Reuters | Business News

U.S. job openings rise, hirings steady in December

2010-02-09T20:03:43Z

WASHINGTON (Reuters) - U.S. job openings rose in December and the number of unemployed workers fell, according to a government report on Tuesday that supported views the labor market was on the brink of recovery.

Job openings edged up to 2.5 million from 2.4 million in November, the Labor Department said in its monthly Job Openings and Labor Turnover Survey. At the same time, the number of unemployed workers fell 73,000 to 15.3 million.

Larry Mishel, president of the Economic Policy Institute in Washington said this meant there were 6.1 jobseekers per available job in December, slightly less than 6.3 in November.

"Job openings appear to be stabilizing in recent months. In the first quarter of 2009, job openings declined an average of 197,000 per month, but in the last two quarters of 2009, job openings were basically flat," Mishel said.

"However, for the labor market to recover, we must start seeing substantial increases. There is considerable ground to make up. Before the recession hit in 2007, there were 4.6 million job openings per month on average."

While the U.S. economy resumed growth in the second half of last year, the labor market has lagged the recovery. There are signs the jobs sector, ravaged by the worst economic downturn since the Great Depression of the 1930s is on the mend.

Government data last week showed employers only cut 20,000 jobs in January after reducing payrolls by 150,000 in December. At the same time, factory payrolls increased for the first time in three years, while the total average workweek in January was the highest in a year.

"We already know that the number of unemployed fell 430,000 to 14.8 million in January. If job openings in January remain at their December levels then the ratio of job openings per unemployed worker will fall to 5.9," said Mishel.

"However, improvement will still leave this imbalance at a level far more than double the highest it reached in the prior recession."

The Labor Department report on Tuesday also showed hiring was little changed at 4.1 million in December. Total separations -- quits, layoff and discharges -- fell 36,000 to 4.2 million in December.

In the face of rough labor market conditions, workers are reluctant to change jobs. The quits rates, a measure of workers' willingness or ability to change jobs, decreased in the business sector and was unchanged for government in December, the report showed.

(Reporting by Lucia Mutikani; Editing by Andrew Hay)

Toyota to recall more 2010 Camrys in U.S.

2010-02-09T21:28:12Z

DETROIT (Reuters) - Toyota Motor Corp will recall 7,314 model-year 2010 Camry sedans in the United States due to the risk that a potential defect in steering may make it harder for drivers to stop the vehicle.

In a document sent to U.S. dealers on Tuesday and obtained by Reuters, Toyota said the 2010 Camrys equipped with a 4-cylinder engine might have a shorter-than-required power steering pressure hose in the engine compartment.

That could deplete the brake fluid, increasing the brake pedal stroke and making it more difficult and requiring more time to stop the vehicle, Toyota said.

Toyota notified the National Highway Traffic Safety Administration on Tuesday of its intention to conduct a voluntary safety recall, the document showed.

Toyota was not immediately available for comment.

The latest move follows a string of recalls over the past few months that cover more than 8.5 million vehicles globally due to the risk that a loose floor mat or a sticky accelerator pedal may lead to unintended acceleration.

Earlier on Tuesday, Toyota said it would recall nearly half a million new Prius and other hybrid cars for braking problems, the third recall in a spiraling safety crisis at the world's biggest automaker.

(Reporting by Soyoung Kim; Editing by Gary Hill)

MetLife may pay AIG in stock, cash for unit: source

2010-02-09T19:49:44Z

By Paritosh Bansal

NEW YORK (Reuters) - MetLife Inc (MET.N: Quote, Profile, Research) plans to pay American International Group Inc (AIG.N: Quote, Profile, Research) in stock and cash for American Life Insurance Co (Alico), as the two sides negotiate what could be a roughly $15 billion deal, a source familiar with the matter said on Tuesday.

MetLife, the largest publicly traded U.S. life insurer, may pay roughly $8 billion of the purchase price in stock and the rest in cash, according to the source.

Banks including JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), Bank of America Corp (BAC.N: Quote, Profile, Research), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research) and Credit Suisse Group AG (CSGN.VX: Quote, Profile, Research) may give MetLife a $5 billion bridge loan for the deal, according to Bloomberg, which first reported the news.

A deal could be struck as soon as February 11, Bloomberg said.

The terms of any deal had not been finalized, though, and the mix could change, the source said.

