Chinese e-commerce giant Alibaba files for $1 billion IPO, "Frozen" heats up Disney 2nd quarter earnings and mortgage applications are up. Read about these and other of the day's top business news stories.
Alibaba Files for $1 Billion IPO
Alibaba filed paperwork on Tuesday that sets the stage for what could be the biggest initial public offering in U.S. history, CNN reports. The Chinese e-commerce giant plans to raise $1 billion, but analysts expect the price to exceed that, and even surpass that of Facebook, which raised $16.4 billion in 2012. The company’s registration statement was more than 2,300 pages long, CNN said, but it did not specify an offering price, what exchange American Depositary Shares would be listed on, or what stock symbol under which Alibaba would trade. At the end of last year, Alibaba reported it had 231 million active monthly buyers, up 44 percent from a year earlier. For the nine months ended in December, Alibaba generated net income of $2.9 billion on revenue of $6.5 billion.
Disney’s 2nd Quarter Earnings: Let it Grow
Things are heating up at Disney, thanks in part to the phenomenal theatrical, home video, and soundtrack success of its Oscar-winning animated film, “Frozen.” The studio on Tuesday posted second-quarter earnings that beat Wall Street forecasts. Disney also got some earnings muscle from “Thor: The Dark World,” which comes from Disney’s $4 billion purchase of Marvel Entertainment five years ago as part of its strategy to make branded movies. Net income in the three months through March jumped 27 percent to $1.92 billion, or $1.08 per share, from $1.51 billion, or 83 cents per share, in the same period a year ago. Revenue grew 10 percent to $11.65 billion, trumping the $11.25 billion analysts expected. The movie studio’s revenue increased by 35 percent to $1.8 billion, while TV business revenue rose 4 percent to $5.13 billion and parks and resorts revenue increased 8 percent to $3.56 billion. Consumer products revenue grew 16 percent to $885 million.
Mortgage Applications Up
The Mortgage Bankers Association reports that loan applications rose last week following weeks of mortgage market weakness. Total mortgage applications rose 5.3 percent week-to-week on a seasonally adjusted basis. Refinance applications were up just by 2 percent, but new purchase applications jumped 9 percent, reaching the highest level since January. "A sizeable increase in purchase applications last week likely reflected the impact of somewhat lower mortgage rates as well as continued growth in the job market, as confirmed by Friday's employment report from the (Bureau of Labor Statistics)," said MBA Chief Economist Mike Fratantoni. The MBA noted that overall volume remains 16 percent behind last year’s rate.
Non-Farm Productivity Falls Significantly
The Labor Department Wednesday said U.S. non-farm productivity in the first quarter dropped at its fastest rate in the last 12 months. Severe weather through March is seen as the reason, and also led to the largest gain in unit labor costs in more than a year. Productivity declined at a 1.7 percent annual rate after advancing at a 2.3 percent pace in the fourth quarter. That marked the largest decline since the first quarter of 2013. The productivity figure measures hourly output per worker, and the drop coincided with the weather-driven weakness in the economy from January through March. Economists surveyed by Reuters had predicted a 1.0 percent drop in productivity, so the actual numbers came close to double that loss.
Whole Foods Cuts Forecasts Again
For the third time in recent months Whole Foods dropped its 2014 same-store sales and earnings forecast as rising competition for healthy food continues to affect sales. Shares in Whole Foods dropped almost 15 percent with the announcement Tuesday. The company urged analysts and investors to lower their expectations as it works out a different pricing structure to compete with Wal-Mart, Trader Joe’s and Fresh Market in the natural and organic grocery sector. We were overly optimistic ... particularly in light of the rapidly changing competitive landscape," said Whole Foods co-chief executive officer John Mackey in a conference call Tuesday.
Bernanke’s Next Chapter: $1 Million Book Deal
In what is hoped will be a stimulus to the publishing industry, W.W> Norton & Co. has signed a $1 million book deal with Ben Bernanke, The Associated Press reports. The memoir by the former chairman of the Federal Reserve Board will cover his years at the Fed and his response to the 2007-2008 economic crises. The book is scheduled for publication in 2015. Bernanke, 60, served on the Fed for more than a decade, and was appointed to two four-year terms as chairman. He was succeeded by Janet Yellen. In pitching the book to publishers, Bernanke promised a “personal and frank” account.