The Dow Jones industrial average jumped 208 points Thursday after Greece scrapped a referendum on unpopular budget cuts and the European Central Bank unexpectedly cut interest rates. It was the second straight day of big gains in the stock market.
The European Central Bank surprised markets by cutting its benchmark interest rate a quarter of a percentage point, to 1.25 percent. The bank had increased its key rate twice this year, but that was before Mario Draghi took over as head of the bank this week. The announcement sent stocks higher as investors hoped that lowering borrowing costs would help prevent a recession in Europe.
Buying intensified in the early afternoon after Greek Prime Minister George Papandreou abandoned his effort to put package of austerity measures to a public vote. A "no" vote could have caused chaos in the European financial system by leading to a messy default on Greece's debt.
Investors and other European nations were shocked by Papandreou's announcement Monday that he would call a referendum on a financial rescue package worked out just last week after months of negotiations between Greece and its international lenders.
The Dow lost 573 points the first two days of this week as investors feared that Europe's plan to preserve its currency union was in jeopardy. Markets in the U.S. and Europe have been highly sensitive to headlines out of Europe as leaders there try to avoid a financial calamity. Investors have become fatigued as various efforts to resolve the situation seem to continually run into trouble.
"Today it looks like a deal in Europe is more likely and that's making the market positive, but who knows what people will think tomorrow," said Uri Landesman, president of Platinum Partners.
The Dow Jones industrial average gained 208.43 points, or 1.8 percent, to 12,044.47. The average closed above 12,000 for only the third time since the start of August. The Dow last closed above that level on Friday. Even with the gain of 386 points over the last two days, the Dow is still 1.5 percent below where it closed on Friday.
The S&P 500 rose 23.25, or 1.9 percent, to 1,261.15. The Nasdaq composite added 57.99, or 2.2 percent, to 2,697.97.
Reports on the U.S. economy also lifted stocks. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April. That's a sign layoffs are easing. Companies also made more orders to U.S. factories in September.
"All of the economic data is pointing to a slow-growing economy, and putting the recession fears to rest," said Bill Stone, chief investment strategist at PNC Asset Management Group.
Companies reporting quarterly earnings were among those making the biggest gains.
Estee Lauder Cos. jumped 18 percent, the top stock in the S&P 500. The company's quarterly earnings soared 46 percent on strong global sales, which beat analysts' expectations. The company also raised its annual earnings outlook.
Alpha Natural Resources rose 13.3 percent. The coal producer's profit more than doubled, helped by its acquisition of rival Massey Energy Co. and higher prices for coal used to make steel. The results topped estimates.
Qualcomm Inc. gained 7.5 percent, after the chip-maker for mobile phones said rising smartphone demand helped it post results that were stronger than analysts were expecting.
Kraft Foods Inc. rose 3.3 percent. The food company, whose brands include Nabisco and Maxwell House, reported a 22 percent jump in income thanks to higher prices on some of its products. Kraft also raised its full-year profit forecast.
Kellogg Co. dropped 7.6 percent after its quarterly earnings fell even further than analysts had expected. The cereal and snack maker was hit by higher costs for ingredients.
Part-time nanny helps end Bank of America fee
Recent college graduate Molly Katchpole has $2,200 to her name, holds down two part-time jobs -- one of them as a nanny -- and describes her financial situation as paycheck-to-paycheck.
So when Bank of America announced that it would begin charging debit card users a $5 monthly fee, Katchpole got mad and started an online petition. More than 300,000 people signed it.
And on Tuesday, the nation's second-largest bank backed down.
Now the 22-year-old is getting the credit for the end of the debit card fee.
Katchpole is a Rhode Island native who lives in Washington, where she does freelance work for a political communications firm that supports unions and other Democratic-leaning causes. She describes herself as a progressive and says she stands in solidarity with the Occupy Wall Street movement. She has a tattoo below her collarbone that reads: "Empathy."
"I believe that is the most important quality that a person can have, is the ability to empathize with others," she said. "When I first started the petition, and even now, people were saying, `Just close your bank account and go to another bank.' I think people are forgetting that not everybody can easily close their bank and join a credit union. There are some neighborhoods in this country where there's only one bank."
Shortly after Bank of America announced plans a month ago to start charging the fee, she put the petition on Change.org, a nonpartisan website that allows individuals and advocacy groups to launch campaigns on any topic.
After the bank relented, Change.org declared on its home page: "We Won."
"It's an awesome display of the potential power that real people can have when they come together," said Ben Rattray, the site's founder and CEO.
Katchpole credited the popularity of her petition to good timing, calling it "stupid" for Bank of America to announce the fees in the midst of the Wall Street protests. Her boyfriend, Ben Sisko, said Katchpole succeeded because she expressed her outrage so clearly and concisely.
The petition read, in part: "The American people bailed out Bank of America during a financial crisis the banks helped create. ... How can you justify squeezing another $60 a year from your debit card customers? This is despicable."
A Bank of America executive called Katchpole more than three weeks ago to explain the fees, but by then it had already lost her as a customer to a community bank.
Bank spokesman Ernesto Anguill declined to say precisely what role the petition played. He said Bank of America scrapped the fees after listening to public reaction and gauging the competition from other banks that backed off plans for similar charges.
The outcry over Bank of America prompted other major banks, including JPMorgan Chase & Co. and Wells Fargo & Co., to cancel tests of their own debit card fees.
Michael McCauley, a spokesman for Consumers Union, the advocacy arm of Consumer Reports Magazine, said the petition was a sign that Bank of America had misjudged its customers, just as Netflix did when it tried to divide its DVD-rental and online streaming businesses. He called Katchpole an inspiration to consumers who feel they are being treated poorly.
"The debit card issue pushed her over the edge, and she took action, and look at the impact that she's had. I think it's remarkable," he said.
Katchpole grew up in Cumberland, R.I., a town of 33,000, and graduated last spring from Roger Williams University in Bristol, R.I., with a degree in art and architectural history. She was on the debate team in high school and wrote letters to her local paper.
"When she had something that she wanted to say, she usually said it, and if she felt other people needed to know, then she found the avenue to express it," said her mother, Kathy Katchpole, a physical therapist. "She's always had pretty strong views one way or the other."
She and her boyfriend live in a tiny, one-bedroom basement apartment, where they split the $1,250 rent. Sisko works as a paralegal, and Katchpole is hoping to find a full-time job in politics.
Katchpole's parents and boyfriend remain Bank of America customers.
"I haven't decided if I'm going to switch yet," Sisko said. After all, he said, "the petition worked!"
So when Bank of America announced that it would begin charging debit card users a $5 monthly fee, Katchpole got mad and started an online petition. More than 300,000 people signed it.
And on Tuesday, the nation's second-largest bank backed down.
Now the 22-year-old is getting the credit for the end of the debit card fee.
Katchpole is a Rhode Island native who lives in Washington, where she does freelance work for a political communications firm that supports unions and other Democratic-leaning causes. She describes herself as a progressive and says she stands in solidarity with the Occupy Wall Street movement. She has a tattoo below her collarbone that reads: "Empathy."
"I believe that is the most important quality that a person can have, is the ability to empathize with others," she said. "When I first started the petition, and even now, people were saying, `Just close your bank account and go to another bank.' I think people are forgetting that not everybody can easily close their bank and join a credit union. There are some neighborhoods in this country where there's only one bank."
Shortly after Bank of America announced plans a month ago to start charging the fee, she put the petition on Change.org, a nonpartisan website that allows individuals and advocacy groups to launch campaigns on any topic.
After the bank relented, Change.org declared on its home page: "We Won."
"It's an awesome display of the potential power that real people can have when they come together," said Ben Rattray, the site's founder and CEO.
Katchpole credited the popularity of her petition to good timing, calling it "stupid" for Bank of America to announce the fees in the midst of the Wall Street protests. Her boyfriend, Ben Sisko, said Katchpole succeeded because she expressed her outrage so clearly and concisely.