MetLife spokesman Christopher Breslin and AIG spokesman Mark Herr declined to comment. The banks could either not be reached immediately or declined comment. The source is anonymous because the talks are not public.

Alico, which was founded in 1921 and is based in Wilmington, Delaware, sells life insurance and retirement products to 19 million customers in 54 countries.

Its sale would be the largest for AIG since its September 2008 bailout, and a transformational deal for MetLife, expanding its presence in fast-growing international markets.

Still, a large stock component to the purchase price would add complications around how AIG pays back U.S. taxpayers, who have pledged a total of $182.3 billion to support the insurer.

The insurer has put Alico and American International Assurance, another life insurance business, in special purpose vehicles, and given the New York Federal Reserve a preferred stake in them. The Fed's interest in the Alico vehicle is worth $9 billion, while that in AIA is worth $16 billion.

The possibility for the Fed to accept stock as repayment adds a level of complexity but may not be a dealbreaker, said Clark Troy, a senior analyst at Aite group.

AIG has announced some two dozen deals to sell assets for more than $11.9 billion so far, as part of its efforts to pay back taxpayers. It remains tens of billions of dollars away from paying off Uncle Sam.

Robert Benmosche, who took over as AIG's chief executive last summer, has slowed the divestment process and pulled some auctions as he tries to rebuild the insurer's businesses.

In a recent interview, he told employees he envisions a smaller AIG in the future, with global property-casualty and U.S. life and annuity operations at its core.

Under the terms of his contract, Benmosche, a former MetLife chief executive and current shareholder, cannot be involved in AIG's discussions to sell Alico to his former employer.

Last week, MetLife confirmed it was in talks to buy Alico but hadn't reached a deal.

There is "no certainty" MetLife will reach a deal for the AIG unit, Chief Executive Robert Henrikson said on a conference call last Wednesday, adding the insurer does not need an acquisition to meet its business objectives.

Management added on the call the company would not sell any current businesses to finance a possible deal, nor would it use capital in an off-shore reinsurance unit toward a deal.

AIG's shares were up 88 cents, or 4 percent, at $23.04, while MetLife was up $1.62, or 4.8 percent, at $35.26, both in afternoon trading on the New York Stock Exchange.

(Reporting by Paritosh Bansal; Editing by Leslie Gevirtz, Bernard Orr)

McDonald's January global sales up, U.S. lags

2010-02-09T18:51:30Z

By Lisa Baertlein

LOS ANGELES (Reuters) - McDonald's Corp (MCD.N: Quote, Profile, Research) beat expectations with a 2.6 percent increase in January sales at established restaurants, as overseas results overcame a sluggish performance in the United States.

Sales at restaurants open at least 13 months fell 0.7 percent in the United States, while those in Europe and in the Asia/Pacific, Middle East and Africa (APMEA) region both rose 4.3 percent, McDonald's said on Tuesday.

Analysts were expecting a 1.4 percent overall rise in same-store sales for January. Europe and APMEA each topped Wall Street expectations, while the U.S. fell short of the flat January same-store sales result analysts expected, Bernstein Research analyst Sara Senatore said in a client note.

Jefferies & Co analyst Jeff Farmer said McDonald's Europe and APMEA sales are getting a lift from refurbished stores, extended hours and expanded menus -- factors that boosted the U.S. business two years ago.

But back at home, it is a different story.

"There is a near full-scale market share battle being waged in the U.S. with discounting and value offers intensifying on a daily basis," Farmer said in a client note.

Still, McDonald's said on Tuesday that its U.S. results outperformed those of its fast-food rivals.

In January, McDonald's U.S. sales benefited from the national debuts of the breakfast Dollar Menu and the Mac Snack Wrap -- a new spin on its popular Big Mac hamburger that sells for around $1.50 -- as well as McCafe coffee drinks and the premium-priced Angus Burger.

The company reported a 0.1 percent rise in U.S. same-store sales for the recent fourth quarter.

That was better than the results from rival Burger King (BKC.N: Quote, Profile, Research), which earlier this month said same-store sales for the United States and Canada fell 3.3 percent during its quarter ended December 31.

For the early part of the U.S. recession, McDonald's and some other fast-food chains benefited when the global economic downturn sent customers to lower-priced fare.

