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The Morning Ledger: GE's $22 Billion Write-Down Draws Regulatory Attention |
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The General Electric logo at the New York Stock Exchange, June 12, 2017. PHOTO: RICHARD DREW/ASSOCIATED PRESS
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Good day. Regulatory scrutiny may be a natural course of action after General Electric Co. recorded a multibillion-dollar write-down of assets that led to a big loss in its latest quarter, reports CFO Journal's Tatyana Shumsky. GE on Tuesday announced a $22 billion accounting charge related to its 2015 acquisition of Alstom SA’s power business.
New inquiry: The U.S. Justice Department is conducting a criminal investigation into GE’s recent accounting practices, including the goodwill impairment charge, finance chief Jamie Miller said on the company’s quarterly earnings call Tuesday. That probe is in addition to a Securities and Exchange Commission’s investigation launched in November.
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Goodbye goodwill: GE’s $22 billion impairment charge this quarter is among the biggest in recent history, according to Carla Nunes, managing director at valuation firm Duff & Phelps LLC. It is the largest such charge since oil producer ConocoPhillips’ 2008 impairment of $25.4 billion, she said.
Drilling down: The investigations by the DOJ and the SEC likely will focus on examining whether GE accurately followed accounting rules and corporate law when allocating goodwill on its balance sheet and when estimating the size of the writedown, said Harvey Pitt, former chairman of the U.S. Securities and Exchange Commisison. “At issue will be how hard they [GE] looked at this, how diligent they were in considering whatever warnings were circulated internally and the rationale for ignoring those warnings,” he said.
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“Companies don’t write down this amount of money and not get held accountable.”
| — former Securities and Exchange Commission Chairman Harvey Pitt |
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Brazil’s central bank is widely expected to keep its benchmark Selic rate on hold at 6.5%, a historic low.
Chesapeake Energy Corp., Clorox Co., Estee Lauder Cos Inc., Garmin Ltd., General Motors Co., Hess Corp., Kellog Co., Sprint Corp., Fitbit Inc. and The Carlyle Group LP are among the companies slated to report earnings Wednesday.
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CFOs Tap Cheap Euro Funding Ahead of ECB Policy Change |
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U.K. supermarket giant Tesco sold €750 million in debt this, its first euro-bond issue since 2014. PHOTO: ZUMA PRESS
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European finance chiefs are issuing more new debt to benefit from cheap financing conditions ahead of the European Central Bank rolling back its easy-money policy, reports CFO Journal's Nina Trentmann.
The central bank is phasing out its quantitative-easing program this year and is expected to raise rates in 2019, which would result in higher financing costs. Also, companies are trying to get ahead of any market turbulence when Britain leaves the European Union next year.
European companies issued €80.8 billion ($91.6 billion) in euro-denominated bonds during the third quarter, up 15% from the same period a year ago, according to Dealogic.
Some companies are refinancing existing debt, looking to lock in lower interest rates. Roughly €33 billion in euro-denominated corporate bonds are to mature before the end of the year and €218 billion are due in 2019, according to Dealogic data.
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Suez is targeting annual cost savings of €200 million ($227.3 million). PHOTO: CHRISTIAN HARTMANN/REUTERS
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French Utility Suez Drills Down on Costs As Revenues Stagnate
French utility company Suez SA is looking to reduce costs to offset stagnating revenue growth in its European water business.
The Paris-based company is targeting annual cost savings of €200 million ($227.3 million) through to 2020, up from €150 million in 2017.
“It is the top, top priority of the CFO that costs are under control,” Chief Financial Officer Jean-Marc Boursier said Tuesday. Suez on Tuesday reported earnings before interest and taxes of €963 million for the nine months ended Sept. 30, up 4.4% compared to the prior year period.
The company is looking to reduce procurement costs and general administrative expenses. It also wants to improve the efficiency of its wastewater treatment, desalination and recycling plants, according to the company’s finance chief.
