Internet giant Google has announced a 23% jump in first quarter revenue to $US6.77 billion due to an upturn in web advertising, but its shares have fallen 5% with investors underwhelmed by the results.
The company announced a 7% rise in average cost-per-click, along with net income of $US1.96 billion, up from $US1.42 billion in the previous corresponding period. Chief financial officer Patrick Pichette said in a statement that the company will continue hiring, having already increased its headcount by nearly 800.
“We are pushing ahead with significant investments,” Pichette said in a conference call. Chief executive Erich Schmidt did not participate, unlike previous financial results announcements.
While the result was strong, according to analysts, the stock still fell 5% to $US565.50.
Also in the United States, Wall Street recorded a sixth consecutive day of gains due to lifts in transport stocks despite a rise in the number of unemployed persons applying for jobless claims.
The Dow Jones industrial average rose 21.46 points, or 0.19%, to end at 11,144.57. The Standard & Poor’s 500 Index gained 1.02 points, or 0.08%, to 1,211.67.
In Washington, the International Monetary Fund said it is now impossible to give any type of timetable for how quickly a deal can be made with Greece regarding funding.
“There will be two key elements of program discussion. One is determining the amount of financing that is needed, so I can’t give you any idea yet as to what that will show,” IMF spokeswoman Caroline Atkinson told Reuters. “And the other is determining which policy is needed in order to achieve the balance of financing and adjustment that is needed.”
Sharemarket dips below 5,000 points
Back home, the Australian sharemarket has opened lower, below the 5,000-point line, with weak results in commodities and copper and oil prices.
The benchmark S&P/ASX200 index was down 20 points or 0.41% to 4981.6 at 12.00 AEST, while the Australian dollar opened slightly higher to US93c.
ANZ shares lost 0.4% to $25.87, while Commonwealth Bank shares gained 0.1% to $59.32. Westpac lost 0.3% to $28.15, while NAB rose 0.1% to $28.48.
Seven Network Holdings has said proposed merger partner WesTrac has now confirmed its order book for sales of mining equipment was taken into account for its earnings forecast.
As reported by the Herald Sun, the Government is set to announce tax savings to small investors who put money into banks and building societies. As part of the Rudd Government’s response to the Henry Tax Review, which is set to occur in the next fortnight, is set to reverse declines in cash deposits.
The move would reportedly provide investors some type of relief from tax rates on savings from banks and other types of financial institutions.
Macarthur Coal has said one of its key shareholders, POSCO, has offered support for an improved offer from American group Peabody Energy. Fellow shareholder, Arcelor Mittal, has said the new $16-per-share offer does not warrant due diligence.
“For the avoidance of doubt, POSCO does not have, and it does not propose to enter into, any agreement, arrangement or understanding (binding or otherwise) with Peabody relating to Macarthur, any power to exercise (or control the exercise of) a right to vote Macarthur shares, or any power to dispose of (or control the exercise of a power to dispose of) Macarthur shares,” POSCO said.
“ArcelorMittal does recognise that the Peabody offer is one that warrants MCC giving it due consideration and providing them the necessary time for the five days due diligence that [Peabody] have sought from MCC Board,” Arcelor Mittal also said in a statement.
QBE Insurance is now set to acquire US underwriter NAU Country Insurance Company for $US565 million, with chief executive Frank O’Halloran saying the deal fits into a long-term strategy.
“The acquisition is in line with QBE’s long-term strategy of acquiring specialist businesses to further enhance our significant product diversification and distribution,” he said. “Synergies are expected from savings in reinsurance costs and cross selling of QBE’s various agricultural insurance products to NAU’s client base.
Rio Tinto confident about BHP venture
Meanwhile, Rio Tinto chairman Jan du Plessis has said he is confident about the company’s proposed joint venture with BHP Billiton regarding the Pilbara mining location.
“This transaction, which has been well received by shareholders, continues to be subject to the satisfaction of regulatory and, of course, shareholder approval,” du Plessis said at the company’s annual general meeting in London.
Chief executive Tom Albanese said the deal was “strategically important… We expect it will bring substantial benefits to shareholders by delivering synergies of at least $US10 billion,” he said. “Sales volumes from the Pilbara set a new record. We passed the milestone of exporting a total of three billion tonnes of ore since shipments began in 1966.”
The company also said global economic conditions remain volatile and uncertain.
Gary Weiss is now retiring as a director of Westfield Holdings, the company has announced. Banker Mark Johnson is set to stand for the board position at the company’s AGM in May 27.
Johnson is now chairman of AGL Energy and the Australian Financial Centre Forum. The company said Weiss is standing down “due to an increase in business commitments”.
JPMorgan head of investment banking Douglas Braunstein has said in a new report that the global market for mergers and acquisitions is recovering, but will not see any lasting activity until the second half of 2010.
“We all expected to have a strong 2010, but it has taken the first quarter for people to be assured that we’re not going to see a double-dip,” he said at the Tulane Corporate Law Institute conference in New Orleans. “Today signs are much more positive.”
“We’re seeing the beginning and seeds of movement; but the real expectation is that it will not be until the second half (of 2010) to see a significant rise in transactions,” Braunstein said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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