But that so-called trade-down effect is no longer strong enough to offset weaker spending by young men and minority groups, who account for a large number of fast-food customers and have unemployment rates much higher than the overall U.S. jobless rate of 9.7 percent.

Just a few weeks ago, McDonald's surprised analysts by announcing a 1 percent increase in December U.S. same-store sales after two months of declines.

Despite the weather-affected January lull in U.S. same-store sales, Skinner told Reuters earlier this month that the December increase in U.S. same-store sales was a "sustainable result" in the longer term.

The company said on Tuesday that Europe's gain in January same-store sales was fueled by France, United Kingdom and other markets, offset partly by Germany.

The Asia/Pacific region was boosted by demand in Japan and Australia.

McDonald's Japan -- which posted 10 percent higher same-store sales for January fueled by its "Big American" hamburger promotion -- said in a separate release that it planned to close about 430 units, mostly in traditional malls, store fronts and food courts, over the next 18 months in a bid to boost overall returns.

That operator, which now has 3,700 units, also plans to open 90 new restaurants and to renovate 250 others in the Japanese market this year. Those investments will mainly focus on free-standing units. McDonald's Corp plans to book related tax impairment charges of $40 million to $50 million, primarily in the first half of this year.

The move came just weeks after Wendy's/Arby's Group (WEN.N: Quote, Profile, Research) announced plans to shutter 70 Japanese restaurants and exit the country. Japan, which was still clawing back from its "lost decade" in the 1990s when the latest global financial crisis hit, has been a weak market for American hamburger chains.

China, seen as a key growth market for McDonald's, reported negative same-store sales for January, in part because the important Chinese New Year holiday falls in February this year, rather than in January as it did in 2009.

McDonald's shares were up 42 cents, or 0.7 percent, to $63.34 in afternoon trade on the New York Stock Exchange.

(Additional reporting by Ben Klayman and Brad Dorfman in Chicago, editing by Dave Zimmerman, Derek Caney and Tim Dobbyn)

U.S. stock exchange heads take aim at "Volcker rule"

2010-02-09T18:33:23Z

By Jonathan Spicer

NEW YORK (Reuters) - The heads of the top U.S. stock exchanges have poured cold water on the Obama administration's plan to bar banks from proprietary trading.

The chief executive of NYSE Euronext (NYX.N: Quote, Profile, Research) said on Tuesday the president's plan falls short of targeting what caused the financial crisis, while his counterpart at Nasdaq OMX group Inc (NDAQ.O: Quote, Profile, Research), the day before, said the plan would probably have to be changed.

Obama last month surprised Wall Street with the ambitious proposal to limit risky trading by banks. Dubbed the 'Volcker rule' after Paul Volcker, the White House economics adviser, it would bar banks from proprietary trading, or placing bets on markets with their own money.

The proposal jolted markets. The shares of the New York Stock Exchange parent fell 3.8 percent, while those of the Nasdaq Stock Market parent tumbled 4.8 percent, on concerns the Volcker rule would reduce liquidity and trading volumes.

On a conference call with analysts and media, Niederauer said it would prove difficult to separate "the small fraction of equity volume that these banks do for their own account.

"I don't really think that had anything to do with the crisis that we just lived through," said the former Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) trading head, adding he would encourage policymakers "to focus on solutions that get at the root cause of the crisis and I just don't think this is one of them."

Robert Greifeld, CEO of Nasdaq OMX, said on Monday it is impossible to know how much bank trading volume is proprietary versus nonproprietary because it is not identified on arrival at the exchange.

"In a sense that shows you the difficulty the legislators would have prescribing anti-prop trading," he said on a conference call Monday. "It's a hard job for them to do because once you get into what's prop, what's customer facilitation, what's a riskless principal, it gets impossible.

"So I think they would have to find a different path to go."

The Volcker rule gained some support among European lawmakers, who are also considering new rules to avoid a repetition of the mortgage market-inspired crisis of 2008 that spawned a global recession.

Banks have criticized the plan. It also faced resistance last week from U.S. senators, who looked increasingly likely to adopt, at best, only a watered-down version.

Niederauer and Greifeld played down the impact the Volcker rule would have on volumes, which drive the exchange operators' revenue.

Morgan Stanley analysts estimated the plan would shave NYSE Euronext's 2010 earnings by 2 percent and shave Nasdaq OMX's earnings 3 percent -- assuming all U.S. and non-U.S. bank proprietary trading disappeared and flowed directly to the exchange operators' bottom lines.

