Business This Week

JPMorgan Chase, America’s second-biggest bank, announced profits of $3.59 billion in the third quarter of this year, helped by earnings from its investment-banking activities. The bank has set aside $8.79 billion to cover pay, bonuses and other benefits for its employees in the first nine months of this year. This is about 38% of its revenue over the three quarters. The bank set aside 52% of its revenues for this purpose during the same period last year.
On October 13th AIG, an insurer, announced the sale of its Taiwanese life-insurance business to Hong Kong-based buyers for $2.15bn. But there was trouble over past bonus payments at the firm. A report from the head of America’s Troubled Asset Relief Programme (TARP) has condemned the American Treasury for failing to monitor bonuses paid by AIG before giving it $30 billion in bail-out funds in March. In March AIG executives promised to return $45m in bonuses. But less than half that amount has been repaid, according to the report.


After months of stalling, Bank of America (BofA) agreed to hand over documents detailing legal advice it received during its purchase of Merrill Lynch in January. Andrew Cuomo, attorney-general of New York, is investigating whether BofA executives should face charges over their failure to disclose Merrill’s mounting losses to shareholders ahead of the purchase.
General Motors, Magna International and Sberbank were expected to sign binding agreements for the sale of Opel/Vauxhall. Separately, Magna secured British backing for the deal after giving assurances of continued vehicle production at Ellesmere Port and Luton. Final closure of the deal on November 30th is still conditional on EU approval.
Helped by lower costs, Philips, a Dutch electronics company, announced a third-quarter net profit of €174m ($249m), three times the figure for the same period last year.
Xstrata, a mining company, dropped a proposed $48 billion bid for Anglo American, a rival, five days before a deadline to make an offer was due to expire.
A rising tide
The Dow Jones Industrial Average, a widely followed price-weighted average of 30 shares of American industry leaders, crossed 10,000 for the first time in over a year on October 14th, ending the day at 10015.86. It was aided by better-than-expected profits at giants like JPMorgan Chase and Intel. But a dismal set of figures on retail sales, which fell by 1.5% in September, sent the dollar reeling to new lows. It ended October 14th at $0.671 to the euro, its lowest level since August 12th last year.
Feeling chipper
Intel, an American firm that is the world’s biggest chipmaker, reported profits of $1.9 billion for the third quarter. This was $2.3 billion more than the previous quarter, but still $158m lower than the third quarter of 2008. Revenues were $9.4 billion. Sales of microprocessors and chipsets did particularly well.
McGraw-Hill, a publisher, has agreed to sell BusinessWeek, a magazine founded in 1929, to Bloomberg, a provider of financial data and news. The price, as yet undisclosed, is rumoured to be in the region of $5m, with $10m in liabilities attached. BusinessWeek is estimated to be losing around $40m a year.
Jeffrey Peek, the chairman and chief executive officer of CIT Group, a struggling American commercial lender, announced that he would resign on December 31st this year. The 101-year-old company received bail-out funds under the American government’s TARP scheme, and is in the process of restructuring its liabilities to avoid bankruptcy.
On October 13th America’s Supreme Court agreed to allow Jeffrey Skilling, the former chief executive of Enron, the disgraced energy company, to appeal against his conviction for his role in the company’s collapse. Mr Skilling is three years into a 24-year jail sentence. See article
Code black
Profits at Infosys, one of India’s largest outsourcing companies, rose by 15% to 19.4 billion rupees ($403m), in the three months to the end of September, from 16.8 billion rupees for the corresponding period last year.
Nokia, a Finnish mobile-phone company, posted a third-quarter loss of €426m on sales of €9.8 billion, which were nearly 20% lower than a year earlier, and 1% lower than in the previous three-month period.
Bruce Wasserstein, the head of Lazard, an investment bank which he took public in 2005, died on October 15th. Mr Wasserstein brokered many big deals, like the merger between AOL and Time Warner, during a legendary Wall Street career.