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Five Important Wall Street Q3 Results [Apple, Goldman, BoA, Citigroup, Yahoo]

Viral Dholakia — Wed, 19 Oct 2011 08:26:45 +0000

Even as India Inc moves forward with its Q2 fiscal earnings, the top Wall Street companies are slowly oozing out with their Q3 results performance amid slowdown and deficit-reeling US economy.

While the global sentiment is mired by the unanimous downgrade of Spain’s creditworthiness by three credit rating agencies – Fitch Ratings, S&P and now even Moody’s; the Wall Street earnings have been no show-stealer amid mixed-bag of results with some banks doing well, while few others including Apple missing earnings forecast.

Let me summarize a few important Wall Street earnings performance over here:

Apple drags on lower iPhone sales

In a rare instance on missing its earnings forecast, Apple Inc reported a net profit of $6.62 billion (up 54% from $4.31 billion last year) on revenues of $28.3 billion, which came in a tad lower than Wall Street expectation of $30 billion, for its fiscal fourth quarter of this year.

At 17.7 million, Apple sold 21% more iPhones than last year during the July to September 2011 quarter, with no new next-generation iPhone and iPad releases. However, the iPhone sales fell short by 19% when compared with its previous quarter figures.

Goldman stutters with underwriting losses

Investment banker Goldman Sachs reported a quarterly loss of $428 million for the three months ended September 2011, run down by slump in its investment portfolio and fall in trading revenues. This was its second-ever quarterly loss in at least a decade, next only to post-Lehman era loss of $1.6 billion in Q4-2008.

Goldman’s net revenues came in at $3.59 billion, down 60% from $8.9 billion a year ago period. The Q3 results include $1.05 billion losses from investment in Industrial and commercial Bank of China. Its investment and lending business lost $2.48 billion during the quarter under review.

Bank of America prospers with one-time gains

Bank of America, the second biggest US bank by assets next only to JP Morgan Chase, posted a net profit of $6.23 billion. Revenues recorded a growth of 6% to $28.7 billion mostly led by one-time accounting gains related to debt valuations.

In the race to claim position of top-most American bank, Bank of America came in second with its $2.22 trillion in assets, behind JP Morgan Chase’s which reported assets of $2.29 trillion in this latest quarter.

Citigroup in the pink of health

Citigroup posted positive Q3 results with net income of $3.77 billion, up 74% from $2.17 billion in the corresponding quarter last year, backed by lower losses from loans and $1.9 billion from credit valuation adjustment gains.

Citigroup, which is fourth largest US bank, posted revenues of $20.8 billion, almost at par with its revenues clocked in the year-ago period. The bank’s losses from bad loans came down by 41% during the July-September quarter to $4.5 billion.

Yahoo beats estimates

Internet portal Yahoo announced its third quarter results with dwindling sales and profitability, led by growing prominence of social media platforms and Google search products. Yahoo Inc posted Q3 profit of $293 million, with search queries showing tepid growth.

Revenues for the third quarter came in at $1.07 billion, down 4.5% from $1.12 billion recorded last year for the September-end quarter. The revenues exclude traffic acquisition costs. The internet giant is aiming for more business partnerships to target growing monetization.

[Image Source]

No income tax return filing upto Rs. 5 Lakh earnings!

Arun Prabhudesai — Tue, 07 Jun 2011 04:24:29 +0000

Its Official – If you are salaried and earn less than Rs. 5 Lakh a year – There is no need for you to file income tax returns for assessment year ending 2012. What his means that salaried persons will not have to file returns for earnings in current financial year (2010-2011).

Indian Government has been trying to simplify Indian taxation processes for past couple of years now, and this announcement is a big step towards that. Last year, during the budget announcement, Direct Tax Code bill was introduced which promised to make life simple for consumers as well as Businesses for filing tax returns.

Although, this directive was part of the Direct Tax code bill, it was officially announced yesterday. This will save lot of time, effort & money of over 85 lakh Indian citizens (who earn less than Rs. 5 Lakh p.a) and file tax returns year after year, without much change.

However, there are certain caveats – This is applicable only to people who do not have any income from any other sources. For e.g: If you are trading in stocks, investing in mutual funds or earning money from real estate property etc. you will have to file Income Tax returns.

