Microsoft (MSFT) Challenged By EU Anti-Trust
Markets were edging higher while the Dow Jones Industrial continued to reach new highs after the the U.S. private sector hired more employees than expected in February. The ADP National Employment Report showed that there was 198,000 new jobs added which contributed to hopes that the economy is improving. Economists were expecting a rise of 170,000. The January data was also upwardly revised to 215,000 from the originally reported 192,000. Mark Zandi, chief economist at Moody’s Analytics, said “It feels like underlying job growth continues to improve, and at the current pace, this should be enough to start bringing down unemployment.” The current unemployment rate rings in at 7.9%. He continued to say, “In a really rip-roaring economy, we’d be creating closer to 300,000 jobs a month or a bit north of that. So we’re not there yet, but we’re moving in the right direction.” It was also a positive sign for the economy that hiring continued to increase despite worries over the recent sequester.
The European Union announced that they have fined Microsoft (MSFT) $731 million in an antitrust dispute. The EU said that Microsoft failed to follow through with a promise to offer users a choice of web browser. The company signed a contract in 2009 that they would provide several ways to access the internet other than solely Microsoft’s Explorer Browser, however they failed to follow through. It was found that between May 2011 and July 2012 they failed to give nearly 15 million users an option to do so. This is the first time in history that EU’s anti-trust authority has given out a fine to a company for failing to meet it’s obligations. Joaquin Almunia, the EU’s competition commissioner, said “If companies agree to offer commitments which then become legally binding, they must do what they have committed to do or face the consequences. I hope this decision will make companies think twice before they even think of intentionally breaching their obligations or even of neglecting their duty to ensure strict compliance.”
Staples (SPLS) was trading down on Wednesday morning as the company’s fourth-quarter net income sank down 72%. Their year forecast was also below analysts’ expectations. The loss was largely attributed to charges from store closings and other issues. The company earned $78.1 million, or 12 cents per share in the fourth-quarter. This was down from $283.6 million, or 41 cents per share, the same time last year. Subtracting out the charges from store closings and other issues, earnings came in at 46 cents per share, which did surpass analysts’ expectations of 45 cents per share. Revenue was up 3% to $6.57 billion while analysts were expecting $6.71 billion in revenue. However, there was an extra week in the period when taken out revenue actually fell 4% from a year ago to $6.37 million. Revenue at stores open at a least a year were down 5% which was largely attributed to less traffic and flattened order size. Online sales was up 7% but when the additional week was taken out sales actually fell 1%.
That’s all for the day. We’ll see you back here tomorrow, loyal readers.
All the best,
Jack Aubrey, Oakshire Financial