"Reported Earnings vs Operating Earnings"

I´ll repeat what i have said in my post But Still Better Than Expected....

Thank god that real earnings don´t matter...until they matter..Some still call the market "cheap"...... No problem with the right pro forma ( What are pro forma earnings? ) model/formular.... Havn´t heard the word GAAP for a long time..;-)

Ich wiederhole einfach das was ich in meinem Posting But Still Better Than Expected........ gesagt habe.....

Gottseidank wird ja den realen Gewinnen momentan keinerlei Bedeutung beigemessen und das alle Schätzungen auf den berühmt berüchtigten EBITDA bzw Proformabasis ( ex dieses, ex jenes, usw.) basieren......Ansonsten wäre das KGV ( wenn es denn überhaupt vorhanden wäre ) auch zu schockierend... Gut zu wissen das einige der Experten den Markt immer noch als "billig" betiteln..... Wenn man die richtige "Proformakalkulation" (siehe What are pro formaearnings? ) zugrunde legt sicher kein Problem.... Ich jedenfalls wundere mich schon lange nicht mehr das ich den Gewinnausweis nach der einheitlichen Bilanzierungsvorschrift GAAP nur nach lagem suchen im Kleingedruckten der Quartalsberichte finden kann..... Vor alternativen Analysten und Unternehmenskreationen wie EBITDA ( oftmal noch versüßt durch andere "außerordentliche" Belastungen ) usw. kann man sich in der tagtäglichen Berichterstattung hingegen kaum retten.....;-)

Alternative yardsticks for US earnings tell different stories By Paul Marson via FT

Every quarter, US companies publish their results under the defined US GAAP accounting rules. These results are labelled "reported earnings".

However, the most commonly looked at form of earnings are adjusted "operating earnings" on which companies prefer to focus as they onsider these better capture the underlying trend in activity

Adjusted operating earnings exclude non-recurring expenses such as restructuring charges, asset sales gains, major litigation charges, goodwill right downs and other write-offs.

While reported earnings are based on strict accounting rules, adjusted operating earnings are at the discretion of companies because there is no defined set of exclusions

Neither measure is perfect but with adjusted operating earnings, exclusions are currently so large that information about the true state of companies (and therefore the market as a whole) is being excluded.

These exclusions have reached the level where the gap between adjusted operating earnings and reported earnings is so wide that they deliver different messages on the state of US corporates.

Today reported earnings per share for the S&P 500 companies gathered by Standard & Poor's is $7.2 per share, down 91 per cent from the 2007 peak.

On an adjusted operating basis, earnings are $61.2, down 34 per cent from the 2007 peak.

This $54 gap is a record.

How has this come about? Much of the difference between adjusted operating earnings and reported earnings is caused by massive writedowns in the financial sector. However, outside the financial sectors write-offs are also at record highs as corporates are eager to toss out impaired assets during periods of stress.

Furthermore, when looking at adjusted operating earnings, it seems that most US corporates managed to beat their analyst estimates thanks to production and job cuts.

Number Of The Day " Goodwill On Top 133 Listed German Companies Balance Sheets...."

I have written about this in the past ( see Thank God There is No Stress Test On Goodwill Assets Propping Up Bank Balance Sheets......... ) and i think this topic is indeed a ticking time bomb that will "wreck" numerous balance sheets. I´m pretty sure that this issue is similar around the globe and will pop up on a weekly basis.... Except there will be an accounting change not to mark these assets "mark-to market"..... Wouldn´t be the first time ....... :-)

Ich habe über diese Thematik bereits vorher ( siehe Thank God There is No Stress Test On Goodwill Assets Propping Up Bank Balance Sheets.........) geschrieben und ich bleibe dabei, das es sich hier um eine tickende Zeitbombe handelt die schon bald etliche Firmenbilanzen "ruinieren" wird. Da diese Problematik weltweit dieselbe ist dürften hier demnächst Meldungen im Wochenrhythmus Schlagzeilen machen.... Es sei denn es wird eine neue Bilanzierungsvorschrift aus dem Hut gezaubert die diese "Mark to Market" Bewertung aussetzt..... Wäre ja nicht das erste Mal........ :-)

Was waren das noch für Zeiten als es bis vor kurzem noch Vorschrift war die Übernahmen über mehrere Jahre konsequent abzuschreiben....... Da dies aber die kurzfristigen Gewinne belastet hat wurde nur allzu gern die erstbeste Möglichkeit ( Umstellung auf US GAAP/IFRS ) genutzt um diese "Belastung" zu vermeiden.... Wie sich jetzt zeigt hat dies die Bilanzen nicht gerade "wetterfester" gemacht und die Ergebnisse der letzten Jahre künstlich aufgebläht ( siehe aus dem Jahr 2004 WiWo Neuregelung der Goodwill-Abschreibung bewirkt Kurssprünge bei Dax-Werten )... .Argument war seinerzeit die bessere Vergleichbarkeit mit den internationalen Wettbewerbern...... Großes Kompliment an das Handelsblatt !

