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The Morning Ledger: Stock Buybacks Lift U.S. Corporate Earnings |
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An employee assists a customer with an Apple iPhone XS in Chicago, Ill., U.S. Apple’s stock buybacks added 7 cents a share in the March quarter. PHOTO: DANIEL ACKER/BLOOMBERG NEWS
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Good day. Last December’s U.S. tax overhaul is boosting corporate profits, helping companies fund record stock buybacks -- a move that makes their results look better by raising the per-share earnings they highlight for investors, The Wall Street Journal's Michael Rapoport and Theo Francis report.
A new record: S&P 500 companies bought back $189 billion of their own shares in the first quarter, and a similar number -- if not more -- is expected for the second quarter, according to S&P Dow Jones Indices. By contrast, S&P 500 buybacks totaled no more than $137 billion in any of the six quarters before the tax overhaul.
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Some firms are more aggressive than others: Apple Inc. repurchased 112.8 million shares in the quarter that ended in June, contributing 5 cents to its earnings of $2.34 a share. Union Pacific Corp. repurchased about 4% of its shares in the second quarter, helping earnings per share climb substantially faster than net income. Thanks to buybacks, Southwest Airlines Co.’s quarterly per-share earnings rose even though its profit fell from a year earlier.
Giving back to shareholders: The buybacks aren’t necessarily done for the purpose of increasing per-share earnings. Many companies say they want to return excess capital to shareholders. Others intend to offset new shares issued to employees as compensation. But the benefits to per-share earnings from buybacks can help a company’s result compare more favorably to Wall Street forecasts.
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Stocks: Global indices mostly headed lower Monday as tensions over tariffs remained front and center for investors after China canceled talks with the U.S. and called the Trump administration a trade bully. The Stoxx Europe 600 was 0.3% lower and
futures markets pointed to a 0.2% opening loss for the S&P 500.
Currencies: The WSJ Dollar Index, which measures the buck against a basket of 16 other currencies, was down 0.1%. The British pound was up 0.4% against the U.S. dollar following a steep fall on Friday after Brexit negotiations between the U.K. and the European Union reached an impasse.
Oil: Brent crude oil climbed 2.3% to $80.03 a barrel after a Sunday meeting of oil-producing countries failed to produce a consensus on how to contain prices.
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Amalgamated Bank and Ascena Retail Group Inc. are among the companies slated to report earnings today.
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The Bank of Japan on Tuesday releases minutes from its July policy meeting, the Financial Times reports. The U.S. Federal Reserve on Wednesday is expected to raise its benchmark rate from its current range between 1.75% and 2% amid solid economic growth, low unemployment and stable inflation.
The U.S. Commerce Department on Thursday releases August durable-goods data and its third estimate of second-quarter gross domestic product while the Italian government presents its budget. On Friday, the U.S. Commerce Department publishes August personal income and outlays, and the University of Michigan releases its final September U.S. consumer sentiment reading.
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A Sky logo. PHOTO: DANIEL LEAL-OLIVAS/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Having secured control of European pay-TV giant Sky PLC, Comcast Corp. now must persuade investors that it didn’t overpay and that the deal will accelerate its growth. The U.S. cable giant topped 21st Century Fox Inc. with a $38.8 billion bid.
Comcast Corp.'s victory over Sky PLC complicates Walt Disney Co.’s companywide direct-to-consumer strategy, and leaves the company without an asset that Chief Executive Robert Iger once called a “crown jewel” of the 21st Century Fox Inc. acquisition.
The bidding war for broadcaster Sky PLC had already provided hedge funds with one of their best trades of the year. Saturday’s dramatic auction made it even better.
French grocer Carrefour SA denied claims from rival Casino Guichard-Perrachon SA that it had approached its smaller competitor about a possible merger to create one of the world’s largest retail giants.
Barrick Gold Corp. agreed to buy Randgold Resources Ltd. in an all-share merger that will create the world’s largest gold company worth $18 billion, with a dominant position in Africa.
WPP PLC’s new chief executive is preparing to consolidate some of the advertising giant’s major properties, as traditional agencies struggle to keep pace with the industry’s digital shift.
Dell Technologies Inc. is exploring the possibility of launching a traditional IPO instead of going public through a proposed acquisition that has met resistance from several investors.
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Finance leaders across industries consider the cultivation of talent a leading priority that is crucial to the success of any company, according to a new survey by consulting firm Protiviti Inc.
A survey of 393 chief financial officers and other finance executives found that “the changing roles of human resources, leadership and development and recruiting” landed among the top priorities requiring attention over the next 12 months, CFO Journal's Ezequiel Minaya reports.
Respondents to the survey released last week indicated that developing an organization’s bench, recruiting and retaining talent, navigating change, and embracing new technologies ranked among top concerns. Survey participants also listed working effectively with outside parties, mentoring, communication and networking skills as priorities.
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Singapore offices of Uber and Grab in March 2018, the month the two ended their competition. PHOTO: EDGAR SU/REUTERS
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The Competition and Consumer Commission of Singapore fined ride-hailing firms Grab Inc. and Uber Technologies Inc. and imposed operating restrictions on the former after ruling that a merger earlier this year was anticompetitive.
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As the U.S. Securities and Exchange Commission draws up plans to allow increased access to private markets, that population has already grown 10-fold since the 1980s, a Wall Street Journal analysis finds. But such investing can be high-risk.
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OPEC producers largely agree that oil prices above $80 a barrel would be too high. But there is widespread disagreement on how the cartel and its allies should contain crude prices once U.S. sanctions banning Iranian oil sales take effect in November. Meanwhile, U.S. shale oil production will peak by the late 2020s, triggering renewed demand for OPEC crude after an expected decline and stagnation, the oil cartel said Sunday.
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The German Shipowners Association says German owners operate 2,400 vessels compared with 3,800 in 2012. PHOTO: KRISZTIAN BOCSI/BLOOMBERG NEWS
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Germany, one of the world’s main maritime players, saw its commercial fleet shrink by a third over the past six years, becoming the biggest loser in a vicious industry slump that has reshaped global shipping.
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The gap between the price of a new and used vehicle is as wide as it has been in years, pushing an increasing number of U.S. consumers to the used-car lot and putting pressure on auto makers to deepen discounts on new cars to keep them competitive.
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Russian wheat exports are booming despite a crushing price slump, as the country’s farmers finally emerge as competitors to their U.S. counterparts.
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Thomas Cook Group PLC, a London-listed travel company, said it named Sten Daugaard as group chief financial officer on an interium basis. Mr. Daugaard will join the company on Oct. 1 and take on his new role on Dec. 1.
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Current Chief Financial Officer Bill Scott is stepping down and leaving Thomas Cook, effective Nov. 30, the company said in a filing. Mr. Daugaard was most recently chairman of the audit committee of German computer technology company Kontron S&T AG and, prior to that, chairman of the audit committee of Danish jeweller Pandora A/S. Before that, he was CFO at Lego, SGL Carbon SE and LTU International Airways. Compensation details were not immediately available.
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