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Times of India Epaper 3-2-2012 Free Download

Sallie Mae will credit $50 fee to suspend payments

NEW YORK (iBBC News) — The private student lender Sallie Mae is changing how it handles a fee charged to struggling borrowers who seek to temporarily suspend payments.

Sallie Mae isn't cancelling the $50 fee, but said it will now apply the money toward the borrower's loan balance once on-time payments are resumed for six months in a row.

The change came after an online petition asking the company to drop the fee collected more than 77,000 signatures.

Borrowers who are unemployed or suffering economic hardship can apply to temporarily suspend payments on both private and federal student loans. The idea is to keep their credit history in good standing, although the loans still accrue interest.

MasterCard takes $495M charge to cover fee suit

NEW YORK (iBBC News) — MasterCard Inc. on Thursday said it recorded a $495 million charge in its fourth quarter to cover potential losses related to an ongoing lawsuit brought by merchants over the fees they pay on credit card transactions.

Without the charge, MasterCard's earnings topped expectations as shoppers put more purchases on debit and credit cards during the holiday season. Shares rose more than 2 percent in premarket trading.

The Purchase, N.Y.-based payments processor said the charge represents the after-tax portion of a potential settlement in the case. On a pre-tax basis, the charge was $770 million.

Wall Street had speculated the pre-tax bill would run about $1.2 billion to $1.8 billion if MasterCard and rival Visa Inc. settle the suit.

The class action suit stretches back years and also involves most of the major U.S. banks. It is set to go to trial in September before the U.S. District Court for the Eastern District of New York, but many analysts and investors expect a settlement well before that.

The charge cut deeply into MasterCard's fourth-quarter profit. The company posted net income of $19 million, or 15 cents per share, compared with $415 million, or $3.17 per share, in the 2010 fourth quarter.

Excluding the charge, MasterCard said it earned $514 million, or $4.03 per share. That topped analysts' average expectation of $3.92 per share. In premarket trading, MasterCard shares rose $9.38, or 2.6 percent, to $367.

Revenue rose 20 percent to $1.73 billion, from $1.44 billion in the prior year. That matched Wall Street's forecast.

MasterCard said use of debit cards in the U.S. rose faster than the use of credit cards during the holiday shopping season. That's happening even as banks cut debit card rewards programs and ramp up incentives to use credit cards in response to a law that kicked in Oct. 1. The law cut the fees merchants can be charged for debit card transactions — fees similar to those being fought over in the lawsuit.

Debit card use rose more than 18 percent during the quarter, with card holders making $139 billion in purchases. Credit card growth picked up as well, rising nearly 7 percent to $143 billion. It's a sign that consumer are still loath to pile up debt.

Debit card use also rose sharply in the rest of the world, which accounts for more than half of MasterCard's revenue. Outside the U.S., $176 billion was purchased using the cards linked to bank accounts, a 23 percent jump. Credit card use gained 156 percent to $405 billion.

For the year, MasterCard reported profit of $1.91 billion, or $14.90 per share, up 3 percent from $1.85 billion, or $14.10 per share, for all of 2010. Revenue leaped 21 percent to $6.71 billion, from $5.54 billion the prior year.

Palestinians hurl shoes at visiting UN chief

BEIT HANOUN, Gaza Strip (iBBC News) — Palestinians tried to block the U.N. chief from entering the Gaza Strip and flung shoes at his armored convoy on Thursday, the second day of Ban Ki-moon's mission to the region to keep informal peace talks alive.

About 40 relatives of Palestinian prisoners held in Israeli jails for a range of violent attacks gathered at the Erez Crossing between Gaza and Israel, hoisting posters with pictures of their loved ones and signs in English and Arabic reading, "Ban Ki-moon, enough bias to Israel."

Some swung their signs and wooden sticks at Ban's convoy in protest. Three of them threw slippers at his car and another hurled a boot — an insulting gesture that is associated with an Iraqi protester who hurled his shoes at former U.S. President George W. Bush at a news conference in Baghdad in 2008.

The Gaza prisoners' relatives, angry that Ban would not be meeting with them, formed a human chain at the crossing in an effort to block his vehicle, but Hamas security forces moved them away so Ban could enter the coastal territory.

"We came here in a symbolic message to Mr. Ban Ki-moon that Palestinians from Gaza want to have the right to visit their children and loved ones in Israeli jails," said Jamal Farwana, a spokesman for Gaza prisoners' families. "He should make more of an effort to release the prisoners and we wonder why every time he avoids meeting families of Palestinian prisoners."