"The impact will ultimately be far less onerous than it appeared at first blush," the analysts said in a January 27 note, adding futures-based exchanges CME Group Inc (CME.O: Quote, Profile, Research) and IntercontinentalExchange Inc (ICE.N: Quote, Profile, Research) would be hit harder than the more diversified cash equities exchanges.

(Reporting by Jonathan Spicer; editing by Andre Grenon)

Timeline: Toyota's rise and run-up to its recall crisis

2010-02-09T18:05:45Z

DETROIT (Reuters) - Toyota Motor Corp has issued a string of recalls covering more than 8.5 million vehicles worldwide including its flagship Camry sedan and the Prius hybrid.

Following are milestones leading to the largest recall in Toyota's history, a series of events that has hit the automaker's reputation and results:

* 2000: Toyota launches program known as "Construction of Cost Competitiveness for the 21st Century" with the aim of cutting costs of 180 key car parts by 30 percent, saving nearly $10 billion by 2005.

* 2004: In cooperation with National Highway Traffic Safety Administration (NHTSA,) Toyota narrows the scope of investigations into unintended acceleration by eliminating incidents lasting more than a few seconds or those where the driver applied the brake.

* 2006: Following a surge in global recalls, Toyota head Katsuaki Watanabe apologizes for "quality glitches." Toyota delays some new models by up to half a year.

* March 2007: NHTSA opens investigation into pedal entrapment in some Toyota vehicles. That leads to recall of 55,000 floormats in September.

* Late 2007: Insurer State Farm tells NHTSA of a "significant increase" in Toyota-related accidents involving its policyholders.

* September 2007: Former Toyota attorney Dimitrios Biller signs a severance agreement with the automaker. He claims he found "numerous" cases where the company concealed evidence from the courts and the U.S. government. Toyota "strongly disputes" this claim.

* October 2007: Consumer Reports influential vehicle quality survey drops three Toyota vehicles, including a version of the Camry, from its recommended list. The verdict: "After years of sterling reliability, Toyota is showing cracks in its armor."

* December 2007: Toyota's U.S. sales for 2007 hit 2.6 million units. It has displaced Ford Motor Co as No. 2 in the U.S. market and is on the cusp of unseating General Motors Co as No. 1 on a global basis.

* June 2009: Akio Toyoda, 53, grandson of Toyota's founder, is named president, replacing Watanabe, 67. Toyota executive Yoshi Inaba is called out of retirement and dispatched to the United States to head operations in the automaker's largest market.

* November 26, 2009: Toyota recalls 4.2 million vehicles in the United States to address the risk that floormats can come loose and trap the accelerator pedal.

* December 15, 2009: NHTSA officials meet Toyota executives in Japan seeking prompt action on safety issues. Toyota commits to improving its responsiveness.

* January 16, 2010: Toyota informs NHTSA that accelerator pedals made by supplier CTS Corp may have a dangerous "sticking" defect.

* January 19: At meeting in Washington including Inaba and U.S. sales chief Jim Lentz, NHTSA asks Toyota to take prompt action. Hours later Toyota tells NHTSA it will issue a recall.

* January 21: Toyota announces recall for about 2.3 million Toyota models to fix sticky pedals.

* January 25: NHTSA informs Toyota it is legally obliged to stop selling vehicles even if it does not have a remedy.

* January 26: Toyota halts U.S. sales of eight models involved in the recall, including its best-selling Camry and Corolla sedans, and says it will halt production for first week of February.

* January 27: At urging of NHTSA, Toyota recalls an additional 1.1 million vehicles due to the risk that a loose floormat could trap the accelerator in an open position. That adds to the recall of 4.2 million vehicles announced in November 2009.

* January 28: Toyota meets with NHTSA to review its pedal fix. NHTSA says it has no objections to the fix.

* January 29: NHTSA opens investigation into CTS pedals. NHTSA asks CTS if it sold pedal to other carmakers and when it discovered reports of problems.

* February 2: Toyota reports a 16 percent drop in January U.S. sales. Monthly U.S. sales drop below 100,000 for the first time in more than a decade and Toyota's U.S. market share falls to its lowest level since January 2006.

