According to Daisuke Wakabayashi, Microsoft Corp. (MSFT.O: Quote, Profile, Research) posted a 16 percent rise in quarterly profit on Thursday but missed Wall Street expectations and set a disappointing profit target due to increased costs on products from Windows to the new Xbox 360 game console.

Shares in the world’s largest software maker fell 6 percent in after-hours trade after Microsoft said earnings will be hurt by increased investments for its software services business, accelerated Xbox 360 game console shipments and higher costs ahead of crucial new product releases.

Microsoft also predicted personal computer and server computer sales growth would slow in the fiscal year starting July 1. The company plans in the upcoming fiscal year to ship upgrades to its mainstay Windows operating system and Office business software suite.

"Guidance for next year was lighter than anticipated, especially due to the upcoming product release cycle," said Kim Caughey, equity analyst at Fort Pitt Capital Group. "Microsoft often sets the bar low for itself."

Microsoft posted a net profit of $2.98 billion, or 29 cents per share, in its fiscal third quarter ended March 31, compared to $2.56 billion, or 23 cents per diluted share, a year earlier. Revenue rose 13 percent to $10.9 billion.

Excluding legal charges, Microsoft said it earned 31 cents per share. Analysts, on average, had forecast earnings of 33 cents per share on revenue of $11.04 billion, according to Reuters Estimates.

Microsoft Chief Financial Officer Chris Liddell said the higher costs and investments may weaken earnings and profit margins in the short term, but argued they are important for long-term growth.

"We have made a strategic decision with respect to next year that, given the set of opportunities and the revenue growth potential we see, we’re willing to make that trade-off," Liddell said in a conference call with analysts.

Redmond, Washington-based Microsoft provided its first outlook for the coming fiscal year starting July 1. It sees diluted earnings per share to range between $1.36 and $1.41 on revenue of $49.5 billion to $50.5 billion next year.

Wall Street analysts called for earnings per share excluding special charges of around $1.53 in fiscal 2007 on sales of $49.5 billion, according to Reuters Estimates.

Finance and Investment

Finance and Investment

Finance and Investment

The business confidence of India Inc has risen during the second quarter of 2006 compared with the previous period, according to the Business Optimism Index released by Dun and Bradstreet India today.

In its survey, Dun and Bradstreet (D&B) has reported a steady outlook for the Indian economy despite a sharp rise in global crude prices.

The D&B business expectation survey for the period was conducted in March.

The composite business optimism index has recorded an increase by 5.8 per cent to 177.5 from 167.7 in the first quarter. While the volume of sales, net profits and new orders recorded a decline, selling prices, inventory levels and employee strength have increased.

�The survey reflects high business optimism and demand conditions are expected to remain strong,� said Manoj Vaish, president and chief executive officer, Dun and Bradstreet India.

�Going forward, interest rate movements and inflation rates could affect the business optimism,� he added.
The index measures the pulse of the business community and is arrived at on the basis of a quarterly survey of their expectations. It surveys companies from several sectors, including basic, capital as well as intermediate goods, consumer durables, consumer non-durables and services.

The corporate sector has shown a greater optimism about future sales prospects with approximately 88 per cent respondents expecting sales volumes to increase during the quarter. However, about 3 per cent are expecting a decline. The index for volume of sales was at 85 per cent compared with 88 per cent in the previous quarter.

The optimism index for net profits for the quarter stood at 80 per cent, 3 percentage points down from the previous quarter. About 83 per cent of the respondents anticipate an increase in profitability, while 3 per cent expect a decline in profits.

Approximately 52 per cent of the respondents anticipate selling prices to go up, while 8 per cent expect prices to decline. Thus, the index for selling prices was at 44 per cent, an increase of 6 percentage points from the previous quarter.

The index for new orders is at 82 per cent, a decrease of two percentage points over the previous quarter with about 85 per cent respondents expecting their order book position to improve and 3 per cent anticipating a decline.

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The additional burden of service tax on builder flats has become the latest irritant in the field of housing finance.

People seeking home loans are now required to pay a hefty service tax in addition to the cost of the land and building, stamp duty and registration charges.

While the banks are flush with funds, they seem cagey in financing the extra bit, saying it’s a risky proposition.

Banks usually lend only about 85 per cent of the total cost of a house. If a house is valued at Rs 20 lakh, the stamp duty and registration fees push up the cost to Rs 23 lakhs. An 85 per cent loan on that amount works out to Rs 19.5 lakh, which gives a final loan-to-cost ratio of 97 per cent of the value of the house.

Once the 12 per cent service task is added to the cost of the house, the final price works out to nearly Rs 25.5 lakh. An 85 per cent loan on that amounts to nearly Rs 21.5 lakh, or around 109 per cent of the property’s actual value.

