in the U.S.
Kalinowski is optimistic about the first quarter as well. He’s predicting a 3.8% increase in domestic same-store sales.
Still, many of the franchisees that Kalinowski talked to continue to sound disgruntled. They’re not thrilled with what they see as bad decisions by executives at corporate headquarters in Oak Brook, Illinois.
Some franchisees told Kalinowski they are worried that aggressive discounting will hurt profits, even if it boosts sales and traffic. McDonald’s recently introduced McPick 2, a replacement for its old Dollar Menu that lets customers pick two items for two bucks.
There were also gripes about how the new menu items and all-day breakfast could backfire since it may complicate the ordering process and lead to slower service.
But investors aren’t concerned. They have every reason to act like a kid who just got the toy they really wanted in their Happy Meal.
Shares of McDonald’s rose more than 25% in 2015, outperforming rivals such as Burger King owner Restaurant Brands, Wendy’s and KFC/Taco Bell parent Yum Brands.
The stock even did better than some of the fast casual restaurants that have been increasingly eating into McDonald’s sales — chains like Panera and Chipotle.
And so far this year, shares of McDonald’s are flat and just 2% from their all-time high– while the Dow is down nearly 8%.
That’s impressive.
But it also means McDonald’s has to deliver strong results Monday. The company’s expectations have suddenly been supersized.
Michael McDonald, OilPrice.com 10:30 a.m. EST January 23, 2016
As the stock and commodities markets continue trying to make paupers of energy investors everywhere, many investors are undoubtedly unnerved by the volatility. Yet for all of the sound and fury of the markets, many oil companies from Exxon to Devon actually remain in relatively good shape even if this quarter’s earnings will be pretty rough.
That is not universally the case though – some firms are actually very risky and in the current market investors would be wise to stay away. One such example is Petrobras. The Brazilian oil giant may be the riskiest oil major in the world right now.
Petrobras faces a variety of problems that will likely hold the company back for years and keep risk averse investors away from the story. First the company has a massive debt load – more than $125B in total. The past decade has been a relatively good time for companies to hold debt as funding costs were low and bond investors were willing to snap up virtually any new offering.
That is starting to change. With the U.S. Fed raising interest rates, capital costs around the world are likely to start slowly rising. Furthermore, investors are now starting to become more wary of bonds and concerned about defaults in the future. This volatility led PBR to cancel a recent offering, for instance.
For PBR this means major problems. The company’s equity is only worth about $20B at present, and without the debt market, it’s unclear how Petrobras can fund any sort of significant expansion in the future.
Unfortunately for PBR investors, they actually have relatively little clout with the company, which is the second problem with the stock. Petrobras is very closely monitored by the Brazilian government and Brazilian President Rousseff is more than willing to intervene in company affairs. For instance, Rousseff chose the current CEO of the company after management turnover following last year’s corruption scandal. Add to this interventionist view, the powerful unions that Petrobras must also deal with, and it’s little wonder that shareholders cannot successfully agitate for much of a change in the firm’s policies.
Petrobras’ stock is trading around $3 a share at this point but even that price may be too rich given the problems facing the company. The final issue that Petrobras is dealing with is the same one facing all oil companies – the low price of oil. In PBR’s case though, the firm is heavily dependent on the offshore arena, and this is a particularly costly type of production. PBR is closely involved with offshore driller Ensco, and while ESV is a top quality outfit, offshore drilling is one of the least attractive production methods in the current environment.
The truth is that Petrobras faces a Herculean task in turning around the company. The corruption scandal suggested that the company has deep ethical issues that cannot be solved overnight, and the financial leverage and company oversight issues are problems that have been ingrained for years if not decades.
Much of the reason that PBR’s stock still has as much value as it does is because investors are assuming that the company will be bailed out by Brazil if it’s problems become too severe. It’s not clear if such a bailout is even a realistic option though given Brazil’s own problems.
Even if such a bailout were to occur, investors should be careful what they wish for – virtually none of the major bailouts in the financial crisis ended well for shareholders who usually found themselves diluted out of existence or with their stock outright cancelled. With that in mind, it is just possible that Petrobras’ ADRs may in fact be the riskiest oil stock in the world.
OilPrice.com is a USA TODAY content partner offering oil and energy news and commentary. Its content is produced independently of USA TODAY.
American Apparel founder Dov Charney, who was fired from his own company two years ago, is trying to win it back.
Charney has been in federal bankruptcy court as American Apparel moves through its Chapter 11 proceedings.
American Apparel(APPCQ) filed for court protection from its creditors in October, hoping to restructure and turn the store around.
But Charney opposes the Los Angeles company's plan and has offered an "alternative proposal," working with two firms ready to finance a bid for American Apparel. Earlier this month, Hagan Capital Group and Silver Creek Capital Partners said they'd made a $300 million offer to buy American Apparel.
Charney claims in court papers that the company engaged in a "scheme" to "force" him out.
Charney got fired, twice, in 2014 amid allegations of mismanagement and sexual harassment. He retaliated with lawsuits and other legal actions.
Under Charney, sex was in the DNA for American Apparel. Its ads were infamous for starring scantily clad models.
Paula Schneider, who replaced Charney as CEO, told CNNMoney that she was toning down the sex as part of the company's revamp.
The judge presiding over the American Apparel bankruptcy case could rule as soon as Monday, according to reports.
When asked about the lawsuit, a spokesperson for American Apparel said the company was "focused on pursuing the completion of its financial restructuring."
Charney told CNNMoney he had no comment on the proceedings.