The 133 leading German listed companies have ( thanks to the M&A madenss during the past few years ) accumulated $ 265 Billion in Goodwill. This equals 44 percent of their capital.

In the worst case scenario this would half the equity ratio from 40 to just over 20 percent.

For all the details on the 133 companies involved in the study see Handelsblatt Goodwill Checklist May 2009

Firmenbilanzen bergen immense Risiken Handelsblatt

Die führenden deutschen Konzerne ( 133 analysierte Firmen aus Dax, MDax, TecDax und SDAX durch eine Untersuchung des Handelsblatts in Zusammenarbeit mit dem Institut für Wirtschaftsprüfung (IWP) in Saarbrücken und der Unternehmensberatung Oliver Wyman ) haben nach der Übernahmewelle der vergangenen Jahren 189 Milliarden Euro an Firmenwert in den Büchern. Das entspricht fast der Hälfte ihres Eigenkapitals. Wegen der Rezession drohen nun massive Abschreibungen. Bei einem Dutzend Unternehmen ist die Situation brenzlig.

In den Bilanzen der führenden deutschen Konzerne standen Ende des vergangenen Geschäftsjahres noch 189 Mrd. Euro an Goodwill. Dieser Betrag entspricht knapp 44 Prozent des bilanzierten Eigenkapitals.

Das verdeutlicht, welch gefährliche Zeitbombe in den Zahlenwerken tickt: Nach Abzug des Firmenwerts würde sich die aktuelle Eigenkapitalquote von gut 40 Prozent annähernd halbieren.

> Wer mehr zu den Einzelfällen ( z.B. Telekom ) wissen möchte sollte sich den Link sowie Firmen können nicht mehr wegschauen & Firmen nutzen Frühwarnsystem nicht ( beide Handelsblatt ) zu Gemüte führen und zudem einen Blick in die Handelsblatt Goodwill Checklist Mai 2009 ( enthält alle 133 Unternehmen aus DAX,MDAX, TECDAX & SDAX) werfen.

I´m pretty sure "Frankfurt, London & Wall Street Finest" have already "considered" the bullet proof balance sheets into their as usual conservative forecasts ( see Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner & CNBC´s Dennis Kneale: "The Great Recession Is Over")....... ;-)

Bin mir sicher das die Experten aus Frankfurt, London & New Yorks all dies in Ihren wie gewohnt "konservativen" Prognosen berücksichtigt haben (siehe Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner & CNBC´s Dennis Kneale: "The Great Recession Is Over")......... ;-)

I Want My Buyback Back Daimler Update... Buy Sky High & Selling At Record Low To Abu Dhabi

I´m still suffering a flu so the posting will continue to be light but this one is just too good to slip through..... Unfortunately i was spot on in my judgement on the incompetence of Dailmer´s management ( see How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ). Also no surprise to see the media here in Germany applauding the move not mentioning the failure of Zetsche € Co......

Bin gesundheitlich immer noch etwas angeschlagen und werde daher auch diese Woche blogtechnisch etwas kürzertreten. Dieses Meisterstück von Daimler verdient aber zumindest ein paar Minuten Aufmrksamkeit und Häme. Schadenfreude kann selbst ich bei soviel Inkompetenz nicht mehr aufbringen. Leider hatte ich mit meiner Einschätzung ( siehe How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ) Recht und es bleibt zu befürchten das Leute wie Zetsche von den deutschen Medien für diesen "Schachzug" auch noch gefeiert werden ( siehe FT Deutschland , FAZ , Spiegel Experten loben Daimler für Abu-Dhabi-Deal).


Daimler Sells Aabar a 9.1% Stake for $2.7 Billion March 22 (Bloomberg) --

Daimler AG, the world’s second- largest maker of luxury cars, will sell 1.95 billion euros ($2.7 billion) of shares to Abu Dhabi’s Aabar Investments PJSC, raising cash as it grapples with the deepening global recession and gaining a long-term shareholder.