The petition read, in part: "The American people bailed out Bank of America during a financial crisis the banks helped create. ... How can you justify squeezing another $60 a year from your debit card customers? This is despicable."
A Bank of America executive called Katchpole more than three weeks ago to explain the fees, but by then it had already lost her as a customer to a community bank.
Bank spokesman Ernesto Anguill declined to say precisely what role the petition played. He said Bank of America scrapped the fees after listening to public reaction and gauging the competition from other banks that backed off plans for similar charges.
The outcry over Bank of America prompted other major banks, including JPMorgan Chase & Co. and Wells Fargo & Co., to cancel tests of their own debit card fees.
Michael McCauley, a spokesman for Consumers Union, the advocacy arm of Consumer Reports Magazine, said the petition was a sign that Bank of America had misjudged its customers, just as Netflix did when it tried to divide its DVD-rental and online streaming businesses. He called Katchpole an inspiration to consumers who feel they are being treated poorly.
"The debit card issue pushed her over the edge, and she took action, and look at the impact that she's had. I think it's remarkable," he said.
Katchpole grew up in Cumberland, R.I., a town of 33,000, and graduated last spring from Roger Williams University in Bristol, R.I., with a degree in art and architectural history. She was on the debate team in high school and wrote letters to her local paper.
"When she had something that she wanted to say, she usually said it, and if she felt other people needed to know, then she found the avenue to express it," said her mother, Kathy Katchpole, a physical therapist. "She's always had pretty strong views one way or the other."
She and her boyfriend live in a tiny, one-bedroom basement apartment, where they split the $1,250 rent. Sisko works as a paralegal, and Katchpole is hoping to find a full-time job in politics.
Katchpole's parents and boyfriend remain Bank of America customers.
"I haven't decided if I'm going to switch yet," Sisko said. After all, he said, "the petition worked!"
AMD to cut 1,400 workers, new CEO's first big move
Advanced Micro Devices Inc. is cutting some 1,400 workers as a weak computer market and manufacturing delays have hurt the world's second-biggest maker of microprocessors for PCs.
The layoffs announced Thursday amount to about 12 percent of the company's 12,000 workers and are the first big move by AMD's new CEO, Rory Read, who was hired from Lenovo Group in August. The cuts will unfold over the next five months.
AMD is struggling with an industrywide problem: PC sales growth, particularly in the U.S. and Europe, has been anemic because of the down economy and competition from smartphones and tablets.
Although PC shipments continue to grow, the pace is slowing sharply -- and more than market research firms IDC and Gartner Inc. expected. That has raised concerns about the strength of the market going in to the holiday shopping season.
Most of AMD's business is in chips for PCs; it doesn't have a meaningful presence in smartphones and tablets.
Read's job in large part is to help devise a strategy for AMD to penetrate computing markets where it and rival Intel Corp. have been largely absent. The battle has taken on a new dimension as AMD's and Intel's market share in PCs has reached a steady balance for years -- Intel's chips are in about 80 percent of the world's PCs, and AMD's are in essentially the rest.
Not having much presence in mobile devices has hurt AMD more than Intel because of its smaller size and it was a key reason AMD ousted Read's predecessor, Dirk Meyer, in January.
Meyer in some ways had an excuse: He was orchestrating triage as he tried to manage the company's spinoff of its manufacturing operations while fending off Intel and overseeing the launch of an important new type of chip for AMD. That chip can process sophisticated graphics and general data on the same piece of silicon, a technical achievement.
The rise of mobile devices, meanwhile, is benefiting chip makers such as Qualcomm Inc. and Texas Instruments Inc., whose processors were designed to consume less power.
A variety of financial struggles has led to several rounds of layoffs at AMD in recent years. It let about 3,300 workers go in 2008 and 2009.
Contributing to Thursday's announcement were manufacturing problems that have postponed the shipment of AMD's newest chips, which it calls "accelerated processing units."
The layoffs and other unspecified operational changes are expected to save $200 million in 2012. A company spokesman said is severance benefits will vary based on location and local laws.
AMD shares increased 5 cents, or nearly 1 percent, to $5.78 in extended trading Thursday after the cuts were announced.
The layoffs announced Thursday amount to about 12 percent of the company's 12,000 workers and are the first big move by AMD's new CEO, Rory Read, who was hired from Lenovo Group in August. The cuts will unfold over the next five months.
AMD is struggling with an industrywide problem: PC sales growth, particularly in the U.S. and Europe, has been anemic because of the down economy and competition from smartphones and tablets.
Although PC shipments continue to grow, the pace is slowing sharply -- and more than market research firms IDC and Gartner Inc. expected. That has raised concerns about the strength of the market going in to the holiday shopping season.
Most of AMD's business is in chips for PCs; it doesn't have a meaningful presence in smartphones and tablets.
Read's job in large part is to help devise a strategy for AMD to penetrate computing markets where it and rival Intel Corp. have been largely absent. The battle has taken on a new dimension as AMD's and Intel's market share in PCs has reached a steady balance for years -- Intel's chips are in about 80 percent of the world's PCs, and AMD's are in essentially the rest.
Not having much presence in mobile devices has hurt AMD more than Intel because of its smaller size and it was a key reason AMD ousted Read's predecessor, Dirk Meyer, in January.
Meyer in some ways had an excuse: He was orchestrating triage as he tried to manage the company's spinoff of its manufacturing operations while fending off Intel and overseeing the launch of an important new type of chip for AMD. That chip can process sophisticated graphics and general data on the same piece of silicon, a technical achievement.
The rise of mobile devices, meanwhile, is benefiting chip makers such as Qualcomm Inc. and Texas Instruments Inc., whose processors were designed to consume less power.
A variety of financial struggles has led to several rounds of layoffs at AMD in recent years. It let about 3,300 workers go in 2008 and 2009.
Contributing to Thursday's announcement were manufacturing problems that have postponed the shipment of AMD's newest chips, which it calls "accelerated processing units."
The layoffs and other unspecified operational changes are expected to save $200 million in 2012. A company spokesman said is severance benefits will vary based on location and local laws.
AMD shares increased 5 cents, or nearly 1 percent, to $5.78 in extended trading Thursday after the cuts were announced.
Retailers report solid sales gains in October
Americans were shopping in October, but they were spending at a slower clip than expected as they faced a barrage of bad economic news.
October revenue at stores open at least a year -- an indicator of a retailer's health -- rose 3.7 percent from the same month a year ago, according to the International Council of Shopping Centers' tally of 25 retailers.
But October's increase is weaker than the 5.5 percent revenue gain in the prior month. And 13 of 19 retailers missed Wall Street estimates for October revenue, according to Thomson Reuters, including big merchants like Macy's, Saks and Target.
The results reflect Americans' cautious spending habits. Consumers continue to worry about the challenges of the weak economy, including high unemployment and a weak housing market. At the same time, those who have jobs have paid down their debt since the recession and are starting to feel more comfortable about spending. Retailers hope they'll continue to do so during the holiday shopping season, but so far, consumers aren't giving them a clear sign they will.
"The softer trend in my mind raises questions of whether this is a new trend or a temporary respite before it gets back to stronger spending," said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
The National Retail Federation, the nation's largest retail trade group, predicts revenue in November and December will rise 2.8 percent to $465.6 billion this year. That would be smaller than the 5.2 percent increase last year, but higher than the average over the last 10 years.
"Consumers are regrouping and retrenching and saving their pennies for the holiday season," said Ken Perkins, president of Retail Metrics, a research firm
But stores likely will have to work hard to get people to part with their money during the season.
Many retailers already are beginning to offer holiday discounts to draw shoppers in early. Amazon.com, for instance, just launched a sale this week that included such deals as a10-carat white gold diamond studded earrings marked down to $270 from $1,199.99.
"This is an effort to stimulate the holiday season to be longer and longer," said Janet Hoffman, managing director of Accenture's global retailing practice.