CNNMoney (New York) First published January 23, 2016: 1:59 PM ET
For the first time this year, stocks strung together two consecutive days of solid gains. The Dow Jones Industrial Average(DJINDICES:^DJI) today jumped up by 211 points, or 1.3%, and the S&P 500 (SNPINDEX:^GSPC) rose 38 points, or 2%.
The rebounds left both indexes at roughly 7% below where they started 2016.
The big economic news of the day came from the housing market, which showed renewed strength in December. Existing home sales spiked higher by 15% last month, according to the National Association of Realtors. It was the largest monthly increase ever recorded, but the hike was affected by new regulations that had held November's figures temporarily lower. Still, sales for the full year rose at an impressive 8% rate .
As for individual stocks, American Express(NYSE:AXP) and General Electric(NYSE:GE) made notable moves lower today after the companies posted quarterly earnings results.
American Express adjusts to a new normal American Express lost 12% after the credit card giant announced results that included a weak outlook for 2016 and plans for a billion-dollar restructuring. The headline numbers beat expectations, with revenue falling 8% to $8.4 billion as adjusted EPS tanked by 36% to hit $0.89 per share.
Profits and sales were significantly affected by temporary factors, though. Revenue actually rose by 4%, after adjusting for exchange rate swings, and adjusted EPS fell by 12%.
Image source: American Express.
Yet management wasn't happy with fiscal 2015's results, and they warned of broad, negative trends that convinced the team that a huge cost-cutting focus was needed. "Our 2015 results and outlook reflect the reset in co-brand economics, pressures on merchant fees, the evolving regulatory environment and intense competition that have been reshaping the payments industry," CEO Kenneth Chenault said in a press release. "Against that backdrop, and the fact that revenue growth has not accelerated as we anticipated, we are moving aggressively to streamline the company," he explained .
American Express now sees earnings of $5.55 per share in 2016, which implies another annual profit decline absent its one-time gain from selling the Costco portfolio. It won't be until 2017, management believes, that it can return to the $5.60 per share profit level it last saw in 2014.
General Electric's volatile sales environment
GE shares fell by as much as 3% today before recovering to end the day down 2%. This morning the industrial giant posted fourth-quarter earnings results that described its sales environment as "volatile," and held down by slow growth.
Image source: GE.
Consolidated revenue ticked higher by 1%, to $33.9 billion as operating earnings fell 21% to $0.31 per share. Yet profitability improved and the company soundly beat its goal of shrinking its consumer capital business by at least $100 billion. "GE executed well in a slow-growth environment," CEO Jeff Immelt said in a press release .
GE affirmed its 2016 outlook that calls for between 2% and 4% organic growth, producing $1.50 per share of profits at the midpoint of guidance, compared to $1.31 per share in the year that just closed. The recent economic slowdown is on management's mind. "We recognize that the first few weeks of 2016 have been especially volatile," Immelt said. But GE's steady growth pace -- both with regard to sales and to backlog -- gave management confidence to leave its 2016 forecast in place.
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CHICAGO--U.S. grain futures settled higher on Friday as crude oil prices rebounded and greater demand boosted corn and
wheat markets.
Meanwhile, soybeans dipped.
Meanwhile, a rally in crude oil prices also boosted the corn market. Higher prices for crude oil often lead to greater
domestic demand for corn since it prompts refiners to blend more corn-based ethanol into the nation's gasoline supply.
"In an extremely volatile week for a lot of markets, corn was incredibly stable," said Doug Bergman, an analyst with
investment firm RCM Asset Management in Chicago.
Corn futures for March corn rose 3 1/4 cents, or 0.9%, to $3.70 1/4 a bushel at the Chicago Board of Trade, the
highest closing price since Dec. 21.
Wheat prices inched higher, propped up by strength in the corn market and improving export sales. Gains were limited,
however, by increasing competition in the world market, with Argentina exporting more wheat thanks in part to a weaker
peso, which makes grain supplies from that country less expensive for world importers.
CBOT March wheat added 1/2 cent, or 0.1%, to $4.75 1/2 a bushel.
Soybean prices dipped after trading higher for much of the day as U.S. and Argentine farmers began marketing crops to
take advantage of an upswing in the market. Prices for the oilseeds gained earlier in trade thanks to the rally in crude
oil prices and adverse weather in South America which is threatening soybean crops there.
CBOT March soybeans slid 2 cents, or 0.2%, to $8.76 1/2 a bushel.
Crude oil has finally stopped crashing -- and that's excellent news for the stock market.
At the end of another week of wild swings, the Dow jumped more than 211 points on Friday. The S&P 500 advanced 2% and the Nasdaq soared 2.7%. All three indexes rose for the week.
The mood on Wall Street has improved substantially, thanks largely to a turnaround in oil prices. Oil surged 9% to $32.19 a barrel Friday, marking a dramatic rebound after freaking investors out by crashing to $26 earlier this week.
More talk of stimulus from central bankers, especially in Europe, also helped lift global markets overnight, with Japan's market spiking nearly 6%. .
"There clearly was some oversold activity. It got too extreme," said David Mazza, head of research for SPDR ETFs and State Street Global Advisors Funds.
The Dow has raced 643 points higher since midday on Wednesday, while the Nasdaq is up 6.4% since then
Still, it's way too early to say if the worst of the market freakout of 2016 is over. Despite Friday's big gains, the Dow remains down 1,300 points this year and the S&P 500 is off 7%.
"This has the feel of a bar in a college town on a Saturday night after a big win for the football team -- exuberance abounding in the price action," Bespoke Investment Group wrote in a client note.
Whether it's the start of a lasting rebound or a "party that will yield hangovers shortly is an open question, but it's quite the show to watch either way," the firm wrote.