Aabar will buy 96.4 million new Daimler shares for 20.27 euros apiece, the Stuttgart, Germany-based automaker said in a statement today. The price equates to a 5 percent discount to Friday’s close of 21.34 euros.

Now the "glorious" history of buybacks taken from How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... JUST BRILLIANT!

Nachfolgend nun die ruhmreiche Auflistung der Aktienrückkäufe ( siehe How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ) Einfach brilliant!

The company started its first share buyback program at the end of August 2007. By March 28, 2008, 99.8 million shares had been bought back for EUR6.2 billion.

Share Buyback based on the Authorization of the 2007 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	99,768,314	62.11	6,196,752,952.16
March, 2008	27,622,866	53.62	1,481,249,244.31
February 2008	22,185,448	55.69	1,235,524,406.33
December 2007	4,384,000	69.10	302,953,032.70
November 2007	16,366,000	69.05	1,130,005,849.60
October 2007	13,445,000	74.29	998,821,360.14
September 2007	14,390,000	66.72	960,165,710.94
August 2007	1,375,000	64.02	88,033,348.15

In exercise of the authorization granted by the Annual Meeting of April 9, 2008, the decision of the Board of Management allows for the buyback of 10% or approximately 96.4 million of the outstanding shares for a maximum amount of EUR6 billion

Share Buyback based on the Authorization of the 2008 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	37,283,831	38.86	1,448,922,311.86
Oct 2008	2,283,831	27.88	63,669,232.59
Sep 2008	7,690,000	39.43	303,203,682.07
Aug 2008	6,910,000	40.19	277,696,796.64
Jul 2008	13,850,000	38.14	528,276,120.47
Jun 2008	6,550,000	42.15	276,076,480.09

I Want My Buyback Back......" Sears / Eddie Lampert Edition"

This is even worse than Daimler ( see How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ). Unbelievable that only 24 month ago Eddie "the Eagle" Lampert was viewed as the next Warren Buffet and was the paid hedge funds guy...... But with his current holdings ( see ESL Holdings i´ll bet that he will be out of business very soon.......

Dieses Beispiel schafft es sogar Daimler vom Sockel ( siehe How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months...... ) zu stossen. Unfassbar das Eddie "the Eagle" Lampert noch vor 24 Monaten als der nächste Warren Buffet gefeiert worden ist und als einer der bestbezahlten Hedgefondsmanager gegolten hat...... Wenn man einen Blick auf seine aktuellen Beteilgungen wirft ( siehe ESL Holdings ) dürfte klar sein das dieser Typ demnächst ausgezockt hat..... Bin mir ziemlich sicher das die Rubrik "I Want My Buyback Back" demnächst das Potential hat täglich für "Betroffenheit" zu sorgen.....

Since the third quarter of fiscal 2005, when our repurchase plan was first approved, we have repurchased approximately 41.4 million of our common shares at a total cost of $4.9 billion pursuant to the program. As of November 28, 2008, we had approximately 123.6 million common shares outstanding.

> You do the math........ My calculator shows something close to $ 117........ To put things into perspective......Todays marketcap is just 4.5 billion........

> Wer nachrechnen möchte dürfte wie ich auf ne Summe nahe von 117 $ kommen...... Um das ganze besser ins Verhältnis zu setzen sollte man wissen das die Marktkapitalisierung heute knapp 4,5 Mrd $ beträgt......

> More "healthy" news from the latest Sears release

> Mehr "gesunde" Details der letzten Sears Veröffentlichung.......

During the first three quarters of 2008, significant uses of cash included share repurchases of $558 million (as discussed further below), capital expenditures of $395 million, pension contributions of $204 million, net long-term debt repayments of $196 million and payments on commercial paper borrowings of $129 million. These amounts were offset by a $1.9 billion increase in short-term borrowings, primarily through borrowing on our $4 billion credit facility. Had $94 million of our short-term investment in The Reserve Primary Fund been available short-term borrowings would have increased by $1.8 billion.

Our domestic comparable store sales declined 8.7% during the month of November 2008. This decline includes a decline in comparable store sales of 7.8% at Sears Domestic and 10.0% at Kmart. The month of November 2008 includes two days of the holiday shopping season compared to the month of November 2007 which included nine days due to a one-week shift in the Thanksgiving holiday.