Banks are worried about upgrading the loans to provide maximum possible finance to people buying homes, but that increases the risk of loan defaults. The good news is that the Finance Ministry is looking into the matter to see whether the service tax pressure can be eased a bit, and customers can only hope for better days ahead.

Source: http://www.ndtvprofit.com/homepage/storybusinessnew.asp?id=30929&template=&cache=4/26/2006%209:58:48%20AM

Finance And Investment

Finance in India

Indian Finance

By I. Ramamohan Rao, Hannover (Germany): Asserting that India is at the cusp of a historic transformation, Prime Minister Manmohan Singh has said that the mechanism of an open market, "in an enabling environment of a free parliamentary democracy, has never been used before to raise so many millions of people from the age old scourges of poverty, ignorance and chronic disease Speaking at the inauguration of the Hannover Fair here yesterday evening, Singh said that today, we have a new vision for India as an active participant in the increasingly integrated economy. We are committed to an open, liberal economy; one that is in tune with the new realities of the global economic order. We seek to enhance our presence in the international trading system&quot. As tariff barriers fall and an even more welcoming investment climate develops, India is more open and more hospitable. Ours is one of the most liberal policy frameworks for foreign investment. We have opened up most sectors of our economy to foreign investment, Singh said. Pointing that India was at present paying particular attention to infrastructure, the Prime Minister said that India have plans to step up investment in transport connectivity, power and energy, both in the rural and the urban sectors. Our highway plan, currently nearing completion, is one of the world’s largest. Our railway system, already one of the world’s largest, is being modernized with new technology. Ports and airports are witnessing renewed activity as the private sector and public-private partnerships in investment and operation are encouraged. These programmes will create significant opportunities for construction and engineering firms. On a rough estimate, over the next decade, our economy can absorb over 150 billion dollars of investment in the infrastructure sector alone,Singh said.Emphasising that India attached great importance to its relations with Germany, he said that the Indian and German people have cherished a close and warm friendship. He added that there has been a constant flow of ideas, knowledge and commerce between the people of India and Germany. The Prime Minister further went on to say that India has benefited from German support in the European Union (EU) system, adding that just as India see Germany as a natural partner in Europe, we hope Germany will increasingly come to view India as its natural partner in Asia. Asserting that German firms have been playing an important role in the technological modernization of India, the Prime Minister said that India saw Germany as a leading scientific, technological and cultural power.

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Hyderabad: Aimed at making the banking experience of farmers and rural population easy and comfortable, Andhra Bank is going to shortly introduce voice-interactive ATMs in the vernacular languages, according to the bank’s Chairman and Managing Director, Mr. K. Ramakrishnan.

Addressing a gathering of bank’s farming customers at the launch of the ATM-enabled Kisan Credit Card here on Tuesday, he said the bank would take a step forward in taking the technology to farmers.

The ATM-enabled Kisan Credit Cards will facilitate farmers to draw cash at any of the bank’s 390 ATMs and over 1,100 shared ATMs across the country. There would be no service charge levied on these cards issued free of cost with a validity of three years, subject to annual review. The cardholders would also be covered under personal accident insurance scheme, he said.

Having disbursed Rs 13,385 crore of crop loans during 2005-06 surpassing the targets, the bank has set a target of Rs 15,000 crore of disbursals during the current fiscal under Kisan Credit Card mode, covering 75-lakh farmers, Mr Ramakrishnan said. Stating that the bank proposes to focus on the tenant farmers through Rythu Mitra Groups, he urged the Government to form such exclusive groups to enable the bank cover them in a phased manner.

Source: http://sify.com/finance/fullstory.php?id=14182747

Investment Banking

Investment Banking

Investment Banking

Wal-Mart Stores issued a statement this evening following today’s FDIC hearing on Wal-Mart’s application for an ILC bank.

"We thank the FDIC for providing us the opportunity to clarify and correct much of the confusion and misinformation that exists about our application and our intentions.

"Today’s hearing made it clear that regulators can choose between approving a routine application or yielding to unfounded speculation and heated rhetoric about topics unrelated to our application.

"Our application and testimony should convince regulators that we will continue to support and expand upon the over 1150 independent bank branches already in our stores, and that our goal is to save money on transaction costs and then pass on those savings to working families who shop in our stores. We’ve made it clear to regulators that the scope of our plan is limited and specific and that anyone who suggests otherwise is simply wrong.

"Instead of supporting our efforts to help save even more money for working families across the country, our critics chose to distort the facts and raise fears about activities our application prohibits.

"In the end, we think regulators will see through their rhetoric, and we’re confident they will approve this application based on its strong, pro- consumer merits, just as they have approved some 60 similar applications."

Source: http://www.paymentsnews.com/2006/04/walmart_comment.html

Investment Banking
Investment Banking
Investment Banking