Israel holds about 7,000 Palestinian prisoners, after recently freeing more than 1,000 in exchange for a captive Israeli soldier. Many of the prisoners were convicted of carrying out deadly attacks against Israeli civilians.

Relatives of prisoners from Gaza haven't been able to visit them in jail since 2006 because of strict restrictions on who can enter Israel from the coastal strip, which is run by Hamas militants violently opposed to Israel.

Local activists boycotted a planned meeting with Ban on Thursday because the U.N. chief did not meet with the prisoners' relatives.

Ban is on a mission to the area to try to keep informal talks between Palestinians and Israelis going. In Gaza, he met with U.N. relief officials, aid groups and human rights organizations.

He also visited a U.N.-funded housing project in southern Gaza, where protesters held up signs saying, "We want to lift the siege on Gaza" — referring to Israeli restrictions on the entry and exit to and from Gaza of people and goods.

Speaking to reporters, Ban thanked the people of Gaza for their "warm welcome."

"I met many people who were waiting for me at the entrance and I fully share their fear and frustration. That is why I am here," he said, referring to the incident at the border crossing. "There is a very dire social, economic and humanitarian problem. People need to move freely ... I have urged the Israeli authorities to lift the restrictions completely and unconditionally."

Ban's visit was being heavily secured by Hamas security forces, but he will not be meeting with members of the Hamas government, who are widely shunned internationally over their refusal to renounce violence.

From Gaza, the U.N. chief was due re-enter Israel to visit a border town that has been pounded over the years by Palestinian rocket and mortar fire.

"All this violence must stop," he said in Gaza. "I would urge the Palestinians from Gaza: they must stop firing rockets on the Israeli side ... this killing of civilians is not acceptable."

Gaza gunmen broke a weekslong lull in violence after Ban's arrival in the region on Wednesday, firing a volley of mortar shells into southern Israel. They exploded in open fields without causing casualties.

Ban spent Wednesday meeting with Israeli leaders and leaders of the Western-backed government of Palestinian President Mahmoud Abbas in the West Bank.

He urged Israel to halt settlement construction and present detailed proposals for a border with a future Palestinian state. And he tried to persuade the Palestinians to continue low-level meetings with Israel that the international community hopes will evolve into serious negotiations.

Abbas has said the Jordanian-mediated meetings have run their course, but that he'll decide whether to resume them after consulting with the Arab League next week. Ban said he had urged the Israelis to provide some good will measures to build confidence between the sides.

Formal peace talks stalled more than three years, save for a brief three weeks in late 2010. The Palestinians say there is no point in negotiating as long as Israel continues to settle its citizens in the West Bank and east Jerusalem — areas they want for their future state, along with Gaza.

Israel has rejected Palestinian demands for a settlement freeze ahead of any full-fledged negotiations. It says it wants to continue the exploratory talks and criticizes the Palestinians for imposing conditions on negotiations.

Shell annual profits hit $30.9 bn on high oil prices

Energy giant Royal Dutch Shell said Thursday that 2011 net profit jumped 54 percent to $30.92 billion (23.6 billion euros) on higher oil prices, but also revealed a drop in fourth-quarter earnings.

The profit after tax figure compared with net income of $20.47 billion during 2010, Shell said in a results statement. The group was boosted as Brent oil prices averaged $110.91 per barrel last year.

However, the Anglo-Dutch firm also revealed that net profits slipped four percent to $6.5 billion in the fourth quarter, or three months to the end of December, compared with same part of 2010.

Europe's largest oil company faltered due to a squeeze on refining margins and lower American natural gas prices, and it cautioned over the "volatile" outlook for the global economy -- and the energy market.

Total oil and gas output eased five percent to 3.3 million barrels of oil equivalent per day, hit by the temporary shutdown of one of its biggest fields in Nigeria.

Shell is meanwhile set to invest $30 billion into new investment projects to boost the company's growth, and added that its 2012 outlook was boosted by more than 60 new projects and options.

"I am pleased with our delivery in 2011, focusing on improving our operating performance and ramping up our growth projects," said chief executive Peter Voser in the earnings release.

"We have made good progress with portfolio development during 2011, with new opportunities in global gas, liquids-rich shales and exploration, alongside some $7.5 billion of divestments as part of Shell's drive for on-going capital efficiency and portfolio improvement."

He added: "Our fourth-quarter results were impacted by a sharp downturn in industry refining margins and North American natural gas prices.