Retailers are doing more than discounting. Some, like Wal-Mart Stores Inc., are offering to match the cheaper prices consumers find at competitors. And other stores, including Target and Macy's, this week have announced expanded hours on Black Friday, the day after Thanksgiving and the official kickoff to the holiday season.
Retailers have some reason to be optimistic that the incentives will work.
Although October results weren't as promising as retailers had hoped, revenue was impacted by unseasonably warm weather during the beginning of the month and then a snowstorm at the end of the month. And most merchants reported revenue that was only slightly off from Wall Street estimates.
Wholesale club operators Costco Wholesale Corp.'s revenue at stores open at least a year climbed 9 percent in October, for instance, slightly lower than the 9.2 percent increase analysts surveyed by Thomson Reuters had predicted. And Limited Brands said revenue at stores open at least a year rose 6 percent in October, down from analysts' estimates of 6.2 percent.
A few merchants reported much more disappointing results. Target's 3.3 percent increase was below the 4.2 percent gain expected by Wall Street.
And Macy's Inc. posted a 2.2 percent increase in revenue at stores opened at least a year, which fell short of the 3.6 percent increase that Wall Street analysts had anticipated. The department store chain said revenue was hurt in part by the snowstorm at the end of the month that kept shoppers at home and warm weather during the rest of the month that kept them from buying winter clothes.
Luxury retailers, which had benefited from brisk spending by their well-heeled shoppers, also showed a slowdown. Saks Inc. had a 1.8 percent increase, which was much lower than the 5.4 percent gain that analysts had expected.
October revenue at stores open at least a year -- an indicator of a retailer's health -- rose 3.7 percent from the same month a year ago, according to the International Council of Shopping Centers' tally of 25 retailers.
But October's increase is weaker than the 5.5 percent revenue gain in the prior month. And 13 of 19 retailers missed Wall Street estimates for October revenue, according to Thomson Reuters, including big merchants like Macy's, Saks and Target.
The results reflect Americans' cautious spending habits. Consumers continue to worry about the challenges of the weak economy, including high unemployment and a weak housing market. At the same time, those who have jobs have paid down their debt since the recession and are starting to feel more comfortable about spending. Retailers hope they'll continue to do so during the holiday shopping season, but so far, consumers aren't giving them a clear sign they will.
"The softer trend in my mind raises questions of whether this is a new trend or a temporary respite before it gets back to stronger spending," said Michael P. Niemira, chief economist at the International Council of Shopping Centers.
The National Retail Federation, the nation's largest retail trade group, predicts revenue in November and December will rise 2.8 percent to $465.6 billion this year. That would be smaller than the 5.2 percent increase last year, but higher than the average over the last 10 years.
"Consumers are regrouping and retrenching and saving their pennies for the holiday season," said Ken Perkins, president of Retail Metrics, a research firm
But stores likely will have to work hard to get people to part with their money during the season.
Many retailers already are beginning to offer holiday discounts to draw shoppers in early. Amazon.com, for instance, just launched a sale this week that included such deals as a10-carat white gold diamond studded earrings marked down to $270 from $1,199.99.
"This is an effort to stimulate the holiday season to be longer and longer," said Janet Hoffman, managing director of Accenture's global retailing practice.
Retailers are doing more than discounting. Some, like Wal-Mart Stores Inc., are offering to match the cheaper prices consumers find at competitors. And other stores, including Target and Macy's, this week have announced expanded hours on Black Friday, the day after Thanksgiving and the official kickoff to the holiday season.
Retailers have some reason to be optimistic that the incentives will work.
Although October results weren't as promising as retailers had hoped, revenue was impacted by unseasonably warm weather during the beginning of the month and then a snowstorm at the end of the month. And most merchants reported revenue that was only slightly off from Wall Street estimates.
Wholesale club operators Costco Wholesale Corp.'s revenue at stores open at least a year climbed 9 percent in October, for instance, slightly lower than the 9.2 percent increase analysts surveyed by Thomson Reuters had predicted. And Limited Brands said revenue at stores open at least a year rose 6 percent in October, down from analysts' estimates of 6.2 percent.
A few merchants reported much more disappointing results. Target's 3.3 percent increase was below the 4.2 percent gain expected by Wall Street.
And Macy's Inc. posted a 2.2 percent increase in revenue at stores opened at least a year, which fell short of the 3.6 percent increase that Wall Street analysts had anticipated. The department store chain said revenue was hurt in part by the snowstorm at the end of the month that kept shoppers at home and warm weather during the rest of the month that kept them from buying winter clothes.
Luxury retailers, which had benefited from brisk spending by their well-heeled shoppers, also showed a slowdown. Saks Inc. had a 1.8 percent increase, which was much lower than the 5.4 percent gain that analysts had expected.
Starbucks 4Q profit up 29 percent
Starbucks Corp. reported Thursday that its fiscal fourth-quarter profit jumped nearly 29 percent and beat Wall Street estimates on strong sales around the globe.
The coffee company has been a standout among its peers in the tough global economy because consumers have started indulging in more small luxuries like lattes. It has also expanded overseas, increased the number of products it offers and upped its presence in grocery stores and other retailers to help drive growth.
"Starbucks Coffee Company has never been stronger or better positioned for sustained, profitable growth than it is today," Starbucks CEO said Howard Schultz said Thursday. "I have never in my career been more excited or more optimistic about where Starbucks is and where we are going as a company, or felt more strongly that we have the tools in the right places to get us there."
The company reported after the market closed that it earned $358.5 million, or 47 cents per share. That's up from $278.9 million, or 37 cents per share, last year. After adjusting for one-time gains and an extra week in the prior quarter, the company earned 37 cents compared with 32 cents last year.
Revenue rose 7 percent to $3 billion, with some benefit from foreign exchange rates. That jumped 15 percent after adjusting for the extra week last year.
The results beat expectations of 36 cents per share on revenue of $2.95 billion, according to FactSet.
Starbucks is facing a number of challenges from the drag of a weak economy on its customers to higher costs it's paying for commodities such as coffee and milk. But strong sales offset these pressures. The company said revenue was bolstered by new drinks and food products, an expanded loyalty program and an emphasis on customer service and quality.
Revenue in its stores open at least a year, which is considered a key financial indicator as it strips away the impact of recently opened or closed stores, increased 9 percent during the period. This measure jumped 10 percent in the U.S. where consumers bought up more pumpkin spice lattes and bistro boxes. It increased 6 percent for its international business, with strong gains in China and some softness in the U.K. and Europe, where consumers have been hit the hardest by economic problems.
Starbucks also reported that its consumer products business showed major gains during the quarter. The company has expanded the number of products it sells in grocery stores, such as its Via instant coffee. And it recently took its distribution to these retailers back in house, ending an agreement with Kraft Foods Inc. Those moves helped Starbucks generate revenue of $717.9 million, a 20 percent increase over last year, for its consumer products segment
"Starbucks today is executing in all markets and across all channels," Schultz said in a statement. "We have never been better positioned to go hard and go fast after the tremendous opportunity that lies ahead in 2012 and beyond."
The company's full fiscal year net income jumped nearly 32 percent to $1.25 billion, or $1.62 per share. That's up from $945.6 million, or $1.24 per share, in the prior year. Starbucks earned $1.52 on an adjusted basis, versus $1.23 in the prior year.
Revenue increased 7 percent to $11.7 billion for the year.
Starbucks says it expects to earn $1.75 to $1.82 for the coming fiscal year on an adjusted basis, with the bulk of the growth coming in the second half of the year as the pressure from higher costs for coffee and other commodities is expected to ease. Analysts expect Starbucks to earn $1.82 per share.
Coffee bean costs are expected to continue to increase in the coming year but the company said it has locked in some pricing contracts through 2013, which should reduce the pressure on its margins over time. The company also expects its sales growth to continue, which helps offset its higher costs.
The company, which operates about 17,000 stores around the globe, plans to add 800 new stores in the coming year.
