Fraud allegations against Wells Fargo and a disappointing ($620,000) bonus for Microsoft CEO Steve Ballmer top our roundup of business news stories.
Setbacks Cost Microsoft CEO
Microsoft Corp Chief Executive Steve Ballmer got a lower bonus than last year's, Reuters reports. Ballmer, who took over as CEO from co-founder Bill Gates in 2000, earned a bonus of $620,000 for Microsoft's 2012 fiscal year, down 9 percent from last year. His salary, which Reuters calls low by U.S. corporate standards, remained "essentially flat at $685,000. This is the third consecutive year Ballmaer has not earned his maximum bonus. The company saw flat sales for Windows. The financial year, which ended in June, was futher marred by a $6.2 billion write-down for a failed acquisition. The company's failure to provide a browser choice in Europe was also seen as an embarrassing setback.
Unusual Trading Activity Sparks Concern
Unusual trading activity yesterday for U.S. shares of Nokia, Electronic Materials, Inc. and an exchange-traded fund sparked renewed concerns over computerized trading errors, Bloomberg News reports. Nokia shares spiked by 18 percent and dropped by more than 14 percent while Electronic Materials fell by as much as 20 percent, according to Bloomberg. The Financial Select Sector SPDR Fund was up 2.8 percent before diving lower. Also making unusual moves between 10 a.m. and 11 a.m. yesterday were Pandora Media Inc., Hatteras Financial Corp. and Las Vegas Sands Corp.
Alcoa, Yum Brands Beat Expectations
The third quarter earnings season began yesterday with better-than-expected results for Alcoa and Yum Brands, CNN Money reports. Shares of both companies rose in after-hours trading. Alcoa reported sales totaling $5.8 billion, exceeding analysts’ expectations for $5.54 billion in sales. Earnings were $32 million, or 3 cents a share, excluding special items, according to CNN. Yum Brands, which owns restaurant chains such as Pizza Hut and Taco Bell, posted earnings of 99 cents a share, better than analysts’ predictions of 97 cents.
Stocks Slid Lower on Corporate Earnings Concerns
The Standard & Poor’s 500 Index fell 1 percent yesterday to close at 1,441.8 on concerns over corporate earnings and a cut in growth forecasts from the International Monetary Fund, Bloomberg News reports. Oil and Treasuries rose and the euro weakened. The IMF lowered its forecast for world economic growth to 3.3 percent this year and 3.6 percent next year. In July, the IMF anticipated a 3.5 percent growth rate for 2012 and a 3.9 percent rate for next year.Bloomberg also noted that five years ago from yesterday the S&P 500 closed at a record 1,565.15
U.S. Accuses Wells Fargo of Civil Mortgage Fraud
Federal prosecutors accuse Wells Fargo & Co. of making reckless mortgage loans, according to a complaint filed in Manhattan federal court. The civil lawsuit alleges that from Jan. 1, 2002 through Dec. 31, 2010, the bank lied about the quality of more than 6,300 loans it certified for a federal insurance program, which cost the government $190 million in claims when those loans failed. Federal prosecutors allege that Wells Fargo's brokers issued loans that shouldn't have qualified, and then the bank lied about it to the government. The government seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform,
Wal-Mart Delivers Challenge to Amazon
Walmart is testing same-day order fulfillment from its own stores in four parts of the United States, Financial Times reports. Customers who place orders with the Walmart To Go service before noon, local time, can get same-day delivery for a $5-$10 fee in northern Virginia, Philadelphia, Minneapolis, and parts of the San Francisco Bay area. The service is available for general merchandise such as toys and electronics in all four markets, but only for fresh food around San Francisco. Deliveries will be made by UPS. Amazon’s Local Express Delivery offers same-day shipments in 10 US cities for a $8.99 fee.