Also, under this scheme if you if you want to claim Tax refunds – you will have to file taxes.

How it will work for Salaried Employee

Essentially, Employees who are eligible under this scheme for filing tax returns will have to disclose their earnings (other than salary, like interest, dividends) to his / her employer. The Form 16 which is issued at the end of the year will then be treated as Employees Income Tax Return itself.

In India majority of employees earn less than Rs. 5 Lakh salary, but most of them have other sources of income as well. So, it will be interesting to see how many of them actually avail this facility of “No Income Tax Return Filing”.

What do you think?

[Suggested reading: Top tax saving instruments for investors]

iPhone Rings-in Record Earnings for Apple !

Viral Dholakia — Wed, 21 Apr 2010 12:11:28 +0000

How often have we discussed the path breaking products under the umbrella of Apple offerings on this site? Now, let’s have a peep into the record setting earnings performance from this giant company.

A record sales driven by iPhones has skyrocketed the earnings performance of Apple Inc. in the March quarter. iPhone sales standing at 8.75 million units has surged a whooping 131% jump year-over-year.

Apple Inc. on Tuesday announced its results for the fiscal quarter ending March 2010, with $13.5 billion of revenues as against $9.08 billion, a whooping 49% rise from the March quarter of previous year.

However, this Steven Jobs led company surprised one and all by posting a whooping 90% surge in its net profits from $1.62 billion in the same quarter during the previous year to $3.07 billion for the quarter ending March 2010.

Interestingly, sales of iPhone have leaped nearly six fold in the Asian markets while almost doubled in Japanese markets. (although it has been a major failure in India)

While the sale of Macs notched a smart 33% growth over the year ago period, the sale of iconic iPod were down by 1% for the same period under consideration. However, iPod Touch sales were up 63% year-over-year.

The earnings performance of the company has managed to out-perform the street’s expectations which got reflected in a smart 8.3% rally to $265 (in after-hours trading) on Nasdaq Stock Market.

The company also highlighted the iTune Store, which brought in revenues of $1.1 billion from sale of music, video and apps. The number of apps in the app store has reached 185,000.

Steve Jobs has also hinted to the investors that Apple has several more extraordinary products up its sleeve. According to a report on Bloomberg, analysts are speculating that the new products may include overhauled version of Apple TV, which would let users share media on other devices such as iPhone, iPads and iPods.

Apple is also expected to release a new version of iPhone sometime during this year. In a finding in what could be a likely next new Apple’s launch, a prototype of new iPhone which was disguised as the current iPhone 3GS model but with a front-facing camera, Micro-SIM instead of standard SIM, improved display and metallic rim.

An ecstatic aspect about Apple Inc. March quarter results is that it does not include the numbers from the recent mega-launch of revolutionary iPad which went on sale from April 3, 2010, just after the close of the quarter.

With iPad launch, what’s up for Next quarter Results, Any Guesses?

Is Arbitrary Investment in Tax-Saving ELSS MF Scheme Just Before the Year End Justified?

Viral Dholakia — Wed, 17 Feb 2010 09:30:42 +0000

As the close of financial Year 2009-10 nears by, the inflows into Equity-Linked Savings Scheme (ELSS) is gaining its ground over other mutual fund schemes for the sheer benefit of tax-saving advantage that these schemes offer to its investors. In fact, since last one month, the record inflow of retail funds in to such ELSS schemes is gradually over-powering the inflows in some of the more well-known diversified equity schemes of various fund houses.

Claiming Tax-benefit

Under the prevailing set of law, investors can invest up to Rs.1 lakh in ELSS schemes to avail of tax exemptions under Section 80C. However, an investment under this special tax benefit scheme comes with the rider of minimum lock-in period of three years for its investors.

Undergoing Proper Due-diligence

A prudent investment practice would involve investing in any asset class with a proper planning and reasonable due-diligence. Like, for example, an investor in real-estate property would check out certain aspects like price per square feet, location of the premises, amenities provided in the premises, etc. before investing his money.

Similarly, an investor in a direct equity market would check out on certain company fundamentals, valuations, management quality, etc before investing the same hard earned money. So, how is arbitrary investment in tax-saving ELSS schemes without any proper due-diligence justified simply because the financial year is approaching its last month?