* February 2: NHTSA renews investigation into Toyota's electronic throttle control system. U.S. Transportation Secretary Ray LaHood says, "While Toyota is taking responsible action now, it unfortunately took an enormous effort to get to this point." Toyota says it will fully cooperate with NHTSA probe.

* February 3: LaHood warns recalled Toyota owners to stop driving, then withdraws his remarks, saying it was a misstatement. Toyota says it is examining braking complaints about its 2010 model Prius hybrid.

* February 4: NHTSA opens investigation into at least 124 consumer complaints about brakes on Toyota Prius hybrids.

* February 5: After keeping a low profile for nearly two weeks, President Akio Toyoda appears at a news conference to apologize for safety problems. He announces plans to bring in a task force, including outside analysts to review quality. Toyota considers a recall for Prius braking issue.

* February 9: Toyota announces recall of nearly 500,000 new Prius and Lexus-brand hybrid cars globally for braking problems. Akio Toyoda says he may visit the United States in the third week of February.

(Reporting by Reuters Detroit bureau, compiled by Soyoung Kim, editing by Claudia Parsons)

Factbox: Greece set for wage, tax reform to cut deficit

2010-02-09T17:42:37Z

(Reuters) - Greece is putting the final touches to the tax reform bill and public sector incomes policy it plans to unveil later this week, part of its drive to increase state revenues and reduce its deficit. (LDE6170YS: Quote, Profile, Research) The measures are part of Greece's EU-endorsed plan to return to fiscal health.

The following are some of the key changes in the tax reform bill based on press reports and official comments so far:

TAX BILL

- Many press reports say the upper tax rate of 40 percent will be applied on annual incomes above 60,000 euros, instead of the present 75,000 euro threshold.

- The current 12,000 euro tax exemption on all incomes will be kept but wage earners and pensioners will need to submit receipts for goods purchased or services paid for to qualify for the exemption. Receipts will help the tax service do crosschecks and capture tax dodgers.

- Press reports say incomes between 12,000 and 15,000 euros are expected to be taxed at 15 percent, down from the current 24 percent tax on incomes from 12,000 to 18,000 euros. This is intended to help low earners.

- Incomes from 15,000 to 30,000 euros are to be taxed at 24 percent, a new tax bracket. The finance minister has said about 95 percent of individual tax filings report incomes below 30,000 euros.

- Incomes from 30,000 to 60,000 euros are expected to be taxed at 35 percent. This tax rate currently applies on incomes above 45,000 euros.

- The flat tax rate on certain professional groups (ranging from 5 to 20 percent) will be abolished.

- Dividends will be added to incomes and taxed at the applicable rates, meaning up to 40 percent. Currently, dividend distributions are taxed at a flat 10 percent rate.

- There will a 10-15 percent rise in the special fuel tax.

- Higher taxation is expected on offshore firms.

- A value-added tax (VAT) will be applied on lotteries, sports betting games and services provided by doctors, lawyers, notaries and other professional groups.

- The bill will provide for heavy penalties on tax dodgers and pertinent lists will be made public.

- The bill will replace the current real estate annual fee with a progressive tax on large real estate holdings valued above 300,000-350,000 euros for single taxpayers and above 400,000 euros for couples.

WAGE POLICY

- Greek public sector workers will face a wage freeze across the board this year, extended from a freeze on those making over 2,000 euros a month. Seniority pay rises will apply normally.

- The government announced a 10 percent cut in supplemental allowances, which are added to basic salaries to boost incomes over the years.

- State sector pensioners will get a rise of 1.5 percent above inflation.

- The government estimates that a combination of salary and tax policies will reduce its wage bill by about 4 percent this year.

- The private sector holds separate negotiations with employers, but the state sector policy is often used as a guide for collective wage agreements.

(Reporting by Angeliki Koutantou and George Georgiopoulos, editing by Tim Pearce)

Coca-Cola sales rise, led by emerging markets

2010-02-09T21:48:34Z

By Brad Dorfman and Martinne Geller

CHICAGO/NEW YORK (Reuters) - Coca-Cola Co (KO.N: Quote, Profile, Research) reported stronger-than-expected quarterly sales on Tuesday as higher demand for its beverages in China, India and Brazil offset a drop in North America, sending the world's largest soft-drink maker's shares up 2.6 percent.