The market has been freaking out over the implications of cheap oil. Yes, it's great for consumers filling up their gas tanks. However, the oil crash is slamming energy profits, causing tens of thousands of job losses, crushing emerging markets like Mexico and Brazil and raising questions about the health of the global economy.
The S&P 500 has been moving nearly in lockstep with the price of oil, underscoring the intense level of attention the commodity has received in recent weeks.
The energy group of the S&P 500 soared 4% on Friday, led by an incredible 23% surge for Williams Companies (WMB) and a 10% spike for Kinder Morgan (KMI).
"These stocks are so cheap that any sign of stabilization in the price of oil will cause them to bounce back dramatically," said Andrew Slimmon, a portfolio manager at Morgan Stanley Investment Management.
Wall Street is also getting excited about the prospect of more help from central banks. In recent days the European Central Bank has hinted at pumping more money into the economy and reports have surfaced suggesting central bankers in China and Japan are exploring similar options.
Palm Beach County gained 14,100 jobs over the year, led by professional and business services, which added 6,900 jobs. Trade/transportation/utilities and education/health services added 3,100 jobs each. The low-paying leisure and hospitality sector added 1,600 positions.
Construction, once crucial to Palm Beach County’s job growh, remains a laggard. It added only 300 jobs over the past year.
Among Florida counties, unemployment ranged from a low of 3.2 percent in Monroe County to a high of 7.3 percent in Hendry County.
Jobs site Careerbuilder recently released a survey suggesting more employees will be looking for a new job in 2016. If you plan to be one of them, what kind of job should you look for?
Another employment site, Glassdoor.com, has released a list of what it says will be the 25 best jobs in America in 2016.
The best position, according to the survey, is data scientist, with an estimated 1,736 job openings and a base salary of $116,840.
Number two on the list is tax manager. Glassdoor predicts 1,574 job openings for that job with a median base salary of $108,000.
In third place is solutions architect, with 2,906 job openings and a median base pay of $119,500.
Filling out the top 10
Other occupations in the top 10 include engagement manager, mobile developer, HR manager, physician assistant, product manager, software engineer, and audit manager.
What's at the bottom of the list? Software engineer comes in at number 25. It's still a pretty good job. According to Glassdoor, it pays a median base salary of $130,000 – but is highly competitive, since Glassdoor counts only 653 openings.
The Careerbuilder survey found that 21% of employees were determined to leave their current employers in 2016, an increase of 5% from those who expressed that sentiment in the 2014 survey. Younger workers expressed the strongest desire to make a move.
Of the 18 to 34 age group, 30% said they expect to have a new job by the end of 2016, compared to 23% the previous year.
“Just because a person is satisfied with their job doesn’t necessarily mean they aren’t looking for new work,” said Rosemary Haefner, chief human resources officer at CareerBuilder. “Because of this, it’s critical to keep up with your employees’ needs and continue to challenge them with work they feel is meaningful.”
A barista works at a Starbucks coffee shop in the Pike Place Market, Seattle. (AP Photo/Elaine Thompson)
Retailer after retailer has announced in recent weeks that they saw tepid or downright disappointing sales during the crucial holiday season.
And then came Starbucks, dropping a blockbuster earnings report on Thursday that stands out as a clear bright spot in retail. The coffee giant announced that revenue soared 12 percent to a record $5.4 billion. Sales at its U.S. restaurants open more than a year were up 9 percent, and nearly half of that growth came from a surge in foot traffic.
The contrast suggests that Starbucks is outgunning its peers, at least for the moment, in tackling some of the problems that have befuddled the industry. One place where this is evident is in its digital strategy, which has centered heavily on incorporating mobile devices into the in-store experience. The company’s app accounted for over 21 percent of transactions in the quarter. At a time where shoppers have not widely embraced mobile payments, Starbucks appears to have built a digital ecosystem that customers have found especially useful.
It may be tempting to think that this doesn’t mean much for Starbucks’s bottom line, because you might presume that people are buying the same latte and croissant they always did, but just paying for it differently. But that overlooks some key, if not immediately obvious, benefits that Starbucks gets from adoption of the app.
For starters, Starbucks is getting reams of data about customers who use the app and the related loyalty program, allowing the chain to personalize offers to individual users and to generally better understand what menu items and price points are clicking with their most devoted followers.
Starbucks recently rolled out a new facet to its app, a “mobile order and pay” tool in which customers can order and pay for their frappuccino from afar and then walk in, skip the line and pick it up at the counter. The retailer said it is now processing 6 million such transactions a month, a relatively small share for a company that processes 85 million transactions globally each week. So, while this offering probably didn’t contribute massively to overall earnings in the quarter, its potential to move the sales needle in the future could be major.
Adam Brotman, the company’s chief digital officer, said on a Thursday call with investors that Starbucks is seeing an incremental sales boost from mobile order and pay. In particular, he said the system is boosting sales at the chain’s busiest stores during peak hours. (Think about it: How many times have you skipped out on your second coffee of the day when you’ve seen a bewilderingly long line at Starbucks and couldn’t be bothered to wait in it?)
This suggests something powerful for Starbucks: Mobile ordering is making it possible to wring more sales out of existing stores, important for a chain that already has almost 10,000 locations in the United States. That sales growth may not come without a related expense; executives said they may have to look at adding staff in stores to fill these orders if adoption continues to grow like executives think it will. But mobile ordering, along with pilots of delivery service, could be an important avenue for growth going forward.