At the end of the day, even the ELSS schemes are going to invest a major part of its inflows in to equity. What if the stock market valuations are expensive at the time of arbitrary investment made during the year end horizon?

Take, for example, those investors who arbitrarily invested during January and February of 2008 at which time the benchmark index Sensex was hovering around 19-20k. Eventually, stock markets went in to a major bear market for next 2 years since then. The then investors who invested arbitrarily at the market peaks for the sole purpose of tax-saving benefit are still bleeding to date even as we witness doubling of stock markets from their lows of recent slow down. Reason being Sensex is still way below 19-20k and those levels of high NAV is still awaited.

Staggered Approach to Investment

So this indicates the significance of thumb rule regarding proper due-diligence and analysis being applicable to all types of asset-class including ELSS tax-saving schemes. A better approach would be to make use of ELSS schemes, just as SIP works for Diversified Mutual fund schemes, in form of staggered approach to investing during the course of whole year rather than arbitrary investment in lump sump amount at the end of the financial year.

The arbitrary investment would mean betting your entire amount of investment with respect to market levels on that particular date rather than continuous process of investing in staggered manner and taking benefit of all the market ups and downs. This could prove fatal when markets are at the higher price curve; eventually it may lead to lower or no yields at all, at the end of the 3 year lock-in period. This nullifies the investment objective which gets sacrificed for the sole purpose of tax-saving benefit through ELSS schemes.

ELSS vs. Diversified MF

Investors might argue, in that case, the investment perspective is more elegantly met by investing directly in diversified equity schemes itself, if SIP is the approach that is recommended for better yields and returns. I would say, ELSS schemes come with an added advantage of 3 year lock-in period which gives the fund manager an extra elbow room of 3 year investment perspective, unlike diversified funds, where stability with respect to fund outflow is more controlled and capped during times of down turn. From this perspective, ELSS schemes are no less lucrative an offer vis-Ã -vis other equity schemes when used in a staggered approach of investing regularly. Having said that, once all this is factored in, the final yields does cling on various other aspects too like fund house policy, fund manager quality, past performance, etc.

Were you about to invest your lump sump amount in ELSS scheme in next few days? Don’t you agree to debate of a planned approach to investing for your hard earned money?

Arun’s Note: We are nearing the Financial Year end, and most of us are working on how to save taxes. Hence, over next few days we will be featuring series of posts on personal Finance and Investments that may help readers to make informed decisions on their Taxes and Finance. Request to readers – If you have any specific questions, do not hesitate to drop us a line. We will do our best to try and help you out !

Is 2010 Going To Be A Good Salary Year

Ankit Agarwal — Fri, 01 Jan 2010 09:07:03 +0000

First of all , let me Wish You All A Very Happy and Prosperous New Year on behalf of Arun and the trak.in team.

The year 2010 looks like a very promising one to begin with.Not so much that anything spectacular has happened, but we have seen the worst years in the latter part of 2008 and 2009.The U.S. economy bled real bad and it had a ripple effect on the global economy too.Stock Markets tumbled,jobs were lost and the businesses went down like pile of cards.But,all said and done, let bygones be bygones.Let’s celebrate the new year with some positive vibes and hope that the recovering economy goes from strength to strength.

The past year has been rather bad in terms of Salaries.Salaries took a hit across all industry verticals and employees had to make do with marginal or no hikes.Barring a few sectors like Pharmaceuticals and CPG which doled out decent salaries , other sectors felt the heat of a recession hit economy.

However, the outlook for 2010 looks promising.With the Indian Economy registering good industrial growth numbers and still going strong, this year has the makings of turning out a Good Salary Year.

As per Naukri Job Speak, the hiring activities picked up real good in the later part of the year.

Job Index for November ‘09 up by 8.38% and almost all sectors show a positive hiring outlook

As per HR Consulting firm FE , 2010 should turn out to be good year not only in terms of increased hiring activity but also in terms of Salary Hikes and bonuses too.This should come as a breather specially for the top management level which experienced the maximum brunt of salary reductions.The top management salaries took a dip of around 25-30% in CTC.The expected increase for this year is pegged at around 15-20% which is significant.