The Company also announced today that its Board of Directors has approved the repurchase of up to an additional $500 million of the Company's common shares. This authorization is in addition to the $72 million worth of shares that currently remain available for repurchase under the Company's existing repurchase program

Bruce Johnson ( probably the 3rd ceo/cfo since Lampert took over / der gefühlte 3. oder 4. CEO/CFO seit Lampert das Zepter übernommen hat ) commented, "

After careful consideration and a review of the company's valuation, prospects, cash flow and liquidity, we believe that our shares represent an attractive investment for our shareholders

Given the difficult retail environment and its effect on our free cash flow, we have reduced our rate of repurchases throughout 2008 as we worked to retain flexibility to pursue opportunities and address contingencies. With significant assets and cash flow, we believe Sears Holdings has the flexibility to continue to invest in our business, repay debt, and consider acquisitions opportunities as well."

Have heard similar "wisdoms" before ( see Eddie Lampert Is Averaging Down.....)

Habe ähnliche Weisheiten schon zuvor gehört ( siehe Eddie Lampert Is Averaging Down..... )

March 2007

We allocate capital to initiatives that we believe will provide the greatest returns and create the most value for our shareholders. 2006 was no different, as we deployed capital to repurchase shares,......., as follows: $816 million used for share repurchases (we repurchased over 6 million shares in the year at an average price of about $133 per share);

> Definitley a new quality of the phrase " provide greatest return & most value for shareholders".........

> Definitiv ein neue ganz neue Bedeutung der Begriffe "greatest return & sharholdervalue"....

August 2007

The company repurchased 9.6 million of its shares for a total of $1.5 billion during the second quarter ( $ 156,25 )

November 2007

We repurchased 6.7 million common shares at a total cost of $0.9billion (or $131.72 per share) under our share repurchase program duringthe third quarter of fiscal 2007

Jan 2008

During the ten weeks ended January 11, 2008, we repurchased 4.9 million common shares at a total cost of $513 million (or $105.46 per share) under our share repurchase program.

> Too bad that Sears isn´t important enough for a bailout......... :-)

> Zu dumm das Sears für einen Bailout zu unbedeutend ist......... :-)

Number Of The Day " Percentage Of US Companies With A Junk Rating"

This at the start of a deep and long recession...... After the events of the last 3 month it is valid to wonder how much of this debt will get bailed out ( GM....) or will end up without much disclosure on the Fed´s balance sheet......I wonder how many companies are now on the brink of bankruptcy just because they decided to make big debt financed stock buybacks or megalomaniac takeovers & buyouts......

Diese Zahl bereits am Anfang einer schweren und langwierigen Rezession bedeutet nichts Gutes..... Nach den Ereignissen der letzten 3 Monate darf man wohl berechtigt fragen wieviel von diesem Junk entweder ein Bailout ( GM.... ) bekommen wird oder gar ohne großartige Transparenz in der immer weiter explosionsartig wachsenden Fed Bilanz verschwinden wird..... Tragischerweise befinden sich etliche dieser Unternehmen nur dank massiver schuldenfinanzierter Aktienrückkaufprogramme und größenwahnsinniger schuldenfinanzierter Übernahmen ( denke vor allem an Private Equity aber leider auch an den Fall Siemens VDO, Conti, Schaeffler ) in dieser wohl letzlich "tödlichen" Situation.......


WSJ Junk-Bond Market Has Closed the Door
Yields Upward of 20% Make It Too Pricey for Borrowers; Zero Deals Made It in November

About 50% of U.S. companies have below-investment-grade credit ratings, making the $750 billion junk-bond market a vital source of financing for car makers, airlines, retailers, utilities, restaurant chains and media companies

>The next chart is making things even scarier........ Within the "junk" label the remaining "quality" has deterioting fast and furious especially over the past few years..........

> Der nächste Chart macht alles nur noch erschreckender...... Innerhalb des "Junkuniversums" hat sich zudem die Qulität besonders im Laufe der letzten jahre massiv verschlechtert......

How Daimler Wasted € 7 Billion On Buybacks In Just 15 Months......