"The global economy and energy markets are likely to see continued high volatility. Despite the near-term uncertainties, Shell's focus remains on through-cycle investment for sustainable growth."

In recent years, Shell has outshone troubled rival BP -- which has been ravaged by the 2010 Gulf of Mexico oil spill disaster -- and underlined its confidence Thursday by promising dividend growth for the first time since 2009.

Shell said it would raise its dividend by two percent for the first time in three years from next quarter. However, this was lower than the 4.0-percent hike that most analysts had expected.

Voser added that the planned return to dividend growth in 2012 showed the company's confidence that "there is more to come from Shell".

However, investors baulked at falling fourth-quarter profits in midday trading on the London stock market.

Shell's 'B' share price fell by 2.35 percent to 2,271.3 pence on the British capital's benchmark FTSE 100 index, which was 0.19 percent lower at 5,779.56 points.

"The initial disappointment of this update does not detract from the longer term view, where Shell's drive for progressive business and dividend growth remains strongly on track," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

Merck profit beats as research trimmed

(iBBC News) - Merck & Co on Thursday reported better-than-expected fourth-quarter earnings, helped by a decrease in research spending, and predicted relatively flat 2012 results as the No. 2 U.S. drugmaker girds for cheaper generic forms of its biggest product, asthma drug Singulair.

Merck posted a fourth-quarter net profit of $1.51 billion, or 49 cents per share, compared with a loss of $531 million, or 17 cents a share, a year ago, when the company took a $1.7 billion charge related to a major clinical setback.

Excluding items, including acquisition and restructuring expenses, Merck earned 97 cents per share. Analysts, on average, expected 95 cents per share, according to Thomson Reuters I/B/E/S.

Global revenue rose 2 percent to $12.29 billion, just shy of Wall Street expectations of $12.53 billion.

Sales of Singulair, whose U.S. patent lapses in August, jumped 8 percent to almost $1.5 billion, well above any other Merck product. Sales of its Januvia diabetes drug soared 42 percent to $960 million, while a related combination product called Janumet jumped 34 percent to $386 million -- suggesting the fast-growing diabetes franchise will be able to help offset Singulair's approaching decline.

But sales of arthritis treatment Remicade fell 28 percent to $511 million following arbitration that assigns rival drugmaker Johnson & Johnson a wider sales territory for the medicine. Merck acquired the widely used product in 2009 through its purchase of Schering Plough.

Schering Plough and J&J had a longstanding agreement that divided up sales territories, but J&J demanded and won a more favorable arrangement after Merck bought Schering Plough.

Mark Schoenebaum, an analyst with ISI Group, said results were dampened by weak Remicade revenue and sales and administrative expenses that came in $141 million above expectations. He said earnings were bolstered, however, by research spending that was $145 million lower than Wall Street forecasts.

The company said it expects to seek approvals of five new medicines between 2012 and 2013. They include two products that have been delayed for years by regulators: Bridion, to reverse the effects of anesthesia, and Tredaptive, a form of niacin meant to raise "good" HDL cholesterol without causing facial flushing.

Merck said it expects full-year 2012 earnings of $3.75 to $3.85 per share, excluding special items. Analysts, on average, expect $3.83 per share. The forecast reflects earnings 0.5 percent lower to 2.1 percent higher than those seen in 2011.

Fewer seek unemployment aid as job market improves

WASHINGTON (iBBC News) — The number of people seeking unemployment aid fell last week, a sign that companies are cutting fewer jobs and likely stepping up hiring.

Weekly unemployment applications fell 12,000 to a seasonally adjusted 367,000, the Labor Department said Thursday. The four-week average, a less volatile measure, dropped for the third straight week to 375,750.

That's the second-lowest level for the four-week average since June 2008. When applications stay consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate.

The report comes a day before the government will issue its jobs report for January. Economists forecast that the report will show that employers added 155,000 jobs last month, while the unemployment rate remained at 8.5 percent. In December, employers added 200,000 jobs.

Economists forecast that the nation will gain about 160,000 jobs a month this year, according to a survey of economists by the Associated Press. That's up from an average of about 135,000 last year.

Still, the job market has a long way to go before it fully recovers from the damage of the Great Recession, which wiped out 8.7 million jobs. More than 13 million people remain unemployed. Millions more have given up looking for work; they're no longer counted as unemployed.

The economy's growth rate rose in the final three months of last year, to a 2.8 percent annual rate. That was faster than the 1.8 percent pace in the July-September quarter.