Starbucks also announced Thursday that it plans to repurchase up to 20 million shares of its common stock. It also declared a cash dividend of 17 cents per share, up 31 percent from its most recent 13 cents per share dividend. The dividend will be paid Dec. 2 to shareholders of record as of Nov. 17.
Shares of the company rose $1.40, more than 3 percent, to $42.58 in after-hours trading.
The coffee company has been a standout among its peers in the tough global economy because consumers have started indulging in more small luxuries like lattes. It has also expanded overseas, increased the number of products it offers and upped its presence in grocery stores and other retailers to help drive growth.
"Starbucks Coffee Company has never been stronger or better positioned for sustained, profitable growth than it is today," Starbucks CEO said Howard Schultz said Thursday. "I have never in my career been more excited or more optimistic about where Starbucks is and where we are going as a company, or felt more strongly that we have the tools in the right places to get us there."
The company reported after the market closed that it earned $358.5 million, or 47 cents per share. That's up from $278.9 million, or 37 cents per share, last year. After adjusting for one-time gains and an extra week in the prior quarter, the company earned 37 cents compared with 32 cents last year.
Revenue rose 7 percent to $3 billion, with some benefit from foreign exchange rates. That jumped 15 percent after adjusting for the extra week last year.
The results beat expectations of 36 cents per share on revenue of $2.95 billion, according to FactSet.
Starbucks is facing a number of challenges from the drag of a weak economy on its customers to higher costs it's paying for commodities such as coffee and milk. But strong sales offset these pressures. The company said revenue was bolstered by new drinks and food products, an expanded loyalty program and an emphasis on customer service and quality.
Revenue in its stores open at least a year, which is considered a key financial indicator as it strips away the impact of recently opened or closed stores, increased 9 percent during the period. This measure jumped 10 percent in the U.S. where consumers bought up more pumpkin spice lattes and bistro boxes. It increased 6 percent for its international business, with strong gains in China and some softness in the U.K. and Europe, where consumers have been hit the hardest by economic problems.
Starbucks also reported that its consumer products business showed major gains during the quarter. The company has expanded the number of products it sells in grocery stores, such as its Via instant coffee. And it recently took its distribution to these retailers back in house, ending an agreement with Kraft Foods Inc. Those moves helped Starbucks generate revenue of $717.9 million, a 20 percent increase over last year, for its consumer products segment
"Starbucks today is executing in all markets and across all channels," Schultz said in a statement. "We have never been better positioned to go hard and go fast after the tremendous opportunity that lies ahead in 2012 and beyond."
The company's full fiscal year net income jumped nearly 32 percent to $1.25 billion, or $1.62 per share. That's up from $945.6 million, or $1.24 per share, in the prior year. Starbucks earned $1.52 on an adjusted basis, versus $1.23 in the prior year.
Revenue increased 7 percent to $11.7 billion for the year.
Starbucks says it expects to earn $1.75 to $1.82 for the coming fiscal year on an adjusted basis, with the bulk of the growth coming in the second half of the year as the pressure from higher costs for coffee and other commodities is expected to ease. Analysts expect Starbucks to earn $1.82 per share.
Coffee bean costs are expected to continue to increase in the coming year but the company said it has locked in some pricing contracts through 2013, which should reduce the pressure on its margins over time. The company also expects its sales growth to continue, which helps offset its higher costs.
The company, which operates about 17,000 stores around the globe, plans to add 800 new stores in the coming year.
Starbucks also announced Thursday that it plans to repurchase up to 20 million shares of its common stock. It also declared a cash dividend of 17 cents per share, up 31 percent from its most recent 13 cents per share dividend. The dividend will be paid Dec. 2 to shareholders of record as of Nov. 17.
Shares of the company rose $1.40, more than 3 percent, to $42.58 in after-hours trading.
Oil above $94 amid signs of US economy improving
Oil prices hovered above $94 a barrel Friday in Asia amid signs the U.S. economy may be improving.
Benchmark crude for December delivery was up 22 cents at $94.29 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 in New York on Thursday.
Brent crude was up 10 cents at $110.93 a barrel on the ICE Futures Exchange in London.
Crude has jumped about 25 percent from $75 on Oct. 4 amid growing investor optimism that the U.S. economy will avoid a recession.
On Thursday, the Labor Department reported that the number of people who applied for unemployment benefits dipped slightly last week to the lowest level in five weeks. And the Commerce Department said factory orders had the biggest jump in six months in September.
"The general global economic outlook inched away from the edge of collapse," energy trader and consultant The Schork Group said in a report.
Investors will be closely watching the latest unemployment figures for October due to be released later Friday.
Doubts that a plan announced by European leaders last week will contain Greece's debt crisis weighed on oil prices.
After meeting with German Chancellor Angela Merkel and French President Nicolas Sarkozy earlier this week, Greek Prime Minister George Papandreou backed off earlier pledges to call a referendum on his country's bailout package. But traders are still worried the plan will not be fully implemented or enough to stanch Europe rising debt levels.
"Markets are skeptical of the latest final agreement to stave off European contagion," Schork said.
In other Nymex trading, heating oil rose 0.7 cent to $3.05 per gallon and gasoline futures gained 1 cent at $2.65 per gallon. Natural gas added 3.8 cents at $3.82 per 1,000 cubic feet.
Benchmark crude for December delivery was up 22 cents at $94.29 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 in New York on Thursday.
Brent crude was up 10 cents at $110.93 a barrel on the ICE Futures Exchange in London.
Crude has jumped about 25 percent from $75 on Oct. 4 amid growing investor optimism that the U.S. economy will avoid a recession.
On Thursday, the Labor Department reported that the number of people who applied for unemployment benefits dipped slightly last week to the lowest level in five weeks. And the Commerce Department said factory orders had the biggest jump in six months in September.
"The general global economic outlook inched away from the edge of collapse," energy trader and consultant The Schork Group said in a report.
Investors will be closely watching the latest unemployment figures for October due to be released later Friday.
Doubts that a plan announced by European leaders last week will contain Greece's debt crisis weighed on oil prices.
After meeting with German Chancellor Angela Merkel and French President Nicolas Sarkozy earlier this week, Greek Prime Minister George Papandreou backed off earlier pledges to call a referendum on his country's bailout package. But traders are still worried the plan will not be fully implemented or enough to stanch Europe rising debt levels.
"Markets are skeptical of the latest final agreement to stave off European contagion," Schork said.
In other Nymex trading, heating oil rose 0.7 cent to $3.05 per gallon and gasoline futures gained 1 cent at $2.65 per gallon. Natural gas added 3.8 cents at $3.82 per 1,000 cubic feet.
Economy poised for modest job gains in October
Employers likely added only enough jobs in October to keep the unemployment rate from rising, reflecting their cautious outlook in the sluggish economy.
Economists predict employers added a net total of 100,000 jobs last month, according to a survey by FactSet. That's just enough to keep up with population growth.
More than twice that number is needed to lower the unemployment rate, which is projected to stay at 9.1 percent for the fourth straight month.
Many employers are hesitant to step up hiring until they see steady demand from consumers.
Healthier consumer spending was the key reason the economy expanded at an annual pace of 2.5 percent in the July-September quarter, the best quarterly growth in a year. Growth in consumer spending tripled from the spring, despite renewed recession fears and wide fluctuations in the stock market.
But economists worry that the summer spending gains can't be sustained. For one thing, Americans spent more in the third quarter even though they earned less. And they used their savings to make up the difference.
Without more jobs and higher wages, consumers are likely to pare spending in the months ahead. Consumer spending is important because it accounts for 70 percent of economic activity.
The economy generated an average of 96,000 jobs per month in the third quarter, the same as in the preceding three months. That's down from 166,000 in the first three months of this year.
A raft of data Thursday offered a mixed picture for the economy and hiring.
The number of people applying for unemployment benefits dropped below 400,000 for only the third time this year, the government said. Still, applications would need to fall below 375,000 to signal sustained job gains. They haven't been at that level since February.