As it works to build up its digital capabilities, Starbucks has also been moving to diversify beyond its core coffee business to sell more food items and to develop stronger business in lunch and dinner hours. There was evidence this quarter that Starbucks is getting this move right: The retailer said it has seen a 20 percent year-over-year increase in revenue from food sales at its stores, with particularly strong growth coming from breakfast sandwiches and its lunch-oriented Bistro Boxes, which include fare such as an edamame hummus wrap or prosciutto-and-mozzarella pinwheels.
Growing outside the core business has also meant a bigger push into grocery stores with products such as its K-Cups, the pods designed for use Keurig coffee machines that produce just a single serving of coffee. Starbucks said Thursday that sales of these items have shot up 20 percent and, in the quarter, accounted for a record share of the company’s overall sales. This growth is yet another bit of evidence that the company is broadening its reach, either generating more sales from Starbucks loyalists or bringing in new customers who mostly prefer to drink coffee in their pajamas at home.
While Starbucks disappointed investors Thursday with a lower-than-expected earnings outlook, the chain is still forecasting figures that are surely the envy of many of its industry peers: Global comparable sales growth is expected to be “somewhat above mid-single digits;” revenue growth is forecast to be 10 percent. In other words, it looks like the retailer’s caffeine high will continue for months to come.
Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economic news.
Real people are losing real money. The average investor is down about 9% so far this year, according to Openfolio, a free app where investors compare their portfolios and performance.
But put that into the bigger context: Stocks have soared about 200% since March 2009. The recent pullback is a minor haircut, not a decapitation.
Plenty of experts argued stock prices had been bid up too high, especially tech and bio tech shares, and they needed a reality check.
The sell-off has brought stock prices back to more reasonable levels. Many investors gauge how expensive the market is by looking at the price-to-earnings (P/E) ratio. The S&P 500 is now trading at 15.6 times forward earnings, according to S&P Capital IQ. That's cheaper than the 15-year average.
2. Is the world (and U.S.) on the verge of another 2008 crisis?
It's highly unlikely. Banks and individuals have a lot less debt and a lot more cash on hand than they did heading into 2008. Companies too are sitting on over $1 trillion of cash. All of this money acts as a rainy day fund that gives businesses and people a cushion if the economy really tanks. The world didn't have that in 2008.
It's also telling that as investors have been fleeing stocks, they have been purchasing more bonds than gold. Typically, when investors fear the worst, they pour into gold.
The biggest concerns today are China and cheap oil. But China is sitting on its own massive pile of cash. It may be dwindling, but it's still huge. China is likely to spend that cash if the nation's economy dives into recession.
As for oil, it's only about 6% of the stock market and overall U.S. economy. The energy sector may be hurting, but as long as consumers keep spending, America can keep growing.
The one legitimate concern today versus 2008 is that central banks can't provide as big of a life jacket. Typically when the economy slows, central banks cut interest rates to help jumpstart growth. But interest rates in the U.S. and Europe are already at or near historic lows. There's not much left to cut.
That said, central banks continue to pledge they will do everything in their power to intervene if the economy sours. On Thursday, Europe's top banking chief Mario Draghi said he's "ready to act" again to literally pump money into the economy, if needed. Immediately after that, stocks rallied.
3. If not a full-blown crisis, are we headed for a recession?
Unlikely. The U.S. and China are the big players in the world economy. Right now, both are growing, and the U.S. just had two stellar years of job growth.
The global gloom comes from slowing growth, especially in China. It's like going on a diet. It's not a fun feeling, especially at the beginning, as adjustments have to be made.
There's a lot of debate about just how deep China's slowdown is. The government still claims it's chugging along at 6.9% rate of economic growth. A lot of independent experts think the real figure is half that. But it's difficult to know.
If China continues to decelerate and stocks stay in slump mode for months, yes, there is a possibility of a recession. It impacts confidence. People get nervous and they no longer want to spend and banks get fearful and cut back on lending, making it harder for businesses to grow.
"If sustained, we believe the current sell-off also poses a serious threat to world growth," wrote Capital Economics. If it lasts through most of this year, it could cut world GDP by about 0.5% to 1%.
But the point is the downturn in stocks and China's economy have to get a lot worse to trigger a global or U.S. recession.
"Capital markets are a lot like dogs. They try to communicate as best they can, but their repertoire is limited at best. A dog barking could mean 'Play with me' or 'there's an escaped convict at the front door,'" says Nicholas Colas, chief market strategist at Convergex, a global brokerage company in New York.
CNNMoney (New York) First published January 22, 2016: 1:45 AM ET
FILE - In this Monday, Aug. 24, 2015, file photo, a trader looks at his phone outside the New York Stock Exchange, as world stock markets plunged after China's main index sank to its biggest drop since the early days of the global financial crisis. The slide on Wall Street could damage public-employee pension funds around the country that have yet to recover from the Great Recession. Since the start of 2016, stocks have been down by about 8 percent.
FILE - In this Monday, Aug. 24, 2015, file photo, a trader looks at his phone outside the New York Stock Exchange, as world stock markets plunged after China's main index sank to its biggest drop since the ... more
Photo: Seth Wenig, AP
Stock market tumble could keep pension funds behind
The slide on Wall Street could damage public employee pension funds around the country, most of which haven't even recovered from the Great Recession, and the burden could end up falling on taxpayers.
Stocks have been tumbling in the first weeks of 2016, with the Dow Jones industrial average and the S&P 500 down nearly 9 percent since the start of the year.
If there's a quick rebound, the slump won't make much difference. If the tumble continues, it could be bad news for pensions. Somewhere down the line, states may have to either cut benefits — which can be legally or politically difficult — or pump more tax dollars into their pension funds to make sure retirees get what they were promised.