Just brilliant! I have nothing more to add that i havn´t already said at the time when the buybacks were introduced ( see Want My Buyback Back ..."Daimler Edition" & I Want My Buyback Back.....Daimler Is Doubling Down Again). All this has happened at a time when Dailmers net liquidity position ( in part due to the buybacks ) has worsened € 9 billion to almost € 46 billion ( see page 28 in Daimler Q3 Presentaion )

Das Daimlermanagement steht dem von diversen Banken in nichts nach...... Ich habe meinen Kommentaren zu diesem Thema zum Zeitpunkt der Rückkaufankündigung ( siehe Want My Buyback Back ..."Daimler Edition" & I Want My Buyback Back.....Daimler Is Doubling Down Again nichts mehr hinzuzufügen..... Hätte nur zu gerne Unrecht gehabt...... Das alles in einer Zeit während sich auch dank der Rückkäufe die Nettoliquidität binnen der letzten 9 Monate um satte 9 Mrd € auf nunmehr knapp 46 Mrd € verschlechtert hat ( siehe Seite 28 der letzten Daimler Q3 Präsentaion )


Daimler

Due to the current uncertainty in the markets Daimler temporarily suspends the further execution of its share buyback program as of October 24, 2008. Due to the suspension Daimler might not reach its initial target to buy back 10% of the outstanding shares.

I hope you can see the impact of the € 7.5 Billion buyback starting in August 2007.......

Der Effekt des Aktienrpückkaufes von € 7,5 Mrd ist klar zu erkennen, oder?

The company started its first share buyback program at the end of August 2007. By March 28, 2008, 99.8 million shares had been bought back for EUR6.2 billion.

Share Buyback based on the Authorization of the 2007 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	99,768,314	62.11	6,196,752,952.16
March, 2008	27,622,866	53.62	1,481,249,244.31
February 2008	22,185,448	55.69	1,235,524,406.33
December 2007	4,384,000	69.10	302,953,032.70
November 2007	16,366,000	69.05	1,130,005,849.60
October 2007	13,445,000	74.29	998,821,360.14
September 2007	14,390,000	66.72	960,165,710.94
August 2007	1,375,000	64.02	88,033,348.15

In exercise of the authorization granted by the Annual Meeting of April 9, 2008, the decision of the Board of Management allows for the buyback of 10% or approximately 96.4 million of the outstanding shares for a maximum amount of EUR6 billion

Share Buyback based on the Authorization of the 2008 Annual Meeting
Period	No. of Shares Acquired	Average Price (EUR)	Purchased Volume (EUR)
Total	37,283,831	38.86	1,448,922,311.86
Oct 2008	2,283,831	27.88	63,669,232.59
Sep 2008	7,690,000	39.43	303,203,682.07
Aug 2008	6,910,000	40.19	277,696,796.64
Jul 2008	13,850,000	38.14	528,276,120.47
Jun 2008	6,550,000	42.15	276,076,480.09

Number Of The Day "Stock Buybacks From Financials In 2007"

They really deserve the bailout........Sarcasm off....... At least Lehman has gone gone bust. There is no way i can hide my SCHADENFREUDE when reviewing their buyback orgy ( see I Want My Buyback Back....Lehman Edition )

Wer so sorgsam mit seinen Geldern hausgehalten hat verdient jeden noch so großen Bailout...... Immerhin hat es Lehman erwischt. Die haben sich in den vergangenen Jahren eine Aktienrückkauforgie der ganz besonderenArt geleistet ( siehe I Want My Buyback Back....Lehman Edition ). Ich probiere erst gar nicht meine Schadenfreude und Genugtuung darüber zu verbergen...... Ein aus deutscher Sicht besonders tragisches Beispiel an den Irrglauben des Aktienrückkaufes spielt sich gerade in Real Time bei Daimler ab ( I Want My Buyback Back.....Daimler Is Doubling Down Again ). Es bereitet fast körperliche Schmerzen mitanzusehen wie die einst gesunde Kapitalstruktur im Angesicht einer auf Jahre hinaus furchtbaren Automobilkonjunktur ohne Not durch den Schredder gedreht wird......


Marketbeat WSJ

Stock buybacks peaked in the third quarter of 2007, according to Howard Silverblatt, senior index analyst at Standard & Poor’s. Nearly $172 billion in shares were repurchased in the third quarter of 2007, right around when the market peaked, contributing to the one-year record of $589 billion in shares repurchased in 2007. The biggest contributor? Financials, which accounted for 20% of the buybacks in 2007.