Lower costs and volume gain helped boost profit, which was in line with analysts' estimates. The company gained market share in the carbonated and noncarbonated drinks markets.

Results continued a trend for the maker of Diet Coke, Sprite and Dasani water, which has relied on strength overseas to counter a weak North American market beset by high unemployment and low consumer confidence.

"This continues to be a story about emerging market growth," Morningstar analyst Phil Gorham said.

He noted "some really strong numbers in China and India, particularly when you (consider) that they are actually cycling a pretty strong quarter in '08."

Coca-Cola said net income attributable to shareholders rose to $1.54 billion, or 66 cents per share, from $995 million, or 43 cents per share, a year earlier.

Analysts on average were expecting 66 cents per share, according to Thomson Reuters I/B/E/S.

Net operating revenue rose 5 percent to $7.51 billion, topping analysts' average forecast of $7.22 billion.

Sales by volume -- an important measure reflecting the amount of beverage concentrate sold -- rose 5 percent, outpacing gains of 2 percent in the third quarter, 4 percent in the second quarter and 2 percent in the first quarter. Several analysts, such as Stifel Nicolaus's Mark Swartzberg, expected volume to grow about 2 percent.

Still, Coke gave a tepid outlook for the current year.

"With consumers still challenged by a mixed global recovery, there again may be bumps along the way with quarter-to-quarter volatility still possible as we move through 2010," Coke CEO Muhtar Kent said on a conference call.

Kent later told reporters 2010 will be "a difficult environment," due to high unemployment in North America, Europe and Japan, as well as economic troubles in emerging markets of Latin America, Mexico and the Philippines.

Nonetheless he stood by Coke's long-term annual growth targets, which call for 3 percent to 4 percent volume growth, 5 percent to 6 percent revenue growth and high single-digit earnings per share growth. In November, Coke said it aims to double the revenue and its bottlers generate to roughly $200 billion by 2020.

Kent also said foreign currency exchange rates would provide a slight benefit to results in 2010.

CHINA, INDIA DRIVE GROWTH

Fourth-quarter volume rose 11 percent in the Pacific region, driven by a 29 percent increase in China, where Coke said it will continue to focus on generating double-digit annual growth rates.

"The per capitas (consumption rates) are still so low in China. We're just getting started, but again, it takes a lot of investment, a lot of effort to generate a quarter of a billion cases of incremental growth a year in China," Kent said.

Quarterly volume rose 7 percent in Latin America, 1 percent in Europe and 5 percent in the company's Eurasia and Africa division, which was helped by a 28 percent increase in India.

The company said its results will include a $100 million loss in the current first quarter related to revaluing its assets in Venezuela.

Volume fell 1 percent in the closely watched North American market because of continued pressure on consumer spending and weak traffic to restaurants. Still, that decline was smaller than the third quarter's 4 percent decline and JP Morgan analyst John Faucher's expectation for a 2 percent decline.

Coke's carbonated beverage volume rose 3 percent in the quarter. Volume of still beverages, such as juices, teas and waters, rose 9 percent, driven by a 14 percent gain internationally and flat results in North America.

Coke's rivalry with PepsiCo Inc (PEP.N: Quote, Profile, Research), especially in North America, is poised for a new turn this year, as the No. 2 soft-drink maker is about to complete its acquisition of its largest bottlers, Pepsi Bottling Group Inc (PBG.N: Quote, Profile, Research) and PepsiAmericas Inc (PAS.N: Quote, Profile, Research).

Kent has repeatedly expressed his commitment to his company's decentralized, franchise bottling model.

Coca-Cola shares rose $1.36 to close at $54.01 on the New York Stock Exchange.

(Reporting by Brad Dorfman with additional reporting by Martinne Geller and Jessica Wohl; Editing by Derek Caney, Maureen Bavdek, Dave Zimmerman and Robert MacMillan)

UBS still losing U.S. wealth management clients, advisers

2010-02-09T16:09:44Z

By Joseph A. Giannone

NEW YORK (Reuters) - The embattled U.S. wealth management business of Swiss bank UBS AG continued to bleed client assets in the fourth quarter, hurt by fleeing advisers and negative publicity from a tax-fraud scandal.

UBS Wealth Management Americas, mostly the U.S. brokerage formerly known as PaineWebber as well smaller businesses in Canada and Puerto Rico, generated pre-tax profit of 178 million Swiss francs ($166 million) in the quarter. That was up 62 percent from the third quarter and a rebound from a year-ago loss driven by settlements related to auction-rate securities.