Pension funds for government employees in many places are already struggling to bring in enough money to cover future payouts. Data compiled by the Pew Charitable Trusts found that only four states — Oklahoma, Rhode Island, South Dakota and Wisconsin — had amassed funding for a bigger portion of their pension liabilities in 2013 than in 2007, a year before stocks fell dramatically.
The average state-run plan went from being 86 percent funded before the Great Recession to 72 percent in 2013, the last year for which data was available. Despite strong returns on Wall Street from 2009 through mid-2015, most states saw funding declines for a variety of reasons, including higher payouts because of longer lifespans and generous benefits that were promised during flush times.
States such as California, Illinois, Kentucky and New Jersey didn't come close to making the taxpayer contributions they are required to make to their pension funds.
Pension fund officials in states as varied as California and West Virginia said they are not worried about short-term market fluctuations because they are diversified, long-term investors.
"For the most part, we are in it for the long haul," said Christine Radogno, the Republican state Senate leader in Illinois, which faces the nation's largest unfunded pension liability, at more than $100 billion, and is in a tough spot because the courts have ruled that employees' benefits can't be cut. "We look at 30-year returns, and the market is always up and down."
Keith Brainard, research director at the National Association of State Budget Administrators, noted that market drops can be a good opportunity to buy low on stocks that will rise in value before long. "These funds measure themselves in terms of their performance over decades rather than months, days and years," he said.
But some people who track government finance say even short-term returns are important.
"They can say they're long-term investors, but they have fixed payments that they must meet come hell or high water," said Don Boyd, director of fiscal studies at the Rockefeller Institute of Government, part of the State University of New York. "Illinois is very different than, say, a rich family creating a trust fund for a wayward son." While the family could reduce the son's payout when returns are low, there's little wiggle room for states to shrink payments to growing numbers of retirees, he said.
Boyd issued a report this week that found that from July through September of 2015, stock market losses led to a $268 billion increase in pension fund debt across the country, bringing the total to $1.7 trillion. He said he believes a strong end of the year on the stock market canceled out those losses, but the past few weeks erased the gains and then some.
Until the 1970s, pension funds were made up almost entirely of relatively safe investments such as bonds. Since then, it's become tougher to make big returns with bonds, so investment managers have turned to stocks, hedge funds, real estate and other holdings with the potential for larger gains but big losses, too.
CalPERS, the California public employee retirement fund that ranks as the nation's largest, now has more than half its funds in publicly traded stocks and nearly 10 percent in private equity. In New Jersey, U.S. stocks are 30 percent of the portfolio, the single largest type of investment.
Associated Press reporters Jonathan Mattise in Charleston, West Virginia, and Sophia Tareen in Chicago contributed to this article.
The Grasberg copper and gold mine complex near Timika, in the eastern region of Papua, Indonesia, is among Freeport-McMoRan’s “trove of treasures.” Credit
Antara Foto/Reuters
For a look at the damage that the plunging price of commodities — especially oil — is inflicting on the global economy, consider the plight of the venerable Freeport-McMoRan.
Freeport has long embodied the American swagger that conquered the West in the 19th century and enabled it to find significant copper and gold deposits in some of the world’s most remote regions. In 2007, flush from rising commodity prices, it bought Phelps Dodge, which traces its roots to pre-Civil War cotton traders and laid railroads on the American frontier. Its board, which has included a Whitney, a Rockefeller and Henry Kissinger, was long a who’s who of the corporate establishment.
About three years ago, to diversify its business, Freeport plunged into oil and gas under the leadership of its chairman, the Texas wildcatter James Moffett. With oil prices then nearing $100 a barrel, the company bought two companies, McMoRan Exploration and Plains Exploration and Production. The deals cost $20 billion, and to get them done Freeport sharply increased its debt load. (McMoRan had been spun off from Freeport in 1994.)
Oil Prices: What’s Behind the Drop? Simple Economics
The oil industry, with its history of booms and busts, is in a new downturn.
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When some investors questioned the rationale and ethics of the deal, Mr. Moffett highlighted his own management skills with characteristic bravado. “I don’t want to pat us on the back, but we’ve got extraordinary capabilities,” he said at the time. “We found the biggest gold and copper mine in the world, and I’ve said it three or four times, but I got the right to say it. Joe Namath said it isn’t bragging if you can do it.”
The deal now looks like a major blunder. In December 2010, Freeport’s stock peaked at over $60 a share. This week it dropped below $4.
“The stock is trading like they’re going to file for bankruptcy,” said Paul Massoud, a mining analyst with Stifel Nicolaus who in August of 2014 downgraded Freeport shares.
Freeport is hardly alone in getting battered by plummeting commodities prices. Banks’ earnings this month have taken a hit as they have marked down the value of their loans to energy companies. Many of the world’s largest commodities producers, including oil-rich countries like Saudi Arabia and Venezuela, or corporate behemoths like the Swiss company Glencore, are suffering after borrowing large sums of money at ultralow interest rates during the commodities boom.
In previous price slumps, commodities producers cut back. But this time, many have continued to flood the market with oil and copper even at depressed prices, confounding many economists. One explanation is that they need to generate the cash to meet debt obligations. In its last quarter, Freeport actually increased its oil production and barely cut back on copper despite falling prices.
Now, Freeport, which is based in Phoenix, needs to reduce its heavy debt burden, which at more than $20 billion is more than four times the company’s current market value of $4.8 billion. Once an aggressive bidder for trophy assets, it now finds itself in the position of a desperate seller. It’s also cutting jobs and slashing capital spending, the lifeblood of any mining company.
