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Goldman Sachs: Thursday's Headlines

Earnings from Goldman Sachs, eBay, UnitedHealth and PNC Bank were in focus Thursday.



) -- Here are the top stock market headlines for the morning of Thursday, Jan. 21, 2010.

Thursday's Earnings Roundup

  • Goldman Sachs (GS) blew past estimates with a fourth-quarter profit of $8.20 a share, which was $3 ahead of the Thomson Reuters average estimate. Revenue of $9.62 billion in the quarter, though, was shy of analysts' target of $9.65 billion. The bank said net revenue from its investment banking unit totaled $1.64 billion, 58% higher from a year ago and 82% higher than the previous quarter. In an accompanying statement, CEO Lloyd Blankfein said that Goldman's strong performance in the quarter, as well as recognition of the broader environment, "resulted in our lowest ever compensation to net revenues ratio." Compensation and benefits expenses were $16.19 billion for the year and were 35.8% of net revenues, Goldman said. That ratio of compensation and benefits to net revenues was down from 48.0% for 2008
  • PNC Bank (PNC) said it had fourth-quarter earnings of 90 cents a share, excluding a gain of $687 million from the BlackRock (BLK) acquisition of Barclays (BCS) Global Investors and other items. A poll of analysts by Thomson Reuters showed they expected a profit of 78 cents a share. Nonperforming assets increased by $700 million from the third quarter, a lower increase when compared with the $1 billion increase in the third quarter.
  • UnitedHealth Group (UNH) reported a fourth-quarter profit of 81 cents a share, well ahead of the Thomson Reuters average estimate of 73 cents a share. Revenue increased 6.5% from a year ago to $21.78 billion, also better than expectations. Looking ahead, the health insurer reaffirmed its outlook for 2010, saying it expects a profit of $2.90 to $3.10 a share, which is inline with analysts' projections.
  • Freeport-McMoRan (FCX) posted a fourth-quarter profit of $2.15 a share, swinging from a year-ago loss to beat the Thomson Reuters average estimate of analysts. Revenue more than doubled from a year earlier to $4.6 billion, also ahead of expectations.
  • eBay (EBAY) reported fourth-quarter earnings late Wednesday of 44 cents a share, which excludes items such as a gain from the sale of Skype. That beat the Thomson Reuters average estimate of 40 cents a share. Revenue rose 16% from a year ago to $2.37 billion, also better than Wall Street's targets. eBay pinned its fourth-quarter success on growth in its PayPal unit and a strong holiday shopping season.
  • Starbucks (SBUX) posted fiscal first-quarter earnings of 32 cents, which was up sharply from a year ago and ahead of the Thomson Reuters consensus target of 28 cents. Sales were up 4% from a year ago to $2.72 billion, also ahead of forecasts. The coffee chain also raised its full-year adjusted earnings forecast to $1.05 to $1.08 a share, with revenue expected to climb by the mid-single digit in percentage terms. Analysts polled by Thomson Reuters expect earnings of $1.02 a share on a revenue increase of 3%.

Thursday's Early Headlines

  • Obama Seeks to Limit Size of Banks -- President Obama is expected Thursday to propose new limits on the size of the country's biggest banks and the risks they take, congressional sources and administration officials say. Obama's proposal is expected to include new scale restrictions on the size of the country's largest financial institutions, The Wall Street Journal reports. The goal would be to deter banks from becoming so large they put the broader economy at risk and also to prevent banks from becoming so big they distort normal competitive forces.
  • Oracle-Sun Microsystems Deal Gets EU Approval -- Oracle's (ORCL) $7.4 billion acquisition of Sun Microsystems (JAVA) received unconditional approval Thursday from the European Union. The deal was cleared by the U.S. Department of Justice in August 2009.
  • EU Also Approves Agilent's Takeover of Varian -- Agilent's (A) acquisition of Varianundefined has received approval from the European Commission but the companies were required to sell off certain assets to alleviate antitrust concerns. Agilent agreed to buy Varian for $1.5 billion in July.
  • China GDP Jumps 10.7% -- China's benchmark stock index ended with gains Thursday, reversing earlier losses, following news fourth-quarter gross domestic product in the country soared to 10.7%. China's growth is its fastest since 2007. The GDP number surpassed the forecasts of most analysts and raised 2009's expansion to 8.7%, up from a low of 6.1% in the first quarter, The Associated Press reports.
  • Democrats Work on Shrinking Health Care Bill -- The Associated Press reports that President Barack Obama and his Democratic allies are working on a less ambitious health overhaul bill following the victory of Republican Scott Brown in Massachusetts' special election on Tuesday. In losing a filibuster-proof 60th vote for the health care bill, congressional leaders are considering a more modest version. A pared back version could focus on curbing insurance company practices like denying coverage to sick people and on helping low-earning people and small businesses afford coverage, officials told the AP.

-- Written by Robert Holmes in Boston


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