Services companies, which employ about 90 percent of the work force, hired more in October after cutting jobs in the previous month, according to a survey by the Institute for Supply Management. Overall growth for the service sector was mostly unchanged from September's slow pace.
Companies ordered more factory goods in September for a third straight month. The gain occurred largely because businesses spent more on industrial machinery, computers and software. It's a sign that in the sluggish economy, many companies are investing in equipment but not in new hires.
Businesses are getting more out their existing work forces while paying less to employ them. Worker productivity rose in the July-September quarter by the most in a year and a half. At the same time, labor costs fell.
Higher productivity is generally a good thing. It can raise standards of living by enabling companies to pay workers more without raising their prices and increasing inflation. But without strong and sustained customer demand, companies are unlikely to hire.
Federal Reserve Chairman Ben Bernanke said Wednesday that growth is likely to be "frustratingly slow," after the Fed sharply lowered its economic projections for the next two years.
The Fed now says the economy will likely expand no more than 1.7 percent for all of 2011. That's down from its June forecast of 2.7 percent to 2.9 percent. And it predicted growth of only 2.5 percent to 2.9 percent next year, nearly a percentage point lower than its June estimate.
The Fed said it doesn't expect the unemployment rate to be any lower this year. And it sees unemployment averaging 8.6 percent by the end of next year.
Economists predict employers added a net total of 100,000 jobs last month, according to a survey by FactSet. That's just enough to keep up with population growth.
More than twice that number is needed to lower the unemployment rate, which is projected to stay at 9.1 percent for the fourth straight month.
Many employers are hesitant to step up hiring until they see steady demand from consumers.
Healthier consumer spending was the key reason the economy expanded at an annual pace of 2.5 percent in the July-September quarter, the best quarterly growth in a year. Growth in consumer spending tripled from the spring, despite renewed recession fears and wide fluctuations in the stock market.
But economists worry that the summer spending gains can't be sustained. For one thing, Americans spent more in the third quarter even though they earned less. And they used their savings to make up the difference.
Without more jobs and higher wages, consumers are likely to pare spending in the months ahead. Consumer spending is important because it accounts for 70 percent of economic activity.
The economy generated an average of 96,000 jobs per month in the third quarter, the same as in the preceding three months. That's down from 166,000 in the first three months of this year.
A raft of data Thursday offered a mixed picture for the economy and hiring.
The number of people applying for unemployment benefits dropped below 400,000 for only the third time this year, the government said. Still, applications would need to fall below 375,000 to signal sustained job gains. They haven't been at that level since February.
Services companies, which employ about 90 percent of the work force, hired more in October after cutting jobs in the previous month, according to a survey by the Institute for Supply Management. Overall growth for the service sector was mostly unchanged from September's slow pace.
Companies ordered more factory goods in September for a third straight month. The gain occurred largely because businesses spent more on industrial machinery, computers and software. It's a sign that in the sluggish economy, many companies are investing in equipment but not in new hires.
Businesses are getting more out their existing work forces while paying less to employ them. Worker productivity rose in the July-September quarter by the most in a year and a half. At the same time, labor costs fell.
Higher productivity is generally a good thing. It can raise standards of living by enabling companies to pay workers more without raising their prices and increasing inflation. But without strong and sustained customer demand, companies are unlikely to hire.
Federal Reserve Chairman Ben Bernanke said Wednesday that growth is likely to be "frustratingly slow," after the Fed sharply lowered its economic projections for the next two years.
The Fed now says the economy will likely expand no more than 1.7 percent for all of 2011. That's down from its June forecast of 2.7 percent to 2.9 percent. And it predicted growth of only 2.5 percent to 2.9 percent next year, nearly a percentage point lower than its June estimate.
The Fed said it doesn't expect the unemployment rate to be any lower this year. And it sees unemployment averaging 8.6 percent by the end of next year.
Regulator gave $10k to NJ Dems as Corzine ran
Gary Gensler, the regulator overseeing the investigation of Jon Corzine's collapsed securities firm, built close ties to Corzine as they rose through the ranks of Goldman Sachs. Later, they collaborated on Capitol Hill to pass an anti-corporate fraud law.
When Corzine ran for New Jersey governor, Gensler gave $10,000 to the state Democratic Party, which was trying to get Corzine elected.
Now, Gensler, head of the Commodity Futures Trading Commission, is leading an inquiry into how hundreds of millions vanished last week from client accounts at Corzine's firm, MF Global.
At a Senate hearing Thursday, Gensler had harsh words for Corzine's company.
"You don't put your hand in the cash register; you just don't," Gensler said.
He said MF Global's failure to separate clients' money from its own assets violated "the core foundation" of investor protection.
But Gensler's long and deep ties to Corzine pose an apparent conflict of interest that could taint the probe's findings, experts say. Some say he should remove himself from the case.
"The appearance of a conflict is there, there's no question," said Jay Lorsch, a professor at Harvard Business School. "It might be wise for Mr. Gensler to recuse himself from this particular investigation."
A similar appeal came from Sen. Charles Grassley, R-Iowa, of the Senate Agriculture Committee, which oversees Gensler's agency.
"It's hard to see how the chairman could be completely objective in looking out for wronged investors when he has such strong ties to the principal of the failed firm," Grassley said in a statement Thursday night. "It seems recusal would be the best outcome for investors."
Gensler gave $10,000 to the New Jersey Democratic Party in August 2005 as Corzine ran for governor, election records show. Corzine was elected later that year.
The donation followed years of collaboration between the two men on both Wall Street and Capitol Hill. Gensler and Corzine had worked alongside each other on Goldman's trading floor after they joined the firm in the 1970s.
Gensler rose to become Goldman's co-head of finance before leaving in 1997. Corzine left Goldman in 1999, after serving as chairman and CEO.
The two worked together again when Corzine was a senator and Gensler worked on Capitol Hill. As an advisor to Sen. Paul Sarbanes, D-Md., Gensler helped Sarbanes craft the accounting law that bears his name. At the time, Corzine was a senator from New Jersey.
Speaking at a Princeton University conference last year on the day before Corzine's wedding, Gensler described working with Corzine as a "privilege."
He recalled that when the full Senate voted on the Sarbanes-Oxley accounting law, "Jon was sitting in the presiding chair, and I was staffing Chairman Sarbanes on the floor."
Surveying the audience at Princeton's Financial Institutions and Regulation Colloquium, Gensler quipped, "Jon, your life has changed a lot since our days together on a trading floor if this is your idea of a bachelor party."
Representatives for Gensler and Corzine declined to comment on their relationship or to say whether Gensler should recuse himself.
But the investigation's high profile and Corzine's connections make it especially important that those involved avoid any appearance of a conflict of interest, experts in corporate governance said. To do so, Gensler should step away from the case, they said.
"I'm not sure what other options there are," said Naveen Reddy, a research analyst with the firm GMI Inc. "Gensler is a highly qualified guy, but these cozy relationships tend to taint the oversight in these big blowups."
MF Global filed for bankruptcy protection on Monday after a disastrous bet on European debt spooked its investors and trading partners. It was the eighth-biggest U.S. bankruptcy and the largest collapse on Wall Street since Lehman Bros. It also was the first major U.S. firm to fall because of bets on European debt.
Gensler and other regulators forced it to file after MF Global acknowledged that hundreds of millions in clients' money was missing. The FBI is examining whether the company broke criminal laws.
Securities companies are required to keep clients' money separate from their own assets. That way, clients don't have to worry about their cash if the company fails.
Corzine maintained close ties to Washington even after leaving for the New Jersey governor's mansion. He is a top fundraiser for President Barack Obama who has helped raise at least $500,000 for Obama's re-election since April, according to records released by the campaign.
In an April securities filing, MF Global offered investors in its bonds an extra 1 percent interest if Corzine left "due to his appointment to a federal position by the President of the United States."
Officials with the Obama campaign and the Democratic National Committee said any contributions from Corzine would be refunded if he's charged with any wrongdoing -- criminal or civil -- in the investigation. That would also apply to any MF Global employees who might be charged in the probe, if they contributed to the president's re-election efforts, the officials said.
