Discover Financial Services 4Q net income rises

LOS ANGELES (AP) — Discover Financial Services on Thursday reported higher earnings for its fiscal fourth quarter, as users of its namesake credit card stepped up purchases and the company wrote off fewer unpaid balances.
Even so, the Riverwoods, Ill.-based company's results fell short of Wall Street expectations, and investors sent its shares down over 3 percent Thursday.
Discover, the nation's sixth-largest credit card issuer, said total loans, credit card loans and Discover card sales volume increased 6 percent in the quarter, which coincided with the tail end of the back-to-school shopping season and the ramp up to the December holidays — key periods when consumers traditionally spend more.
Discover card sales volume increased to $26.5 billion, while credit card loans at the end of the quarter totaled $49.6 billion. Private student loans rose 6 percent, while personal loans climbed 24 percent, the company said.
"Our strong receivables and sales growth results demonstrate the effectiveness of our marketing programs, consumers' preference for cash rewards and our acceptance and awareness initiatives," Chairman and CEO David Nelms said during a conference call with analysts.
While Discover's customers racked up more debt, more of them paid off credit card balances on time. The delinquency rate on credit-card loans over 30 days past due was 1.86 percent, an improvement of 53 basis points from a year earlier. The rate of charge-offs, when the company writes off unpaid credit card balances, dropped to a historic low of 2.29 percent.
"While the continued improvement in credit appears to be nearing an end, we don't believe we are at a point where charge-offs are poised to rise significantly," Nelms said.
Nationwide the rate of credit card payments at least 90 days overdue edged up in the third quarter to 0.75 percent, according to credit reporting agency TransUnion. The rate is coming off historically low levels, however.
Discover has traditionally had one of the lowest rates for default and delinquency in the credit card industry, the result of tighter lending standards and close monitoring of problem accounts.
The company has reported improvement in its customers' default and late-payment rates since the Great Recession, as cardholders moved to pay down debt and boost savings.
Late-payment rates tend to creep higher in the fall, particularly as cardholders spend more money on holiday shopping, travel and other expenses. The company said that seasonal factor led to a slight increase in its credit card loan delinquency rate between the third and fourth quarter.
While Discover's rates for late payments and defaults remain low, the company has been making more loans. As a result, it has been setting aside more funds to cover potential loan losses.
In the September-to-November quarter, Discover increased its provision for loan losses by 6 percent to $338 million, noting that was somewhat offset by a drop in the number of unpaid credit card balances that had to be written off.
Meanwhile Discover's payment-services business, which competes with Visa and MasterCard, saw dollar volume increase 13 percent in the latest quarter.
In a client note Thursday, RBC Capital Markets analyst Jason Arnold said Discover is benefiting from increased acceptance of its cards and favorable credit trends.
"We remain very enthused by Discover's fundamental position and believe the company remains well positioned for loan and (earnings per share) growth," wrote Arnold, who has a $50 price target on the stock.
For the period ended Nov. 30, Discover earned $541 million, or $1.07 per share. That compares with $513 million, or 95 cents per share, a year earlier.
Analysts surveyed by FactSet expected earnings of $1.12 per share.
Revenue climbed 11 percent to $2 billion, after interest expense. Wall Street forecast $1.96 billion.
Also on Thursday, Discover declared a dividend of 14 cents per share. It will be paid on Jan. 17 to shareholders of record on Jan. 3.
Discover shares fell $1.36, or 3.4 percent, to close at $38.41 Thursday. The stock is up 60 percent this year.

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Oracle beats outlook, shrugs off fiscal debate

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.
Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.
Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.
"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."
Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.
The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.
Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.
It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.
"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."
Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.
Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.
OFF A CLIFF
Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.
Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.
"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."
On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.
"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.
The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.
Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.
Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.
Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

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RIM shares fall at the open after earnings

TORONTO (Reuters) - Research In Motion Ltd fell in early trading on Friday following the BlackBerry maker's Thursday earnings announcement, when the company outlined plans to change the way it charges for services.
RIM, pushing to revive its fortunes with the launch of its new BlackBerry 10 devices next month, surprised investors when it said it plans to alter its service revenue model, a move that could put the high-margin business under pressure.
Shares fell 16.0 percent to $11.86 in early trading on the Nasdaq. Toronto-listed shares fell 15.8 percent to C$11.74.