I Want My Buyback Back..... Washington Mutual Edition Part II

They really should have hired Homer or Paris Hilton to run the company.... No joke! After attending the conference call back in Jan 07 ( see Flashback January 2007 ) even the dumbest outside Wall Street could have predicted this outcome. Here is more from Mish . Mish has done another update WaMu Raises Cash, Skeptical Eyebrows

Denke Homer oder Paris Hilton hätten das besser hinbekommen....... Traurig aber wahr! Jeder der wie ich im Januar 2007 ( siehe Flashback January 2007 ) sich den Call angetan hat konnte genau das vorhersehen. Voraussetzung natürlich man arbeitet nicht an der Wall Street......Hier gibt es mehr von Mish . Hier ein weiteres lesenswertes ein Update WaMu Raises Cash, Skeptical Eyebrows von ihm.

Flashback January 2007

On Jan. 3, 2007, the company entered into an accelerated share repurchase agreement with a dealer, buying back $2.7 billion of its common stock ( Stock close to $ 40 )

Fast forward April 2008 Washington Mutual Gets $7 Billion From TPG-Led Group

Wahington Mutual the largest U.S. savings and loan, got $7 billion from a group of investors led by David Bonderman's TPG Inc. after losses on subprime loans ate up capital and erased 74 percent of its market value.

Washington Mutual sold 176 million shares at $8.75 a piece, 33 percent below yesterday's closing price on the New York Stock Exchange, and preferred shares, the company said in a statement today

Bravo!

It will be interesting to see how long this infusion will last......

Bleibt abzuwarten wie lange diese Kapitalspritze vorhalten wird......

I Want My Buyback Back ..."Daimler Edition"

Look at the chart what $ 3.5 billion have done for the stock.... They bought at an average price close to € 70...... This adds up to a loss of € 750.000.0000 in just 6 month..... Needless to say that they bought close to historic highs for the stock and the "return to sharholders" is a whopping negative 21 percent....... With the next € 4 billion now ready to "maximize share holder value" the averaging down can begin.......

Seht Euch den Chart an was satte 3,5 Mrd € zur Performance beigetragen haben....... Daimler hat zum Durchschnittskurs von 70 € zugekauft...... Das ganze sumiert sich binnen 6 Monaten mal eben zu einer Wertvernichtung von 750.0000.000 €...... Überflüssig zu erwähnen das ein Großteil der Käufe nahe der historischen Höchststände der Aktie praktiziert worden ist und die anvisierte Optimierung zugunsten der Aktionäre hat mit minus 21 Prozent nicht ganz die Erwartungen erfüllt....Mit den nächsten 4 Mrd € kann das Verbilligen jetzt ja losgehen........

Share buyback program Daimler

In order to optimize its capital structure, the Group initiated a share buyback program in August 2007. In this context, it was announced that up to €7.5 billion would be applied to buy back nearly 10% of the company’s own shares. By the middle of December 2007, 50 million shares had been acquired for €3.5 billion. These shares were canceled by the end of the year. The share buyback program will be continued today.

At least they hadn´t to issue new debt to finance this "smart" move.....

Immerhin muß Daimler im Gegensatz zu anderen diese Transaktion nicht mit neuen Schulden finanzieren....

UBS: $14 Billion in Mortgage Write Downs

What a mess. Seems their 8 week old forecast was $ 4 billion too low. Lets hope the $ 12 billion capital injection from Singapour & the Middle East at fire sale prices will be still enough after the next forecast is hitting the tape..... I think the image as a rock solid Swiss banking giant is now gone and it will take a very long time to bring the once almost perfect reputation back. I assume that this debacle will also infect the much more important wealth management division. A break up is more than likely....

Was für ein Debakel. Sieht so aus als wenn die 8 Wochen alte Prognose mal eben um satte 40% oder $ 4 Mrd verfehlt worden ist. Bleibt die vage Hoffnung das die 12 Mrd $ Kapitalspritzen aus Singapur und dem mittleren Osten auch noch nach der nächsten Prognose immer noch ausreichend sind....... Der Ruf als solide schweizer Bankenadresse dürfte auf Jahre hinaus vernichtet worden sein. Ich kann mir kaum vorstellen das dieses Disaster ohne Auswirkungen auf die Vermögensverwaltung ( die mit abstand wichtigste Sparte ) bleiben wird. UBS wird wohl in der jetzigen Form die nächsten Jahre kaum überstehen.

FT Alphaville UBS, Europe’s largest bank by assets, reported a record loss after about $14bn of writedowns on assets infected by subprime mortgages in the US, reports Bloomberg on Wednesday.The fourth-quarter net loss of 12.5bn Swiss francs ($11.4bn) will result in a full-year loss of about CHF4.4bn, the Zurich-based bank said in a statement on Wednesday.