Moreover, the industry analysts suggest that even though the benefits and perks will go up significantly, the huge bonuses doled out will be reduced to around 30-35%.This is rather heartening since heavy bonuses make a sizable part of the top management salaries.With the bonuses shrinking, there will be more pressure on the executives to work harder and smarter to qualify for the performance based perks and benefits.

Banking and Financial Services Sector(BFSI) which is at top in terms of executive level salaries saw the maximum impact with the top level salaries coming down to 1 crore annually as compared to around 2-3 crores a year back.

IT/ITes sector which also saw one of the worst years in terms of top-level salaries has lifted the salary hike freeze and is primed for paying top dollar again.The winner however for the 2010 is expected to be the Retail Sector.With the likes of Bharti entering the retail market in JV with Walmart , the future looks good for the sector.

The middle management salaries should also see a decent upswing given the improving economy conditions.With the global economy still in troubled waters , the business outlook is not too rosy but the industrial demand is expected to pick up which will give some further way for hiring’s.

I seriously hope that this year should turn out real good in terms of Salary Hikes.However, I hope that a good amount of weightage is given to Performance( individual as well as organization) based variable component.One more expectation is to tie the performance incentives for the top level management with long term performance targets and not on quarterly or yearly performances.So much has been talked about the recession, but IMO the reason why companies lost their way is because the top level think tank worked to achieve short term targets to get the maximum buck.Organizations should make long term performance metrics and that will pave way for the executives to execute long term winning strategies.

Do you think 2010 will be a Good Salary Year too? Which industry do you think will pay handsomely?

Finance Friday: How do you manage your expenses?

Ankit Agarwal — Thu, 26 Nov 2009 17:26:26 +0000

Let’s face it.Â How good are you at managing your finances? I speak for myself and I know I am very bad at it. With finances I am not talking about investments and the savings , that I somehow do a decent job maintaining.

What I am referring to here is those daily is managing the finances in the form of expenses and loans to friends that we incur frequently. The loans or the expenses may not be huge but then every penny counts.

Let me drill down to the basics of the kind of loans/expenses I am talking about.

Movies and Dinner With Friends : We all do it, don’t we. Most of the time one person from the group ends up flashing his/her credit card and settles the bill for everyone. Cool huh. The problem comes when the individual contribution needs to be calculated and intimated to everyone in the group.
A friendly debt/loan : Now, we all need that little bit of lump sum cash sometime, don’t we. I turn to my friends/roommate to borrow cash at times and at times become a lender too. Now,this money is what I call goodwill loan. We expect the other person to give/ask it back as an when required.But, then memory is in short supply for some of us, isn’t it. So, we might tend to forget it at times and the loan turns into bad debt.

Now, I am too lazy to put things on paper and keep a track of this expenses.While browsing the web, I came across thisÂ new product Beezang . The name is a little weird to be very frank, but the product is as simple as it gets.

It lets you manage your expenses online

Curiosity got the better of me and I gave it a spin. Listed below are some of the things that site has in store for you

KISS (Keep it simple and stupid) – A simple interface and easy navigation. Even a 10th grader can find his/her way around the site and its functions.
Groups – There is an option to create groups and group bills too. This makes it easier to track and maintain those common expenses.
Automatic Payment Split – A part of group bills which lets you automatically divide the bills among the group evenly/unevenly.
A “Add Friend” Implementation – Now, when you add a friend’s name, there is an option to enter their e-mail.What this allows you to do is to create a group bill, add the friends with whom you have to share the expenses and a mail is automatically sent out to all friends in the group.
There is a nifty little transaction tab to automatically keep a track of the debt/loans.So, you can have a a complete list of all your finances with debt marked in RED and the loans marked in GREEN.
An automatic settlement of transactions – If you have an entry with a loan given out to a friend, you will have a transaction for the same.Now, if the same friend loans you out the same amount, both the transactions are settled automatically.

There are a few more options thatIi would personally like to see in the site for better management of my finances. For eg:

Alert or Reminder Option : An option to set an alert for a loan/debt will be good.It will help me a keep a tab on the money i have to return or receive at a certain time.
An Import/Export Option : Now, this may not be exactly feasible given there is no standard format of maintaining bills. But, it will be good if I can import/export the expenses once in a month will be good to have.