For its most recent quarter, Freeport reported a quarterly loss of $3.8 billion, bringing its loss for the first nine months of its fiscal year to $8.2 billion, mostly because of write-downs in the value of its oil and gas assets.
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Freeport-McMoRan’s copper and gold mining complex in Indonesia is among the largest in the world. Credit
Dadang Tri/Bloomberg
When it last announced earnings in October, Freeport said its 2016 projections were based on an average oil price of $56 a barrel. This week oil dropped below $27 a barrel, though it rallied on Thursday. So expectations for Freeport’s latest quarter and full year results, which will be announced next week, are grim. (A Freeport spokesman said the company couldn’t comment because of the impending earnings release.)
Under pressure from the activist investor Carl Icahn, who disclosed an 8.5 percent stake in Freeport last fall, Mr. Moffett, 76, stepped down as chairman late last month.
Freeport “is getting hit by everything,” said Anthony Young, a mining analyst at the Macquarie Group. “It’s the fall in copper prices and metals, the plunge in oil and natural gas, and the amount of debt on the balance sheet. It’s going to take some pretty dramatic steps by management to right this ship.”
Still, however much Freeport is being battered by market forces beyond its control, it’s hard to feel too bad for the company’s management and shareholders, given how many of its woes seem self-inflicted during a woeful lapse in corporate governance standards.
As a pure mining company that had endured over a century of commodity booms and busts, Freeport had long shunned debt and never acted as if it expected good times to last indefinitely — time-honored notions that Mr. Moffett and his allies appear to have discarded when they pushed into oil and gas. Investors “loved this company for so long because they never took on much debt and never hedged,” Mr. Massoud said. “They were a pure proxy for commodities. No matter the price, they’d survive.”
Many Freeport investors were furious over the company’s audacious debt-financed move into oil and gas. As Evy Hambro, chief investment officer for BlackRock’s natural resources team, said in the company’s investor call to discuss the deal: “I haven’t heard anything on this call that in any way justifies why these companies should be put together, and I find it incredibly disappointing that as a management team, you’ve chosen to break the trust with investors from what the business was that we chose to invest in.”
The deal was all the more troubling given that it was rife with conflicts of interest. At the time, Mr. Moffett was McMoRan’s chief executive while also serving as Freeport’s chairman. (The “Mo” in the company’s name stands for Moffett.)
A glut of crude oil on the markets is pushing the price of oil down to levels not seen since the global financial crisis.
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Freeport’s chief executive, Richard Adkerson, was McMoRan’s co-chairman. Nine Freeport directors owned stock in McMoRan totaling about 6 percent of the shares. Freeport agreed to buy McMoRan for $2.1 billion — a 74 percent premium over its market price before the deal was struck. Mr. Moffett himself was paid $73 million.
Moreover, Plains owned 31 percent of McMoRan, enough to block any deal. Freeport eliminated that possibility when it bought Plains. And James Flores, Plains’s chief executive, who now runs Freeport’s oil and gas operations, was also a director of McMoRan. He made $200 million on the deal.
“Would it be possible to find out if anybody on the call from your side is not conflicted?” Mr. Hambro asked pointedly during the conference call.
Freeport officials denied any wrongdoing and justified the deal by saying that committees of independent directors at all the companies approved the transactions. Last year it agreed to pay $137.5 million to resolve shareholder lawsuits over conflicts of interest related to the deal. (All costs to the individual executives were covered by directors’ liability insurance, the company said.)
Even now, Mr. Moffett hasn’t exactly been sent packing. He received a severance package valued at $79.4 million, according to company filings. He keeps the title of chairman emeritus and will be paid $1.5 million a year as a consultant. Mr. Adkerson remains Freeport’s chief executive.
There’s no easy way out for Freeport. The company earlier said it would explore selling all or part of its oil and gas assets, but given current market conditions, any sale would be at fire sale prices. With its stock so depressed, it doesn’t make sense to raise more money in the equity markets, and it would be hard pressed to borrow more, either from banks or in the debt market (where some of its bonds are already trading at distressed levels).
Freeport still owns what Mr. Moffett called its “trove of treasures” — the Grasberg gold and copper operations in Indonesia; the Morenci copper mine in Arizona; and majority stakes in the Cerro Verde copper mine in Peru and Tenke Fungurume, the largest copper mine in the Democratic Republic of Congo. Freeport recently valued its interest in Grasberg alone at $16.2 billion.
“There’s a lot of concern about the company’s long-term solvency,” Mr. Young of Macquarie said. “But they do have some valuable assets that could alleviate the pressure.” He said investors were anxiously waiting to see what strategy the company unveils next week.
Freeport’s salvation may come from a rally in the commodities markets. But just as prices looked as if they would never go down during the commodities boom, they now look as if they won’t go up substantially any time soon. “Unfortunately for them, if you extend these low commodity prices indefinitely,” the Stifel analyst Mr. Massoud said, “there’s zero equity value there.”
Correction: January 21, 2016 An earlier version of this article misstated the date when Paul Massoud, a mining analyst, downgraded the shares of Freeport-McMoRan. It was August of 2014, not August of 2015.
SAN FRANCISCO - Amazon is now offering full refunds for customers who bought hoverboards, the popular electric self-balancing riding devices which have been implicated in multiple fires and explosions.
The Consumer Product Safety Commission so far has investigated 40 such incidents.
The most recent occurred Tuesday in Santa Rosa, Calif., where a girl who got a hoverboard for the holidays had left it plugged in in her bedroom.
From the burn patterns, “investigators were able to pinpoint the location where the fire began,” said Paul Lowenthal, Santa Rose assistant fire marshal.