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Syrian president to give speech Sunday

BEIRUT (AP) — Syrian President Bashar Assad will deliver a speech on Sunday in a rare address to the nation, state media said, as rebels fighting to topple his embattled regime pressed ahead with an offensive on the capital.
The official SANA news agency said in a brief statement Saturday that Assad will speak about the latest developments in Syria. The speech would be the first by the leader since June, and comes amid intense fighting between government troops and rebels on the outskirts of Damascus.
Assad has rarely spoken in public since the uprising against him began in March 2011. In each of his previous speeches and interviews, the president has dug in his heels even as Western powers have moved to boost the opposition in Syria's civil war.
In his last public comments, Assad vowed in an interview with Russia Today on Nov. 8 that he would "live and die in Syria."
Fighting has raged for weeks in the neighborhoods and towns around Damascus that have been opposition strongholds since the Syrian revolt began. The uprising started with peaceful protests but morphed into a civil war that has killed more than 60,000 people, according to a recent United Nations recent estimate.
The rebels are trying to push through the government's heavy defenses in Damascus, prompting the regime to unleash a withering assault on the suburbs that has included intense barrages by artillery and warplanes.
Diplomatic efforts to end the Syrian crisis have failed so far to bring an end to the bloodshed, although the international community continues to push for a peaceful settlement.
On Saturday, Saudi Arabia's Foreign Minister Saud al-Faisal told reporters after a meeting with his Egyptian counterpart in Riyadh that there should be an immediate end to the bloodshed in Syria and called for a peaceful political transition.
Saudi Arabia and Egypt have both called on Assad to step down, and Riyadh has also been an outspoken supporter of the rebels.
The president of the U.N. Security Council said Thursday there are important developments in efforts to find a diplomatic solution to the 21-month conflict in Syria and there could be another U.S.-Russia meeting with international envoy Lakhdar Brahimi next week.
Brahimi and Russian Foreign Minister Sergey Lavrov both said after their meeting last Saturday that the Syrian crisis can only be settled through talks, while admitting that neither the government nor the opposition has shown a desire to compromise. Neither official hinted at a possible solution that would persuade the two sides to agree to a ceasefire and sit down for talks about a political transition.
But Lavrov said Syrian President Bashar Assad has no intention of stepping down — a key opposition demand — and it would be impossible to try to persuade him otherwise. Russia is a close ally of the Syrian government, and has shielded it from punitive measures at the U.N.
It was not clear what kind of initiative, if any, Assad may offer in his speech.
Meanwhile the violence continued unabated Saturday.
Rebels and government troops clashed in suburbs south of Damascus, including Harasta and Daraya, the Britain-based Syrian Observatory for Human Rights said. Fighting in Daraya alone left 10 dead, including six rebels, according to the Observatory, which relies on reports by activists on the ground.
The army dispatched fresh reinforcements to Daraya, part of an offensive aimed at dislodging rebels from the district, located just a few kilometers (miles) from a strategic military air base west of the capital, the Observatory said. Regaining control of Daraya would provide a boost to the regime's defense of Damascus.
Government troops also arrested several residents in raids in the suburb of Qatana, the Observatory said. Fighting was also heavy in the central province of Hama, Idlib, and in the southern part of the country, in Daraa, the birthplace of the Syrian uprising. Besides the deaths in Daraya, 35 people were killed around the country, the group said.
There was also fighting on the road to the Damascus International Airport, which has not been functioning since last month when clashes first erupted on the airport road, and international airlines have yet to resume flights to the capital. Airport officials have said the facility is open, but have not said which flights are operating.
Rebels frequently target government officials for assassination, and have killed several regime figures since the revolt began, including a suicide bombing in December that wounded Interior Minister Mohammed al-Shaar. After the Dec. 12 blast, al-Shaar was secretly sent to neighboring Lebanon for treatment of a back injury, but was rushed out of a Beirut hospital and back home two weeks later for fear of being arrested by Lebanese authorities.
On Saturday, SANA denied reports that al-Shaar had died, saying the minister is "in good health and recovering."
State media also said Syrian journalist Suheil al-Ali who worked for the Dunya pro-government television station died Friday of wounds sustained in a shooting attack in the suburbs of Damascus four days ago. The SANA state news agency blamed a "terrorist," the term the government uses for those trying to topple Assad.
In Tehran, Syrian Deputy Foreign Minister Faisal Mekdad discussed the conflict and ways to end it with Iranian Foreign Minister Ali Akbar Salehi, Iranian State TV said. Iran is one of Syria's strongest allies.
The conflict has increasingly taken sectarian overtones, with predominantly Sunni Muslim rebels fighting the ruling regime that is dominated by Alawites, an offshoot group of Shiite Islam.
Also on Saturday, an Arab League official said the group's foreign ministers will hold an emergency meeting in the coming days in Cairo to discuss ways to assist Syrian refugees in Lebanon. The official spoke on condition of anonymity because he was not authorized to release the information.
More than half a million Syrians have fled violence and sought shelter in neighboring countries, including some 130,000 to Lebanon. The country's government has requested $180 million from international donors to help its efforts with refugees.