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Oreo cookie maker Mondelez plans to raise prices, citing a ‘strong’ consumer environment. PHOTO: VINCENT MUNDY/BLOOMBERG NEWS
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U.S. companies are raising prices on everything from plane tickets to paint, passing on higher costs for fuel, metal and food to their customers after years of low inflation.
Facebook Inc. recorded lower revenue than expected in the third quarter as the social-media giant continues to adjust to slowing growth rates.
Apple Inc. unveiled two more-expensive versions of its Mac personal computers and a redesigned iPad, as it aims to reinvigorate lackluster sales of PCs and tablets with higher-priced devices.
Pfizer Inc. narrowed its full-year revenue and profit targets as the drugmaker works its way through the last legs of patent expiries for big-selling legacy products and copes with pricing challenges.
Barnes & Noble Inc. ratcheted up its battle with a former chief executive officer by detailing in a court filing the reasons for his dismissal, reports Bloomberg.
European plane maker Airbus SE said deliveries and free cash flow this year would fall short because of worsening supplier problems, which have buffeted it and rival Boeing Co. as they race to build all the aircraft they have promised.
Souring confidence in China’s economy and a regulatory clampdown in the private sector could spell trouble ahead for Baidu Inc.’s revenue, executives with the search-engine company warned.
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A Tata Steel plant in Port Talbot, South Wales, U.K. PHOTO: PHOTO: REBECCA NADEN/REUTERS
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The European Commission will open an in-depth investigation into the planned merger of Tata Steel Ltd. and ThyssenKrupp AG's steel business, saying it could cut competition, reports the BBC.
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Federal prosecutors unsealed charges against 10 Chinese intelligence officers and other individuals Tuesday, accusing them of engaging in a persistent campaign to hack into U.S. aviation companies in Arizona, Massachusetts, Oregon and elsewhere.
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A former partner for KPMG LLP has pleaded guilty to participating in a scheme to improperly obtain confidential information from the accounting firm’s regulator in order to help KPMG make itself look better in its regulator’s eyes.
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A landmark 11-member trade deal aimed at slashing barriers in some of Asia Pacific’s fastest growing economies will come into force at the end of December, reports Reuters.
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Employees at Pentagon Federal Credit Union, one of the largest credit unions in the U.S. told executives and regulators that it had a flawed program to prevent money laundering.
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Chinese regulators are forcing Tianhong Yu’e Bao fund, the world’s largest money-market fund to shrink, creating a bonanza for others.
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Shoppers in a DSW shoe store in New York earlier this month. PHOTO: RICHARD B. LEVINE/NEWSCOM/ZUMA PRESS
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A measure of U.S. consumer confidence rose in October to an almost two-decade high, as Americans expected economic and jobs growth to power ahead despite recent stock-market volatility.
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China's official purchasing managers index, a gauge of activity in the critical manufacturing sector, dropped in October to its lowest in more than two years, government data released Wednesday showed.
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The eurozone economy slowed sharply this summer, posting the weakest quarter in five years, as the region begins to suffer from a slowdown in China and turmoil in Italy takes a toll.
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Cargill Inc., the Minneapolis-based commodities company, named David Dines finance chief, effective Dec.1. Mr. Dines previously led Cargill's global trading businesses for the finance and industrial sector.
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Marcel Smits, the company's current CFO, will move into a new strategic role, assuming leadership of Cargill Asia Pacific, effective Dec. 1. Compensation details were not available.
Bank of Nova Scotia, the Canadian Bank, named Rajagopal Viswanathan finance chief, effective Nov. 1. Mr. Viswanathan succeeds Sean McGuckin who will retire from the company at the end of the year.
Mr. McGuckin, who has been with Scotiabank for nearly 28 years, earlier this year took a leave of absence to address an illness in the family. Mr. Viswanathan has been filling the role of acting CFO since June. He joined Scotiabank in 2002 and in 2014 was appointed chief accountant. Compensation details were not available.
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