The product is only in Alpha right now so I am hoping for a lot of improvements and value additions over time. But, it is a nifty little service which I found to be very useful for managing those little here and there expenses. It is serving me far better than creating spreadsheets in Google Docs and sending the links to all my friends.

Give it a spin and let me what do you think? Are there any other applications that you use for keeping a track of your expenses

Globally, Indians better prepared for retirement than most

Arun Prabhudesai — Sun, 04 Oct 2009 15:41:32 +0000

Indians are big on savings – they probably save more than any other country in the world. This has put Indians (42% of them) amongst the ones who are very well prepared for their retirement.

These are the findings of recently released report by HSBC Insurance – Future of Retirement – which put across many interesting findings about how well prepared people are for their retirement.

Retirement Preparedness

Globally, almost 87% feel that they are not well prepared for their retirement, while only 58% Indians are not satisfied with their retirement savings. Conversely, South Koreans (98% ) are the highest.

Percentage of people NOT prepared for their retirement

What are the motives for savings?

Although, Indians are big on savings, do you know what they save on most? yes, you got it right – Children.
Most of the Indians (35%) save their money for their Children, while only 12% of all savings go in the retirement kitty.

Saving for Retirement Vs Saving for their Children

While Japanese (56%) and South Koreans (45%) save for their retirements, China (41%) and India (35%) save for their Children. It is interesting to note that all the developed economies save more for their retirement rather than for their children. While Emerging Economies, like China, India, Mexico, Brazil & Turkey save for their Children more than they do for retirement.

Access to Financial Guidance

One of the surprising findings was that close to 87% of Indians have access to financial guidance, which is maximum amongst all the countries surveyed. The survey points out that only 13% of all Indians have not accessed any financial guidance.

People who have accessed NO financial guidance

Upon reading further, here why the number is so high when it comes to India:

In India, people see their employer as a useful channel for financial information. It is notable that people in both these countries have an appetite for learning about finances through all channels – which is not widely shared in other countries. This helps to explain why the education gap is lower. In China, it stands at half the global average. In India, the gap falls to just one-third of the average.

How long the Downturn will last?

Again, when it comes to optimism about Economy, Indians are in forefront. Indians (59%) feel that this downturn will last less than 12 months, while only 11% feel that it will stretch for more than 2 years. While on the other hand Japanese (55%) are most under confident about the economy picking up anytime soon.

Downturn perception

There are many more interesting highlights and analysis in the 65 page report released by HSBC. You can download it for further reading from here.

Take home salaries dip by 30% over last 10 years…What? How? Why?

Arun Prabhudesai — Tue, 23 Jun 2009 03:26:03 +0000

That headline must have surprised you, especially because it is a known factor that India Inc. is shelling out much fatter pay packages than it did 10 years back. Infact, even a salary 20k p.m for a middle class is considered to be below par by many.

Then how does one justify 30% dip in take home salaries?

It is actually quite simple, and few of you probably might have guessed it already – Even though we have higher salaries, there is too much of a pay cut as compared to 10 years back – and hence this dip of 30%.

Let me back this up by some numbers that were revealed by the survey conducted by ASSOCHAM.

The main culprit offcourse is the BIG housing loan – The survey revealed that take home salary of average employee in metros and large townships has gone down 30% in last 10 years which used to be over 70% around 1999 and now stands around 40% due to increasing burden of EMI’s on housing, auto & luxurious items and life insurance premiums.

In an average salaries structure of Rs. 25,000 per month , the take home part is not more than Rs. 10,000 as average employee sells out over Rs. 6,000 on housing loan, 5,000 loan on cars & autos, Rs. 1,500/ – on luxuries item.

But, what I think is very surprising as well as heartening is that, people are also paying Insurance premiums of nearly 2,500 each month that constitutes 10% of their salary.

This I think is excellent, because, if something happens to them, atleast their families will not have burden of paying big loans and will be covered by Insurance money.