The chairman of the Republican National Committee said that the Obama campaign should return all the money that Corzine helped raise.
Examiners from the Securities and Exchange Commission have been reviewing the company's operations since last week, Chairman Mary Schapiro said Thursday.
SEC examiners have been reviewing MF Global's finances and the events leading up to its bankruptcy filing, officials say. And staffers from the agency's trading and markets division have been monitoring the liquidation proceeding.
When Corzine ran for New Jersey governor, Gensler gave $10,000 to the state Democratic Party, which was trying to get Corzine elected.
Now, Gensler, head of the Commodity Futures Trading Commission, is leading an inquiry into how hundreds of millions vanished last week from client accounts at Corzine's firm, MF Global.
At a Senate hearing Thursday, Gensler had harsh words for Corzine's company.
"You don't put your hand in the cash register; you just don't," Gensler said.
He said MF Global's failure to separate clients' money from its own assets violated "the core foundation" of investor protection.
But Gensler's long and deep ties to Corzine pose an apparent conflict of interest that could taint the probe's findings, experts say. Some say he should remove himself from the case.
"The appearance of a conflict is there, there's no question," said Jay Lorsch, a professor at Harvard Business School. "It might be wise for Mr. Gensler to recuse himself from this particular investigation."
A similar appeal came from Sen. Charles Grassley, R-Iowa, of the Senate Agriculture Committee, which oversees Gensler's agency.
"It's hard to see how the chairman could be completely objective in looking out for wronged investors when he has such strong ties to the principal of the failed firm," Grassley said in a statement Thursday night. "It seems recusal would be the best outcome for investors."
Gensler gave $10,000 to the New Jersey Democratic Party in August 2005 as Corzine ran for governor, election records show. Corzine was elected later that year.
The donation followed years of collaboration between the two men on both Wall Street and Capitol Hill. Gensler and Corzine had worked alongside each other on Goldman's trading floor after they joined the firm in the 1970s.
Gensler rose to become Goldman's co-head of finance before leaving in 1997. Corzine left Goldman in 1999, after serving as chairman and CEO.
The two worked together again when Corzine was a senator and Gensler worked on Capitol Hill. As an advisor to Sen. Paul Sarbanes, D-Md., Gensler helped Sarbanes craft the accounting law that bears his name. At the time, Corzine was a senator from New Jersey.
Speaking at a Princeton University conference last year on the day before Corzine's wedding, Gensler described working with Corzine as a "privilege."
He recalled that when the full Senate voted on the Sarbanes-Oxley accounting law, "Jon was sitting in the presiding chair, and I was staffing Chairman Sarbanes on the floor."
Surveying the audience at Princeton's Financial Institutions and Regulation Colloquium, Gensler quipped, "Jon, your life has changed a lot since our days together on a trading floor if this is your idea of a bachelor party."
Representatives for Gensler and Corzine declined to comment on their relationship or to say whether Gensler should recuse himself.
But the investigation's high profile and Corzine's connections make it especially important that those involved avoid any appearance of a conflict of interest, experts in corporate governance said. To do so, Gensler should step away from the case, they said.
"I'm not sure what other options there are," said Naveen Reddy, a research analyst with the firm GMI Inc. "Gensler is a highly qualified guy, but these cozy relationships tend to taint the oversight in these big blowups."
MF Global filed for bankruptcy protection on Monday after a disastrous bet on European debt spooked its investors and trading partners. It was the eighth-biggest U.S. bankruptcy and the largest collapse on Wall Street since Lehman Bros. It also was the first major U.S. firm to fall because of bets on European debt.
Gensler and other regulators forced it to file after MF Global acknowledged that hundreds of millions in clients' money was missing. The FBI is examining whether the company broke criminal laws.
Securities companies are required to keep clients' money separate from their own assets. That way, clients don't have to worry about their cash if the company fails.
Corzine maintained close ties to Washington even after leaving for the New Jersey governor's mansion. He is a top fundraiser for President Barack Obama who has helped raise at least $500,000 for Obama's re-election since April, according to records released by the campaign.
In an April securities filing, MF Global offered investors in its bonds an extra 1 percent interest if Corzine left "due to his appointment to a federal position by the President of the United States."
Officials with the Obama campaign and the Democratic National Committee said any contributions from Corzine would be refunded if he's charged with any wrongdoing -- criminal or civil -- in the investigation. That would also apply to any MF Global employees who might be charged in the probe, if they contributed to the president's re-election efforts, the officials said.
The chairman of the Republican National Committee said that the Obama campaign should return all the money that Corzine helped raise.
Examiners from the Securities and Exchange Commission have been reviewing the company's operations since last week, Chairman Mary Schapiro said Thursday.
SEC examiners have been reviewing MF Global's finances and the events leading up to its bankruptcy filing, officials say. And staffers from the agency's trading and markets division have been monitoring the liquidation proceeding.
World stocks up after Greece drops referendum plan
World stock markets rose Friday amid relief Greece's prime minister had abandoned a referendum on the country's bailout but gains in Europe were muted ahead of monthly U.S. employment figures.
Oil prices rose above $94 a barrel amid signs the U.S. economy may be improving. The dollar was higher against the euro but lower against the yen.
European stocks were mostly higher in early trading. Britain's FTSE 100 rose 0.3 percent to 5,560.45. Germany's DAX fell 0.3 percent to 6,114.04 while France's CAC-40 was 0.2 percent higher at 3,201.16.
Wall Street appeared headed toward a lower opening ahead of a closely-watched monthly employment report, with Dow Jones industrial futures down 0.1 percent at 11,959 and S&P 500 futures losing 0.2 percent at 1,252.70.
Trading ended higher in Asia. Japan's Nikkei 225 index rose 1.9 percent to close at 8,801.40. Hong Kong's Hang Seng jumped 3.1 percent to 19,842.79. South Korea's Kospi gained 3.1 percent to 1,928.41.
Mainland Chinese shares tracked advances in the region, with the benchmark Shanghai Composite Index adding 0.8 percent to 2,528.29 while the Shenzhen Composite Index gained 0.6 percent to 1,071.34. Benchmarks in Australia, Singapore, Taiwan, India, Indonesia and Thailand also rose.
The gains reversed four straight days of losses starting Monday. That's when Greek Prime Minister George Papandreou shocked financial markets by unexpectedly announcing he would call a referendum on a European austerity plan aimed at restoring the country's solvency.
Markets remain jittery about how Europe will resolve its debt crisis. The risks to the region's economy were also a clear factor in the ECB's surprise decision Thursday to cut interest rates by a quarter of a percentage point to 1.25 percent.
Analysts expect economic growth in Europe to slow in the final three months of the year or even go into reverse.
Still, Greece's decision to call off the referendum allayed concerns that it would reject the bailout plan -- which could lead Greece into a massive debt default that could slam banks and other investors that were heavy purchasers of its bonds.
"The equity markets are reacting quite positively to what's happening in Europe," said Lee Kok Joo, head of research at Phillip Securities in Singapore. "There is still a lot of uncertainty, and the market is just reacting day by day to what is happening."
Investors will be closely watching the latest U.S. unemployment figures for October due to be released later Friday, Lee said.
Economists predict employers added a net total of 100,000 jobs last month, according to a survey by FactSet. That's just enough to keep up with population growth and stop the already high unemployment rate from rising.
Bargain hunting and buying fervor led to broad gains, including shares in airlines and heavy equipment. Hong Kong-listed Air China Ltd. jumped 6.8 percent, while Korean Air Lines Co. rose 2.9 percent. Japan's Komatsu Ltd., a world leader in equipment making, soared 6.9 percent.
Rising commodities prices, including industrial and precious metals, boosted mining shares. Zining Mining Group Co., China's largest gold miner, added 6.3 percent. Australia's BHP Billiton, the world's largest mining company, gained 3.9 percent while rival Rio Tinto Ltd. surged 5.3 percent. Fortescue Metals Group soared 7.9 percent.