UBS posted its first annual loss since the company was created through a merger a decade ago, and the Q4 loss was bigger than the record declines reported earlier this month by Citigroup and Merrill Lynch. The collapse of the US subprime mortgage market has led to more than $130bn of losses and markdowns at securities firms and banks since June, notes Bloomberg.

UBS reported about $12bn of losses directly linked to the subprime market and an additional $2bn for positions related to the US residential market. The company said its Tier 1 capital ratio, a measure of financial strength, was 8.8 per cent as of December 31, reported Bloomberg.

I Want My Buyback Back "Washington Mutual Edition"

Today this news is making headlines

Heute kommt diese Schlagzeile über die Ticker

WaMu to Raise $2.5 Billion in Additional Capital, Reduce Dividend, Resize Home Loans Business and Cut Expenses to Fortify Capital Base

Flashback January 2007

On Jan. 3, 2007, the company entered into an accelerated share repurchase agreement with a dealer, buying back $2.7 billion of its common stock ( Stock close to $ 40 now $ 19)

Multiple Fire Sales At UBS After $ 10 Billion Write Down

Looks like the UBS comment from just a few weeks ago in UBS Write Down Estimates "Best Case $ 6 Billion, Worst Case.... that the write down´won´t be big was quite an understatement..... Will be fun to watch how long the term "maximum clarity" will be up to date this time ;-) . I´m pretty sure that the same survey about bonuses for the UBS will bring less "euphoric" results..... It´s about time to learn the new version of the Investment banking lexicon: The post-credit squeeze edition. HILARIOUS!

Sieht ganz so aus als wenn der Kommentar der UBS in UBS Write Down Estimates "Best Case $ 6 Billion, Worst Case.... das die Abschreibungen nicht "wesentlich" sein werden ein wenig untertrieben gewesen ist. Welch Überraschung..... Wird spannend zu sehen sein wie lange die Haltwertzeit der "maximum clarity" in diesem Falle vorhalten wird ;-) . Ich bin mir ziemlich sicher das die gleiche Umfrage zu Bonuszahlungen" für die UBS weniger "euphorische" Vorhersagen hergeben würde..... Höchste Zeit die für die neueste Version des Investment Banking Lexicon: The post-credit squeeze edition. Köstlich!

UBS to Sell Stakes After $10 Billion in Subprime Writedowns
UBS AG, Europe's largest bank by assets, said it will write down U.S. subprime investments by $10 billion and raise 13 billion francs ($11.5 billion) by selling stakes to investors in Singapore and the Middle East.

UBS expects a loss in the fourth quarter, and may have a loss for 2007, the Zurich-based company said in an e-mailed statement today.

Securities firms and banks had announced about $66 billion of losses and markdowns linked to the collapse of the U.S. subprime mortgage market this year. UBS reported its first loss in almost five years in the third quarter after the subprime contagion led to about $4.66 billion in markdowns on fixed-income securities and leveraged loans.

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UBS Press Release & Deutsche Version
UBS strengthens capital base and adjusts valuations
UBS has introduced measures to substantially strengthen its capital position, adding CHF 19.4 billion of BIS Tier 1 capital. These include an issue of CHF 13 billion of new capital. This has been placed with two strategic investors: Government of Singapore Investment Corporation Pte. Ltd. (GIC) ( see GIC Website) with CHF 11 billion, and an undisclosed strategic investor in the Middle East with CHF 2 billion.


> To be honest i´m surprised that Singapore has two vehicles and that GIC has assets over $ 300 billion. I´ve heard so for only from Temasek HoldingsUnocal) in relation with Singapore. It´s very impressive that such a small country with an estimated GDP of $ 140 billion, a population under 5 million and especially without a resource base has managed to accumulate close to $ 500 billion in Assets Singapore/Wikipedia. Chapeau!

> Ich bin ehrlich erstaunt das Singapur zwei staatlich kontrollierte Fonds zur Verfügung hat und das GIC mit über 300 Mrd $ so groß ist. Ich habe bisher im Zusammenhang mit Singapur immer nur den Namen Temasek Holdings gehört. Es ist beeindruckend wie es ein kleines Land mit unter 5 Mio Einwohnern, einen BSP von knappen 140 Mrd $ und vor allem ohne Rohstoffbasis schafft fast 500 Mrd $ in Staatsfonds zu pumpen Singapur/Wikipedia . Chapeau!

