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The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning.?Send us tips, suggestions and complaints: david.hall@wsj.com. Get The Morning Ledger emailed to you each weekday morning by clicking here. Follow us on Twitter @CFOJournal.
THE DAY AHEAD:
We?ve got some key earnings coming out today. Ford is expected to post a healthy profit increase driven by strength in the U.S. market. Sales in the U.S., Ford?s major profit center, were up 13% year-to-date through June. Even Europe, a financial black hole for it and most competitors at the moment, looks better. Ford?s unit sales there last month were 6.4% higher, even as the entire market fell 6.5%, Ahead of the Tape?s Spencer Jakab notes.
Facebook reports its Q2 results after markets close, and the big question will be how well it?s growing its mobile revenue, says CNBC?s Julia Boorstin. On the earnings call, we should hear questions about how well Facebook?s new ad formats are working, and how users are responding to new products like Graph Search and Instagram video, Boorstin says.
Other earnings of note: Boeing, PepsiCo, Caterpillar, Delta Air, U.S. Airways, Nasdaq and Visa.
Dell shareholders are set to vote today on CEO Michael Dell?s $24.4 billion buyout offer for the company, after a previous meeting was pushed back a week in the hope of persuading dubious investors to accept the deal, Reuters notes. Mr. Dell and Silver Lake have been lobbying hard, but there is a possibility that the vote could be postponed again
And President Obama hits the road to try to drum up support for his economic policies ahead of looming battles over government funding and the debt ceiling. Mr. Obama will deliver the first in a series of economic speeches today at Knox College in Illinois, the Hill notes. House Speaker John Boehner has already dismissed Mr. Obama?s planned speeches as a push for higher taxes.
Markets flash: Weak manufacturing data from China weighed on Asian markets. European shares are up and DJIA futures are also higher.
EXCLUSIVE ON CFOJ:
Strong dollar eats into DuPont profits. DuPont?s earnings this year?could take a hit of 12 cents to 14 cents from the strong U.S. dollar, more than double the company?s previous estimate, Vipal Monga reports. While DuPont is sticking to its $3.85-a-share earnings guidance, the declining values of the Japanese yen and Brazilian real are eating into profits for many multinational companies. McDonald?s, United Technologies and Lexmark International are all suffering from adverse exchange rates. ?The dollar has strengthened considerably during the year,? said Nick Fanandakis, DuPont?s chief financial officer. The yen and the real have lost, respectively, 15% and 8% of their value against the dollar since January. In the second quarter, currency effects shaved three cents a share from DuPont?s earnings. The company reported a profit of $1.03 billion, or $1.11 a share, down 12% from a year earlier.
CORPORATE NEWS:
Strong iPhone sales fail to reverse Apple?s profit slide. Apple reported stronger iPhone sales in its fiscal third quarter, but it?s running into trouble persuading consumers to buy its other gadgets, writes the WSJ?s Ian Sherr. And consumers in emerging markets are gravitating to models of the company?s less-expensive iPhone 4 line?which was introduced in 2010?rather than the flagship iPhone 5 announced last fall. Sales of the iPads dropped 14% from a year earlier and demand for Macs fell 7%, contributing to a second consecutive quarter of declines for Apple?s overall revenue and profit. CFO Peter Oppenheimer told Reuters that iPhone sales rose 51% in the U.S. and 66% in Japan. But revenue from greater China dived 43% from the second quarter and 14% from the year-earlier period. CEO Tim Cook told analysts to expect new products in coming months, with some ?in new categories,? but he played his cards close to the vest. ?We are on track to have a very busy fall,? Mr. Oppenheimer said, without going into details.
RadioShack CFO bolts. RadioShack lost its CFO as the company reported a deeper quarterly loss and warned it would continue to liquidate inventory through the end of the year, the WSJ?s Drew Fitzgerald reports. CFO Dorvin Lively left the company to take the same job at Planet Fitness?forfeiting a $1.5 million retention bonus he could have earned by staying on through Oct. 1. He will be succeeded for now by Holly Etlin, a managing director at consulting firm AlixPartners, who will steer the company through a major debt payment coming due next week as well as the ramp-up to the end-of-year holidays. Mr. Lively, the former CFO, served as RadioShack?s chief executive last winter while the company searched for a successor to James Gooch. Joseph Magnacca took the CEO job in February. Janney Capital Markets analyst David Strasser told Reuters that he wasn?t surprised by Mr. Lively?s departure, given that he had been passed over for the CEO job when Mr. Magnacca was hired. ?The timing, however, is less than ideal, as they are making big balance-sheet decisions imminently,?Mr. ?Strasser said.