The family was away for the evening but their two dogs, a Labradoodle and a Boston terrier, were killed by the smoke. Firefighters tried but weren’t able to resuscitate the animals, Lowenthal said. The fire also caused close to $250,000 damage to their home.
The flammability of the lithium-ion batteries used to power the popular devices is a serious concern to the Consumer Product Safety Commission, which is currently investigating them.
On Wednesday, chairman Elliot Kaye said he was "pleased" that Amazon will now allow customers to return hoverboards for a full refund.
"I want to commend Amazon for voluntarily stepping up, providing a free remedy and putting customer safety first. I encourage consumers to take advantage of Amazon’s offer.
He called on other retailers and manufacturers to take action and offer refunds as well.
"I also expect responsible large-volume online sellers in particular to stop selling these products until we have more certainty regarding their safety," he said in a statement on the commission's web site.
The commission is currently investigating 13 hoverboard manufacturers, importers or distributors. They are:
Futures riding the rising trendline I drew yesterday. Resistance comes in at the falling trendline around 1900 today and the prior top at 1910 area.
Very overbought on this 60 minute chart this morning but it's being supported by the 6 hour chart, which is pointing up strongly with a -10 and -2.5 MACD... and that suggests it will touch zero before dipping back down (on the -2.5 MACD)
Since today is Friday we might not see the rising trendline breakdown. I know the 60 minute MACD is very overbought and the 2 hour isn't far behind it. But with the 6 hour pushing up to support them they might grind this up to the 1900 area (give or take a few points) and not let the market rollover until after the close. That 1800 level that we got close to and started this rally from does support a multiday rally and not just a one day event. Today is day 2 of it and I think it will hold. The key will be to see the MACD dip down today to reset while the actual price level of the futures doesn't drop that much. If they can keep it to less then 10 points on the downside it should be clear that they wany higher prices. I think we'll see a short at the close today or Monday. The problem with the weekend of course is that they can reset the futures and make it bullish by the open Monday. So I'm cautious on any short held over the weekend. My gut tells me they will reset it over the weekend and go up more on Monday.
SAN FRANCISCO - Amazon is now offering full refunds for customers who bought hoverboards, the popular electric self-balancing riding devices which have been implicated in multiple fires and explosions.
The Consumer Product Safety Commission so far has investigated 40 such incidents.
The most recent occurred Tuesday in Santa Rosa, Calif., where a girl who got a hoverboard for the holidays had left it plugged in in her bedroom.
From the burn patterns, “investigators were able to pinpoint the location where the fire began,” said Paul Lowenthal, Santa Rose assistant fire marshal.
The family was away for the evening but their two dogs, a Labradoodle and a Boston terrier, were killed by the smoke. Firefighters tried but weren’t able to resuscitate the animals, Lowenthal said. The fire also caused close to $250,000 damage to their home.
The flammability of the lithium-ion batteries used to power the popular devices is a serious concern to the Consumer Product Safety Commission, which is currently investigating them.
On Wednesday, chairman Elliot Kaye said he was "pleased" that Amazon will now allow customers to return hoverboards for a full refund.
"I want to commend Amazon for voluntarily stepping up, providing a free remedy and putting customer safety first. I encourage consumers to take advantage of Amazon’s offer.
He called on other retailers and manufacturers to take action and offer refunds as well.
"I also expect responsible large-volume online sellers in particular to stop selling these products until we have more certainty regarding their safety," he said in a statement on the commission's web site.
The commission is currently investigating 13 hoverboard manufacturers, importers or distributors. They are:
Yeah, Amazon only stepped up as they didn't want some huge lawsuit against them. Not that I have anything against them but it's just smart business to put out a fire before it starts (no pun intended... LOL)
NEW YORK --Even as Wall Street braces for more cuts to jobs and bonuses, JPMorgan Chase CEO Jamie Dimon was paid $27 million in 2015, up from $20 million the year before, the company said Thursday.
The pay raise comes after JPMorgan announced record annual profits last week, thanks to cost-cutting that helped to offset stagnating revenue growth.
JPMorgan's board paid Dimon a $1.5 million salary, a $5 million cash bonus and $20.5 million in performance-based stock grants, the company said in a regulatory filing.
Last year, Dimon was paid a $7.4 million cash bonus and $11.1 million in stock awards. His $1.5 million salary has remained unchanged.
This year's stock grants are tied to new, three-year performance metrics. This could could help alleviate criticisms, which bubbled up last year, that Dimon's pay is not properly tied to performance.
JPMorgan "is now one of the few, if not the only, large financial institution that does not tie any element of CEO pay to achievement of goals for a specific metric or metrics," proxy advisory firm ISS said last year ahead of a controversial shareholder vote on the bank's pay.
Banks emerged from a tough 2015 only to face worsening conditions this year, including rising costs tied to souring energy loans.
As a result, bank CEOs are expected to take the ax to personnel costs — their single largest expense — as they scout for new ways to boost profits.
Morgan Stanley and Bank of America have already said they are planing to slash expenses this year through either layoffs or by moving jobs to cheaper cities.
In 2015, JPMorgan cut staff by 3%, or 6,761 jobs. Compensation costs at the New York bank fell by 1% last year.
Follow USA TODAY reporter Kaja Whitehouse on Twitter: @kajawhitehouse
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What a total criminal Jaime dimon is... the guy should be arrested for fraud. He's stole more money from the public then Bernie Madoff ever will!
Starbucks shares slid late Thursday after its outlook overshadowed an estimate-beating quarter of profits.