At the same time, UBS has revised key input parameters of the models that are used to estimate lifetime default and resulting losses for sub-prime mortgage pools. As a result of these revisions, UBS will write down its US sub-prime holdings by approximately a further USD 10 billion.

After these actions, UBS projects a strong BIS Tier 1 ratio of above 12%. ...

In response to continued deterioration in the US sub-prime mortgage securities market, partly driven by increased homeowner delinquencies but mainly fuelled by worsening market expectations of future developments, UBS has revised the assumptions and inputs used to value US sub-prime mortgage related positions. This will result in further writedowns of around USD 10 billion, primarily on CDO and "super senior"1 holdings. In light of continued deterioration in the sub-prime market, valuations of UBS's remaining sub-prime positions reflect the extreme loss projections implied by the prices achieved in the very limited number of observable market transactions in US sub-prime related securities and indices up to the end of November.

As the basis for its wealth and asset management business, UBS wishes to maintain a very strong capital base under all circumstances. Growth in net new money continues, with inflows in Global Wealth Management & Business Banking totalling about CHF 30 billion in October and November. It will therefore strengthen its capital position by issuing new capital in transactions with strategic investors, by selling treasury shares, and by replacing its 2007 cash dividend with a stock dividend.

> Must hurt to sell shares at fire sale prices that they have bought back for a better use of their capital. In Q2 the stock price was in a range of 70-80 Swiss Francs, today close to 50 Swiss Francs. And in total they are selling 36.4 million shares......... Well done!

> Muß sehr schmerzen die teuer zurückgekauften Aktien jetzt zu Schleuderpreisen zu verscherbeln. Ironischerweise sollten die Rückkäufe seinerzeit ja die effektivere Nutzung des Kapitals ermöglichen. Im 2. Quartal lag der Preis zwischen 70 und 80 Schweizer Franken, heute nahe 50...... Und insgesamt werden knapp über 36 Mio zuvor erworbene Aktien nahe Tiefstkursen vertickert...... Gut gemacht!

Strategic investors subscribe to issue of CHF 13 billion of new capital
UBS has reached agreements with two strategic investors – GIC and one other – to subscribe to an issue of CHF 13 billion of mandatory convertible notes. This is subject to the approval of UBS shareholders at an extraordinary general meeting (EGM) which will take place in mid-February 2008. GIC has committed to subscribe to CHF 11 billion and the other investor to CHF 2 billion. The notes will pay a coupon of 9% until conversion into ordinary shares, which must take place on or before a date approximately two years after issuance. The proceeds of the issue will count as Tier 1 capital for BIS capital adequacy purposes after EGM approval.

Sale of treasury shares
The Board of Directors of UBS has further approved the re-sale of 36.4 million treasury shares previously intended to be cancelled. UBS has received indications of interest in a share issue, is considering these and will place these shares over time. This will increase BIS Tier 1 capital by approximately CHF 2 billion.

Proposed replacement of 2007 cash dividend by stock dividend
The Board of Directors proposes to replace the 2007 cash dividend with a stock dividend, i.e. a bonus issue of new shares. This will boost Tier 1 capital by CHF 4.4 billion, of which approximately CHF 3.3 billion is a reversal of accrued dividend for the first nine months of the year and the balance is dividend that will now not accrue. This is subject to EGM approval.

In total, these three actions, when completed and approved, will strengthen UBS's regulatory Tier 1 capital by approximately CHF 19.4 billion. After completion, and taking into account the expected fourth quarter loss, the firm's BIS Tier 1 capital ratio will improve to above 12% from 10.6% at 30 September 2007.

Marcel Rohner, Group Chief Executive Officer, UBS, said: "Conditions in the US mortgage and housing markets have continued to deteriorate, and we have updated our loss assumptions to the levels implied by the current distressed market for mortgage securities. In the last several months, continued speculation about the ultimate value of our sub-prime holdings – which remains unknowable – has been distracting. In our judgement these writedowns will create maximum clarity on this issue and will have the effect of substantially eliminating speculation. Together with the strengthening of our capital base this will allow us to concentrate on sustaining and developing our client businesses.

Information on GIC
GIC is a global investment management company established in 1981 to manage Singapore's foreign reserves. With a network of eight offices in key financial capitals around the world, GIC manages a broad diversified portfolio across countries and asset classes that includes equities, fixed income, foreign exchange, commodities, money markets, alternative investments, private equity, real estate and infrastructure investments.

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