Kirin Holdings Co., Japan's No. 2 brewer, rose 1.5 percent after announcing it has taken full control of Brazilian beverage maker Schincariol by acquiring its holding company, Kyodo News Agency reported.
The acquisition is part of Kirin's effort to expand into emerging markets, where rapid economic growth and rising demand are expected at a time when Japan's domestic beer market is shrinking.
Sony Corp., the Japanese electronics and entertainment conglomerate, tumbled 7.9 percent, after earlier this week reporting a 27 billion yen ($346 million) loss for the latest quarter and downgrading its annual earnings forecast, battered by the strong yen and poor sales of flat panel TVs.
Mainland Chinese shares in shipbuilding, development zones and nonferrous metals led the gains while shares in media and cement companies weakened after earlier gains.
"The advance was mainly due to what happened overseas. While there is some pressure of profit-taking in the short term, the gaining trend will continue," said Cai Dagui, an analyst at Ping'an Securities, based in Shenzhen.
Suzhou New District Hi-Tech Ind. Co. gained 5 percent while CSSC Jiangnan Heavy Industry Co. added 4.4 percent. Shanghai Xinhua Media Co. lost 1.9 percent.
The developments in Europe on Thursday helped send Wall Street to a second day of big gains. The Dow Jones industrial average gained 1.8 percent to 12,044.47. The S&P 500 rose 1.9 percent to 1,261.15 and the Nasdaq composite added 2.2 percent to 2,697.97.
Reports on the U.S. economy also lifted stocks by lowering fears of a new recession. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April.
Companies also ordered more factory goods in September for a third straight month.
Benchmark crude for December delivery was up 17 cents to $94.24 in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 a barrel on Thursday, helped by the better U.S. and European news.
In currencies, the euro fell to $1.3794 from $1.3834 late Thursday in New York. The dollar slipped to 78.05 yen from 78.09 yen.
Oil prices rose above $94 a barrel amid signs the U.S. economy may be improving. The dollar was higher against the euro but lower against the yen.
European stocks were mostly higher in early trading. Britain's FTSE 100 rose 0.3 percent to 5,560.45. Germany's DAX fell 0.3 percent to 6,114.04 while France's CAC-40 was 0.2 percent higher at 3,201.16.
Wall Street appeared headed toward a lower opening ahead of a closely-watched monthly employment report, with Dow Jones industrial futures down 0.1 percent at 11,959 and S&P 500 futures losing 0.2 percent at 1,252.70.
Trading ended higher in Asia. Japan's Nikkei 225 index rose 1.9 percent to close at 8,801.40. Hong Kong's Hang Seng jumped 3.1 percent to 19,842.79. South Korea's Kospi gained 3.1 percent to 1,928.41.
Mainland Chinese shares tracked advances in the region, with the benchmark Shanghai Composite Index adding 0.8 percent to 2,528.29 while the Shenzhen Composite Index gained 0.6 percent to 1,071.34. Benchmarks in Australia, Singapore, Taiwan, India, Indonesia and Thailand also rose.
The gains reversed four straight days of losses starting Monday. That's when Greek Prime Minister George Papandreou shocked financial markets by unexpectedly announcing he would call a referendum on a European austerity plan aimed at restoring the country's solvency.
Markets remain jittery about how Europe will resolve its debt crisis. The risks to the region's economy were also a clear factor in the ECB's surprise decision Thursday to cut interest rates by a quarter of a percentage point to 1.25 percent.
Analysts expect economic growth in Europe to slow in the final three months of the year or even go into reverse.
Still, Greece's decision to call off the referendum allayed concerns that it would reject the bailout plan -- which could lead Greece into a massive debt default that could slam banks and other investors that were heavy purchasers of its bonds.
"The equity markets are reacting quite positively to what's happening in Europe," said Lee Kok Joo, head of research at Phillip Securities in Singapore. "There is still a lot of uncertainty, and the market is just reacting day by day to what is happening."
Investors will be closely watching the latest U.S. unemployment figures for October due to be released later Friday, Lee said.
Economists predict employers added a net total of 100,000 jobs last month, according to a survey by FactSet. That's just enough to keep up with population growth and stop the already high unemployment rate from rising.
Bargain hunting and buying fervor led to broad gains, including shares in airlines and heavy equipment. Hong Kong-listed Air China Ltd. jumped 6.8 percent, while Korean Air Lines Co. rose 2.9 percent. Japan's Komatsu Ltd., a world leader in equipment making, soared 6.9 percent.
Rising commodities prices, including industrial and precious metals, boosted mining shares. Zining Mining Group Co., China's largest gold miner, added 6.3 percent. Australia's BHP Billiton, the world's largest mining company, gained 3.9 percent while rival Rio Tinto Ltd. surged 5.3 percent. Fortescue Metals Group soared 7.9 percent.
Kirin Holdings Co., Japan's No. 2 brewer, rose 1.5 percent after announcing it has taken full control of Brazilian beverage maker Schincariol by acquiring its holding company, Kyodo News Agency reported.
The acquisition is part of Kirin's effort to expand into emerging markets, where rapid economic growth and rising demand are expected at a time when Japan's domestic beer market is shrinking.
Sony Corp., the Japanese electronics and entertainment conglomerate, tumbled 7.9 percent, after earlier this week reporting a 27 billion yen ($346 million) loss for the latest quarter and downgrading its annual earnings forecast, battered by the strong yen and poor sales of flat panel TVs.
Mainland Chinese shares in shipbuilding, development zones and nonferrous metals led the gains while shares in media and cement companies weakened after earlier gains.
"The advance was mainly due to what happened overseas. While there is some pressure of profit-taking in the short term, the gaining trend will continue," said Cai Dagui, an analyst at Ping'an Securities, based in Shenzhen.
Suzhou New District Hi-Tech Ind. Co. gained 5 percent while CSSC Jiangnan Heavy Industry Co. added 4.4 percent. Shanghai Xinhua Media Co. lost 1.9 percent.
The developments in Europe on Thursday helped send Wall Street to a second day of big gains. The Dow Jones industrial average gained 1.8 percent to 12,044.47. The S&P 500 rose 1.9 percent to 1,261.15 and the Nasdaq composite added 2.2 percent to 2,697.97.
Reports on the U.S. economy also lifted stocks by lowering fears of a new recession. The number of people who applied for unemployment benefits last week dipped to the lowest level in five weeks. The number of applications fell below 400,000 for only the third time since April.
Companies also ordered more factory goods in September for a third straight month.
Benchmark crude for December delivery was up 17 cents to $94.24 in electronic trading on the New York Mercantile Exchange. The contract rose $1.56 to settle at $94.07 a barrel on Thursday, helped by the better U.S. and European news.
In currencies, the euro fell to $1.3794 from $1.3834 late Thursday in New York. The dollar slipped to 78.05 yen from 78.09 yen.
Groupon raises $700M with IPO at $20 per share
Daily deals pioneer Groupon raised about $700 million with an initial public offering of stock priced well above expectations.
The IPO was set late Thursday at $20 per share, above the anticipated range of $16 to $18. The higher price indicated investors are eager to snap up the Chicago-based company's shares.
Groupon Inc. is expected to make its trading debut Friday on the Nasdaq Stock Market under the ticker symbol "GRPN." That will give a better indication of general sentiment for the company's stock, since it will be the first time that a broader audience will be able to buy it.
The IPO's price gives based Groupon a market value of $12.7 billion. That makes Groupon's IPO the second largest by an Internet company behind only that of Google Inc. in 2004.
The online search leader made its public debut at a market cap of $23.1 billion seven years ago. In comparison, LinkedIn Corp. went public in May with a market value of $4.3 billion and was worth $8.4 billion at the end of trading Thursday.