Texas Instruments CFO: Customers less cautious. Texas Instruments CFO Kevin March thinks that customers are becoming a bit less cautious. TI noted an improving economic climate when it reported its Q2 results earlier this week. ?We saw a slight shift occurring, with customers giving us more visibility,? Mr. March told TheStreet.com. ?We see that as marginally encouraging in that it suggests some increased confidence on the part of our customers.? Mr. March is also optimistic about the broader economy. ?There?s more recognition that the U.S. economy has a number of things going for it,? he said, pointing to the housing and automotive markets. ??We would all like the economy to be growing faster, but if we just step back and look at it?it?s not great, but it?s doing OK,? he added.
CFO optimism jumps. Bank of America Merrill Lynch?s latest?CFO Outlook survey shows CFOs are more optimistic than they have been in years.? CFOs rated the U.S. economy a 58 out of 100, according to the survey. That?s nine points higher than the previous year-end survey, and the highest since CFOs scored the economy a 64 in 2008.
Cisco snaps up Sourcefire for $2.7 billion. Cisco Systems agreed to buy cybersecurity firm Sourcefire for $2.7 billion. The purchase price, which includes retention incentives, is the latest indication of the private sector?s growing emphasis on cybersecurity as more companies become comfortable discussing hacker threats and hackers get more sophisticated, the WSJ?s Danny Yadron and Saabira Chaudhuri say. Intel bought McAfee in 2010, and EMC picked up RSA Security in 2006. ?It does seem expensive,? said Adam Hils, an analyst at Gartner. ?But the halo effect they get from this demonstrates their commitment to security, and it gives them some chops.?
ECONOMY:
Detroit?s new CFO faces daunting task. Detroit?s new CFO, Jim Bonsall, is bringing a tough management style to the city. ?I?m going to start by holding people accountable for the things they told me they were going to do,? Mr. Bonsall told the Detroit Free Press. ?When you tell me you are going to do something, and you give me a date, I expect you to meet that date.? Mr. Bonsall has more than 30 years? experience restructuring companies all over the world and says the task is not that much different for troubled cities. But he faces a daunting task in Detroit. He has budget of about $1.1 billion for a city in bankruptcy with more than 100,000 creditors and $18 billion in debt. ?My initial goal is to get my arms around cash,? he said.
China manufacturing hits 11-month low. China?s economy showed new signs of weakness in July as an initial gauge of manufacturing activity slumped to an 11-month low, the WSJ reports. The HSBC flash China Manufacturing Purchasing Managers Index fell for the third month in a row, potentially testing the resolve of policy makers as they try to rebalance the economy and avoid using major stimulus measures to boost growth. Of particular worry, the survey showed employment fell at its steepest rate since March 2009. So far, China?s slowdown hasn?t been accompanied by signs of major job cuts.
REGULATION:
Prosecutors preparing to charge SAC. Federal prosecutors are preparing to announce criminal charges as early as this week against SAC Capital Advisors, the WSJ reports. There are no signs of settlement talks that would avert the charges. In May, SAC said it was no longer cooperating unconditionally with the probe by the Federal Bureau of Investigation and the Manhattan U.S. attorney?s office. No major financial firm has survived a criminal indictment, the Journal notes.
CFO MOVES:
- Uroplasty, a medical device maker based in Minnetonka, Minn.,?said?Chief Financial Officer Mahedi H. Jiwani retired. Mr. Jiwani was?placed on administrative leave?in June when a review of the company?s internal controls surrounding employee expense reimbursements uncovered issues related to the recognition of orders and the payment of sales commissions at the end of fiscal quarters. The review determined that there had been a material weakness, but that it did not result in any earnings restatements. Robert C. Kill, who had been the company?s acting chief executive officer, was simultaneously promoted to president and CEO, and will also serve as interim CFO until a permanent successor is named. Mr. Jiwani received compensation valued at $325,778 last year, according to a?proxy filing.
- FreightCar America, a manufacturer based in Chicago,?hired?Charles F. Avery Jr. as its chief financial officer. He succeeds Joseph E. McNeely, who was?promoted?in May to chief operating officer. Mr. Avery was most recently controller and chief information officer at?Federal Signal?Corp.
Corrections & Amplifications
CFOs participating in Bank of America Merrill Lynch?s latest CFO Outlook rated the U.S. economy a 58 out of 100, up from 49 in the year-end survey. An earlier version of this article incorrectly said CFOs gave the economy 49 points.
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