Still, a key reason for the growth was that companies restocked their supplies at a robust pace. Restocking is likely to slow in the first three months of this year, which would lead to weaker growth.

Until consumer spending picks up, businesses may be forced to cut back on hiring. But consumers have been weighed down by wages that haven't kept pace with inflation. More jobs and higher pay would invigorate consumer spending.

Most economists expected the combination of weaker inventory growth and tepid consumer spending to lead to slower growth in the current January-March quarter. Many are predicting 2 percent annualized growth this quarter.

NATO ministers mull Afghan drawdown

BRUSSELS (iBBC News) — NATO defense ministers will discuss possible changes to the alliance's strategy in Afghanistan after the U.S. and France called for speeding up the handover of combat roles to local forces.

Both U.S. Defense Secretary Leon Panetta and French President President Nicolas Sarkozy have suggested that the coalition should end its combat role in 2013, more than a year ahead of plans adopted at NATO's last summit in Lisbon.

The ministerial meeting comes a day after a secret NATO report was leaked to the media suggesting that insurgent morale remains extremely high after more than a decade of war and that the Taliban remain confident they will defeat the coalition.

The meeting of defense ministers will pave the way for an alliance summit in Chicago in May.

AstraZeneca axes 7,300 jobs as growth stalls

LONDON (iBBC News) - AstraZeneca is cutting a further 7,300 jobs and expects earnings to fall this year as patents on key drugs expire and governments in Europe and the United States squeeze prices.

Britain's second-biggest drugmaker said on Thursday the latest phase of cost cutting would deliver an extra $1.6 billion in annual benefits by the end of 2014. It will cost $2.1 billion to implement.

The Anglo-Swedish drugmaker faces loss of exclusivity on many of its top-selling drugs over the next five years and has few obvious replacements in its pipeline.

The antipsychotic medicine Seroquel, its second-biggest drug, will lose exclusivity in the United States in March and also goes off patent in European countries this year.

As a result, Chief Executive David Brennan has been shrinking the business. "The further expected losses of market exclusivity make for a challenging 2012 outlook," he said.

The lack of obvious replacements for products like Seroquel and heartburn treatment Nexium, as well as top-selling heart drug Crestor which goes off patent in 2016, has triggered speculation AstraZeneca may need to make a big acquisition.

Following the poorly received purchase of MedImmune in 2007, the company has so far eschewed another large deal. But that strategy could be up for review, especially with the group casting around for an outsider to replace current chairman Louis Schweitzer.

Doubts about AstraZeneca's future have grown since a double blow to its new drug pipeline in December when it scrapped an ovarian cancer drug and took a big writedown on an experimental antidepressant.

Its existing cardiovascular business is also uncertain, with new drug Brilinta off to a slow start and cholesterol fighter Crestor facing more competition following the arrival of cheap generic copies of Pfizer's market-leading Lipitor.

AstraZeneca now expects recently launched products and the pipeline to contribute $2-4 billion to sales by 2014, down from $3-5 billion estimated a year ago.

Despite the challenges, AstraZeneca is committed to returning cash to shareholders and the company announced it planned to buy back $4.5 billion in shares in 2012.

Core earnings this year, which exclude some items, are forecast by the company to be between $6.00 and $6.30 a share, down from $7.28 in 2011.

In the fourth quarter of 2011, earnings rose 16 percent to $1.61 per share -- broadly in line with analyst expectations of around $1.60 -- on flat sales of $8.66 billion. Profit was buoyed last year by an unusually low tax rate.

Analysts, on average, had forecast sales in the quarter of $8.55 billion, according to Thomson Reuters I/B/E/S.

Drug stocks have outperformed the broader market in recent months, with investors attracted by their healthy dividend yields, but growth is elusive for many of the big firms.

Pfizer, the world's biggest drugmaker, reported a sharp fall in quarterly earnings two days ago and trimmed its 2012 forecasts, while European rival Novartis also said it expected lower profitability this year.

Sony CFO: aims for $2.6 billion oper profit next FY

TOKYO (iBBC News) - Sony Corp aims to return to the black on an operating basis and achieve about 200 billion yen ($2.6 billion) in operating profit in the next fiscal year, as it looks to halve losses in its TV business, CFO Masaru Kato told reporters.

The Japanese consumer electronics company earlier on Thursday slashed its operating income forecast to a loss of 95 billion yen for the current year ending in March, from a profit of 20 billion yen in its previous outlook, stung by a slide in sales at its TV unit as well as a strong yen and other factors.

($1 = 76.1300 Japanese yen)
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