The pricing is a milestone in a process that served as a reality check for Groupon, a rapidly growing company that has evoked memories of the dot-com boom's exuberance. Coming at a time of worldwide market turbulence and deep economic woes, Groupon's IPO has been closely watched by fellow Web startups looking to follow a similar path.
It's a lofty appraisal for a service that started just three years ago, but a big comedown from the $25 billion estimate floated when the company filed its IPO plans in June, months after rejecting a $6 billion buyout offer from Google.
Groupon began in 2008 when computer programmer Andrew Mason figured out how to get people excited about the low-margin coupon business.
The company sends out daily emails to subscribers offering a chance to buy discount deals for anything from spa services to messenger bags to restaurant meals, provided enough people sign up for the deal. The company then takes a cut of what people pay and gives the rest to the merchant. Though some businesses see this as good advertising, others have complained that Groupon leaves them inundated with coupon-clasping bargain hunters who never return.
The company started in Chicago and quickly branched out across the country and, shortly thereafter, around the globe. At the end of September, Groupon operated in 175 markets in North America and 45 countries. The company had 143 million subscribers at the end of September, and sold 33 million Groupons in the July-September quarter.
Groupon faced a number of difficulties leading up to its IPO. It drew scrutiny from the Securities and Exchange Commission, and rival companies and critics have been popping up left and right.
"This is not Facebook where they can do no wrong," said longtime IPO analyst Scott Sweet, the owner of IPO Boutique. He called Groupon an "accident waiting to happen."
Sweet pointed to problems the company has had with the SEC that have led Groupon to restate the way it accounts for revenue, cutting it in half from what it originally reported. The analyst is also one of those who question the company's business model, its high marketing expenses and frantic hiring pace that has swelled its ranks to more than 10,000 employees. That is about four times as many as Facebook.
Another worrisome sign is the amount of Groupon stock being offered to the public. The company is "floating" about 5.5 percent of available shares -- 35 million -- which is the well below the percentage that many prominent tech companies have offered in their IPOs, including Google, online retailer Amazon.com Inc. and, more recently, Internet radio service Pandora Media Inc. and professional networking site LinkedIn Corp. This has raised concerns that Groupon is trying to boost demand -- and thus its valuation -- by limiting supply.
Mutual funds, pension funds and other major money managers got the first crack at buying most of the IPO's 35 million shares late Thursday because stock in these offerings is typically sold to investment bankers' top customers. "Main Street" investors will get their first chance at Groupon on Friday.
In addition to the 35 million shares Groupon sold through its IPO, the company also granted an option to its underwriters -- which include, among others, Morgan Stanley, Goldman Sachs & Co. and Credit Suisse -- to buy over the next 30 days an additional 5.25 million shares to cover over-allotments.
The sale of the 35 million shares mean Groupon's initial public offering of stock raised about $700 million, minus investment banking fees and other expenses
In filings with the SEC, Groupon said it hoped to raise $479 million, after expenses and presuming the stock priced at $17 per share, or $552 million if it also sold the 4.5 million in over-allotment shares. It did not go into details on how it plans to spend the money, though it did specify it won't need to use it to pay for its operations, including marketing expenses, during the next 12 months.
Neither CEO Mason, 31, nor executive chairman and fellow co-founder Eric Lefkofsky, 42, are selling any shares in the IPO. Mason's stake in the company is now worth about $938.7 million, given the $20 IPO share price, while the stake of Leftofsky, who is Groupon's largest investor and shareholder, is worth about $2.6 billion.
They've made out well previously from the sale of stock, though, according to SEC filings: Lefkofsky, Groupon's largest investor and shareholder, received $398 million while Mason snagged $28 million.
Ortutay reported from New York.
The IPO was set late Thursday at $20 per share, above the anticipated range of $16 to $18. The higher price indicated investors are eager to snap up the Chicago-based company's shares.
Groupon Inc. is expected to make its trading debut Friday on the Nasdaq Stock Market under the ticker symbol "GRPN." That will give a better indication of general sentiment for the company's stock, since it will be the first time that a broader audience will be able to buy it.
The IPO's price gives based Groupon a market value of $12.7 billion. That makes Groupon's IPO the second largest by an Internet company behind only that of Google Inc. in 2004.
The online search leader made its public debut at a market cap of $23.1 billion seven years ago. In comparison, LinkedIn Corp. went public in May with a market value of $4.3 billion and was worth $8.4 billion at the end of trading Thursday.
The pricing is a milestone in a process that served as a reality check for Groupon, a rapidly growing company that has evoked memories of the dot-com boom's exuberance. Coming at a time of worldwide market turbulence and deep economic woes, Groupon's IPO has been closely watched by fellow Web startups looking to follow a similar path.
It's a lofty appraisal for a service that started just three years ago, but a big comedown from the $25 billion estimate floated when the company filed its IPO plans in June, months after rejecting a $6 billion buyout offer from Google.
Groupon began in 2008 when computer programmer Andrew Mason figured out how to get people excited about the low-margin coupon business.
The company sends out daily emails to subscribers offering a chance to buy discount deals for anything from spa services to messenger bags to restaurant meals, provided enough people sign up for the deal. The company then takes a cut of what people pay and gives the rest to the merchant. Though some businesses see this as good advertising, others have complained that Groupon leaves them inundated with coupon-clasping bargain hunters who never return.
The company started in Chicago and quickly branched out across the country and, shortly thereafter, around the globe. At the end of September, Groupon operated in 175 markets in North America and 45 countries. The company had 143 million subscribers at the end of September, and sold 33 million Groupons in the July-September quarter.
Groupon faced a number of difficulties leading up to its IPO. It drew scrutiny from the Securities and Exchange Commission, and rival companies and critics have been popping up left and right.
"This is not Facebook where they can do no wrong," said longtime IPO analyst Scott Sweet, the owner of IPO Boutique. He called Groupon an "accident waiting to happen."
Sweet pointed to problems the company has had with the SEC that have led Groupon to restate the way it accounts for revenue, cutting it in half from what it originally reported. The analyst is also one of those who question the company's business model, its high marketing expenses and frantic hiring pace that has swelled its ranks to more than 10,000 employees. That is about four times as many as Facebook.
Another worrisome sign is the amount of Groupon stock being offered to the public. The company is "floating" about 5.5 percent of available shares -- 35 million -- which is the well below the percentage that many prominent tech companies have offered in their IPOs, including Google, online retailer Amazon.com Inc. and, more recently, Internet radio service Pandora Media Inc. and professional networking site LinkedIn Corp. This has raised concerns that Groupon is trying to boost demand -- and thus its valuation -- by limiting supply.
Mutual funds, pension funds and other major money managers got the first crack at buying most of the IPO's 35 million shares late Thursday because stock in these offerings is typically sold to investment bankers' top customers. "Main Street" investors will get their first chance at Groupon on Friday.
In addition to the 35 million shares Groupon sold through its IPO, the company also granted an option to its underwriters -- which include, among others, Morgan Stanley, Goldman Sachs & Co. and Credit Suisse -- to buy over the next 30 days an additional 5.25 million shares to cover over-allotments.
The sale of the 35 million shares mean Groupon's initial public offering of stock raised about $700 million, minus investment banking fees and other expenses
In filings with the SEC, Groupon said it hoped to raise $479 million, after expenses and presuming the stock priced at $17 per share, or $552 million if it also sold the 4.5 million in over-allotment shares. It did not go into details on how it plans to spend the money, though it did specify it won't need to use it to pay for its operations, including marketing expenses, during the next 12 months.
Neither CEO Mason, 31, nor executive chairman and fellow co-founder Eric Lefkofsky, 42, are selling any shares in the IPO. Mason's stake in the company is now worth about $938.7 million, given the $20 IPO share price, while the stake of Leftofsky, who is Groupon's largest investor and shareholder, is worth about $2.6 billion.
They've made out well previously from the sale of stock, though, according to SEC filings: Lefkofsky, Groupon's largest investor and shareholder, received $398 million while Mason snagged $28 million.
Ortutay reported from New York.
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