But the results were sobering for UBS Americas, which suffered defections of front-line brokers and clients. It said its ranks of advisers fell by 202, or 3 percent, to 7,084 during the quarter.

Half of the departures reflected brokers jumping ship. UBS executives told analysts on Tuesday that the rest were culled under an aggressive job-cutting scheme. Meanwhile, UBS pulled back recruiting efforts after offering some of the Street's most lucrative pay packages.

UBS group Chief Financial Officer John Cryan told analysts that UBS wanted to start recruiting again but that attracting financial advisers in the Americas was "challenging."

Adviser defections, a headache every major U.S. brokerage has had to contend with, hit UBS Americas particularly hard in the fourth quarter.

In dollar terms, roughly $11.2 billion of assets were withdrawn by UBS Americas clients -- more than twice the amount analysts had forecast and nearly 2 percent of total client assets. That followed third-quarter outflows of $9.3 billion.

The outflows were offset by rising market prices. UBS Americas client assets were little changed during the fourth quarter at 737 billion francs, or $690 billion.

The results capped the unit's first quarter under the leadership of Robert McCann, a former Merrill Lynch executive recruited in October to revive the No. 4 U.S. brokerage.

McCann, who has kept a low profile since joining UBS Americas, is expected to unveil his plans for the business around March 1, after an inaugural "100 day" period of preparation.

Heavy outflows and adviser attrition show that McCann's "renewal team" of other ex-Merrill executives faces a tough battle helping UBS recover from years of credit losses and now the fallout from a U.S. tax-dodging scandal.

In February 2009 UBS agreed to pay $780 million and disclose the names of 250 clients to settle a criminal probe by U.S. authorities. The Swiss bank was accused of helping American clients avoid taxes by hiding assets abroad.

UBS' fourth-quarter net profit came in at 1.205 billion Swiss francs, its first positive quarter after four negative ones, helped by one-time gains. The figure beat expectations of 326 million francs in a Reuters poll.

Pulte posts bigger-than-expected quarterly loss

2010-02-09T15:40:02Z

NEW YORK (Reuters) - Pulte Homes Inc reported a larger-than-expected fourth-quarter net loss on Tuesday despite help from a tax benefit, sending its shares lower.

The largest U.S. builder's net loss narrowed to $116.9 million, or 31 cents per share, from $338.2 million, or $1.33 per share, a year earlier. Analysts on average were expecting a loss of 19 cents per share, according to Thomson Reuters I/B/E/S.

Excluding one-time charges and benefits, Pulte said it operated at roughly break-even in the quarter.

The company recorded $925 million in charges, including a $563 million goodwill writeoff from its 2009 purchase of Centex Corp.

Most of the charges were offset by $800 million in income tax benefits stemming from the extension of a federal law that allows companies to apply losses to prior income.

The Centex acquisition gave Pulte land assets that it says are an important resource as prices rise and some markets face lot shortages.

"One of the strategic pillars to the deal was acquiring Centex' 56,000 lots," said Chief Executive Richard Dugas during a conference call with analysts. "I think everyone is getting a better appreciation for the current land environment and the limited availability of well-positioned finished lots."

The downside: Such a huge land position also carries the risk of impairment charges as values fluctuate during the protracted housing downturn.

Pulte also affirmed its target of acquisition-related savings of $440 million on an annualized basis by the end of 2010.

Revenue rose 5 percent to $1.7 billion, beating analysts' estimates of $1.5 billion, as closings increased 13 percent to 6,200 homes. Orders more than doubled to 3,748 homes, above JPMorgan analyst Michael Rehaut's estimate for a 94 percent increase.

"We believe Pulte's orders and core margins are consistent with our outlook for demand to continue to stabilize if not slowly re-emerge," Rehaut wrote in a note to clients. He has a "neutral" rating on Pulte shares.

The Bloomfield Hills, Michigan-based company has operations in 29 states. It became the biggest builder in the United States by acquiring Centex, knocking D.R. Horton Inc out of the No. 1 spot.

Pulte shares were down 2.4 percent at $10.86 in morning New York Stock Exchange trading.

(Reporting by Helen Chernikoff; Editing by Lisa Von Ahn and John Wallace)