The coffee chain empire said revenue rose nearly 12% to $5.37 billion in its fiscal first quarter, generating a profit of $687 million, down 30% from a year ago, the company announced after markets closed Thursday.
Starbucks (SBUX) earnings per share of 46 cents per share topped brokerage estimates 44 to 45 cents a share as compiled by S&P Capital IQ Consensus Estimates. Sales were largely in line with forecasts of $5.39 billion.
For its current quarter, Starbucks told investors it expects to make 38-39 cents a share in adjusted earnings. That's a little short of what Wall Street expected.
The results, announced after markets closed, sent Starbucks shares down 3.5% in after-hours trading.
The Seattle-based company’s growth was driven in part by a 4% increase in global customer traffic.
Same-store sales in the Americas increased 9%,. Meanwhile, sales in the China and Asia Pacific segment increased 5%.
The company reported that 1 in 6 American adults received a Starbucks Card for the holidays, up from 1 in 7 in the first quarter of fiscal year 2015.
A record $1.9 billion was loaded onto Starbucks cards in the United States and Canada over the holiday season, Starbucks reported.
Starbucks has continued to build out its mobile order and payment app in the United States, where it was launched in 2014 and went nationwide in 2015. The app allows customers to order and pay for drinks ahead of time without having to wait in line.
Starbucks continues to be bullish on Asia and especially China, said Starbucks President and COO Kevin Johnson.
“Asia had a great quarter, it delivered 5% comp store sales. That's a combination of our finishing our acquisition of Starbucks Japan combined with 281 net new stores in China and the Asia Pacific. Revenues there were up 32%” year over year, he said.
Read or Share this story: http://usat.ly/1RC2PEa
How does starbucks stay in business in my question? Who in their right mind is still dumb enough to pay $10.00 for a cup of coffee?
Three more airlines – United, Southwest and Alaska – reported Thursday big profits for the fourth quarter, largely thanks to lower fuel prices.
Cheap fuel has allowed the airlines to reward shareholders with stock buybacks and dividends, and to thank workers with profit sharing. They're also buying planes to update their fleets.
“This was by far our best year for earnings in the company’s history,” Southwest Airlines CEO Gary Kelly told reporters during a conference call, crediting low fuel prices, full planes and more seats to fill with fliers. “The convergence of all of these things made 2015 a very successful year.”
Airlines are reporting record profits —at least since Congress deregulated the industry in 1978. A glut of oil that's led to low fuel prices is helping.
Cheap fuel may continue to be a boon for airlines, at least in the near-term. Southwest expects fuel costs to drop another 30 cents per gallon during January, February and March.
"On the cost side, we continue to benefit from significantly lower jet fuel prices and our fleet modernization,” Kelly said.
Southwest said profits nearly tripled in the fourth quarter to $536 million. In 2015, the airline returned $1.4 billion to shareholders through dividends and share buybacks. Kelly said the company expects to buy back an additional $500 million in stock in 2016.
To reward workers on the “exceptional” results, Southwest distributed $620 million in profit sharing last year, up from the previous record of $355 million in 2014.
Alaska Airlines shared a similar story with investors. Profits rose 29% in the fourth quarter, partly owing to lower fuel costs. Total fuel cost of $213 million for October, November and December, and $954 million for the year, was one-third lower than in 2014. The carrier also increased passenger revenues by 6% in the quarter, to nearly $1.2 billion.
"We're operating safely and on time, our customer satisfaction ratings remain strong, our customer base is growing at a record pace, and our costs and fares are coming down - all a result of the hard work and dedication of our employees,” CEO Brad Tilden said in a statement.
The company announced a 38% increase in its quarterly dividend, to 27.5 cents per share and it awarded a company record $120 million in incentive pay to workers last year, or more than one month’s pay for most employees.
While Southwest and Alaska are enjoying the benefits of lower fuel prices, United Continental is feeling some pressure.
Lower oil prices fueled a sharp decline in operating expenses, which fell 8.4% to $8 billion for the quarter, compared to a year earlier. But the airline, with a major hub in Houston, where many energy industry executives are based, said high energy prices have led to a decline in corporate travel. In response, Jim Compton, vice chairman and chief revenue officer for United said the company would reduce capacity in Houston and shift it to "other growing markets like Denver and San Francisco."
United is battling other issues. During the quarter CEO Oscar Munoz was sidelined by a health crisis. Munoz had a heart attack in October and underwent a heart transplant in early January. Revenue fell 3% in the quarter.
In a surprise, Munoz appeared on a conference call Thursday with investors and media, saying he is steadily increasing his participation in company activities.
"I am certainly darn glad to be here," Munoz said. "I certainly will be back full-time by the end of the first quarter, if not sooner."
Munoz took office in September after a period of chronic delays and computer issues for United, which was ranked as the ninth of 10 North American airlines for on-time performance.
"We are working extremely hard to become the consistently reliable airline our customers can depend on," Brett Hart, acting CEO of United, told investors on Thursday.
Despite its challenges and lower revenue performance, United was able to increase fourth quarter net income to $823 million from $28 million. United workers enjoyed $698 million in profit-sharing for the year.
All three airlines are buying new planes, in some cases to upgrade their fleets and in some cases to expand.
United announced it would buy 40 new Boeing 737-700 aircraft to enter the fleet in mid-2017. The goal is to reduce its reliance on 50-seat aircraft that are less profitable.
Southwest said its delivery schedule includes 33 737-800s and the conversion of 25 737-700s to 737-800s. The wifi-equipped planes will replace existing capacity of the airline’s classic fleet by mid-2018, three years faster than previously expected. Alaska added 11 737-900ERs and one Bombardier Q400 last year.