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Iran parliament seeks full probe in blogger death

Iran parliament seeks full probe in blogger death
TEHRAN, Iran (AP) — Iran's parliament is urging the judiciary to thoroughly investigate the death of a blogger in custody and monitor police stations to prevent further abuses.
A parliamentary committee statement read during a Sunday session of the legislature called for a "special" investigation into the November death of Sattar Beheshti.
It is not clear what that means legally, as prosecutors are already investigating the case. But the statement reflects widespread outrage. Arrests of activists and claims of abuse in detention are commonplace in Iran, but deaths behind bars are much rarer.
Parliament also urged police to monitor all detention centers through closed circuit cameras, and suggested prosecutors visit regularly.
In December, Iran fired its head of cyber-security over the case. It also detained seven police officers, three of whom remain in detention.

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Israel leader appeals for right-wing votes

JERUSALEM (AP) — Israel's Prime Minister Benjamin Netanyahu appealed in a rare interview on Sunday to his right-wing base to cast ballots for his list, rather than hawkish alternatives, to prevent his being unseated by a potential center-left coalition.
His appeal reflects developments in recent weeks that have left Netanyahu more vulnerable ahead of Jan. 22 elections: the emergence of a charismatic new, pro-settler leader; blistering criticism of his leadership by a respected former security chief; and over the weekend, feelers by three center-left parties to unite ahead of the elections to form a bloc that would vie to form the next government.
Still, he does not seem to be in real danger of losing the premiership in the upcoming balloting, so it's not clear whether his comments reflected genuine nervousness or whether he was using the center-left unity talk to prod likeminded Israelis to rally around his hardline flag.
In interviews to Israel Radio and Army Radio, Netanyahu went on the attack against exploratory contacts among three of his adversaries to form a bloc that would pose a stiffer challenge to his leadership.
The bloc would consist of the Labor party, which opposes Netanyahu's economic policies; former Foreign Minister Tzipi Livni's Hatnua party, which thinks Netanyahu is jeopardizing efforts to make peace with the Palestinians, and former journalist Yair Lapid, whose Yesh Atid party thinks the prime minister has shortchanged the middle class.
The center-left parties, Netanyahu told both stations, "have one objective: To topple the government I lead."
The prime minister appeared to be falling back on his strong standing among hawkish Israelis to try to boost support for his troubled list. Polls show sizable numbers of right-wing voters withdrawing their support for Netanyahu's Likud Beiteinu list and redirecting it to the pro-settlement Jewish Home party, led by high-tech millionaire Naftali Bennett. At the same time, the surveys show respondents overwhelmingly choosing Netanyahu as the best option for prime minister.
"Whoever wants me as a strong prime minister can't have a strong prime minister while weakening me," Netanyahu told Israel Radio in an interview conducted Saturday night and broadcast Sunday. "I think there is only one way to guarantee that the right continues to govern Israel, and that's to vote for me."
Still, even though polls show backing for Likud Beiteinu dropping, they do not show Netanyahu's leadership to be at risk: The task of forming the next government will go to the party that appears best able to put together a coalition, and surveys show Netanyahu and his traditional pro-settlement and religious allies winning a majority of parliament's 120 seats, bolstered, perhaps, by one or more of the center-left parties now talking about joining ranks against him.
The numbers do not seem to favor the formation of a government led by centrists or leftists. Instead, the big question appears to how far to the right the next government will be. Labor has ruled out joining a Netanyahu-led government. Livni has not, and Lapid told Army Radio on Sunday that if polls are borne out, he would like to join a broad-based government to make it more moderate and put peacemaking with the Palestinians on the agenda.
In related news, Netanyahu dismissed the assault by former Shin Bet internal security chief Yuval Diskin against his leadership over the weekend. Diskin portrayed the Israeli leader as weak, indecisive and putting personal interests above the state's. He said he was going public with his concerns before elections in an effort to persuade voters not to cast ballots for Netanyahu.
Netanyahu told Israel Radio that Diskin went public so close to the election in an effort to sway the election results.

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Oracle beats outlook, shrugs off fiscal debate

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.
Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.
Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.
"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."
Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.
The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.
Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.
It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.
"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."
Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.
Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.
OFF A CLIFF
Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.
Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.
"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."
On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.
"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.
The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.
Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.
Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.
Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

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