Some other key findings of the survey:

Nearly 30% of employees said that they sell out between Rs. 4,000 to 5,000 in honouring the office loan advance on various petty activities such as construction, on education, marriage in relation.
50% of the respondents said that their take home currently is not more than 40% of their total package and left over amount of 10,000 is spent for food, commuting costs, utilities, doctor and education bills.
In the last 9 years, the salary of common man has gone up by 30% but on the other side the take home salary has come down by as many percentage points.
80% of the respondent mentioned that median home price in the largest metropolitan areas have increased by 100% and the owner would need to earn double the home price to afford it.
70% of the respondent said that the premium insurance cannot afford to skip due to policy cover will cease to exist
42% said that they borrow within their means and thus even after paying the EMI rate of 40-50 per cent of income
The median household income has risen from 10,000 in 2000 to 25,000 in 2009
65% of Single working professional quoted that working in a private firm in metro and buying a flat is difficult. They prefer to live on rent for a quarter of what they would have to pay as EMI.

my my my – what do we have here – A 40% rise in 2-3 days possible?

Arun Prabhudesai — Mon, 18 May 2009 07:52:20 +0000

Now, I am really ecstatic here and I have every reason to be one – The market opened twice and both the times something unprecedented happened – the markets needed to be be halted within matter of seconds.

Markets opened at 9.55am at 12,173 and closed within 30 seconds hit the circuit with BSE rising 10% and NSE rising 14% –
Markets re-opened at 11:55 and hit the circuit again in matter of 17 seconds touching close to 20% overall rise

Yes, I am Ecstatic and why not, many retail investors like me had invested in the market when it was close to 20,000. Instead many of them saw their portfolios cut to less than half the size, in matter of few weeks.

After a long wait of nearly 15 months, there is real big cheer in the market and why not, with this new UPA government coming in with more than expected majority – and importantly – Left getting shattered, the days ahead look great for India Inc and Indian stock markets.

Coming back to today’s upward mayhemÂ – The stock Market clocked whooping 20% in mere 47 seconds – take that ! The bigger question though from investors and traders point of view is

What will happen tomorrow and in coming days?

Here is my personal opinion – There are thousands of trades still remaining to go through, and if they do, we are seeing another day of upper circuit halt to the stock Markets tomorrow as well. Yes, I think we still have 1 upper circuit remaining. I also expect that market may even go beyond 40% (including today’s rise) by this weekend. Which will propel it to beyond 16000 levels.

Now here is my reasoning – The rally from 10,000k has been 90% driven by FII’s ( and they are the biggest winners in this rally) . We still have Domestic Mutual Fund houses who are still nearly 15% to 20% in cash, which I guess will enter the market soon – and dont forget the retail investors, many of them are still in cash. All this money has to yet come into the market.

I think, this stupendous rally is less because UPA has got majority and more because the left now are powerless and cannot come in the way of Economic Reforms that India Inc. has been asking the Government for last 5 years. And if at all the govt. performs even at par with India Inc’s expectations, we can surely see a new highs in next 12 to 18 months!

One of my Twitter friends asked me – Don’t you think market will go down due to profit bookings – Yes, there will be many who will sell and book profits – but there will be many more waiting in the wings to put in money at every fall. The bottom line is that this rally will not be very short-lived as few of them expect it to be.

There is another important aspect of this rally (bad for some, good for many) – The rupee will now appreciate. Infact, rupee exchange rate is inversely proportional to stock markets. As I write this the rupee has already appreciated to 48 against dollar – and with more market upsurge, Dollar may touch 45-46 levels. A bad thing for Adsense publishers. If you have dollars in bank, I suggest convert atleast a partial lot to rupees.

Having said all this, you have to keep in mind that we are not decoupled with global economy,and western markets especially European markets dont look like they will come out of recession that easily. The global cues are something that we will have to watch for time and again – And anything disastrous, like the Lehmann episode happens again, it may effect our markets adversely.

I have an alternate theory as well for this, and would be interesting to know how many of you buy it – With India’s stable government, higher likeliness of reforms in coming months, GDP growth of around 6-7% – India looks a much better markets than most, even BRIC nations included.

Dont you think FIIs will now prefer Indian markets and put in more money here than anywhere else – So probably foreign markets not doing well may be a blessing in disguise for us? What say?

Come on readers, let me hear what you guys think – Are you a Big Bull as much as I am :)?