Business News Roundup, Jan. 24

United profit

up 46 percent

United Airlines is reversing a long slide in average prices and increasing its profit.

United said Tuesday that it earned $580 million ($1.40 per share) in the fourth quarter of last year, a 46 percent increase from a year ago despite higher fuel prices.

The results beat Wall Street’s expectations.

Like its rivals, United is benefiting from strong demand for travel, which is filling more seats.

Overall, revenue rose 4.3 percent to $9.4 billion.

CEO Oscar Munoz boasted about the airline’s best-ever operational results, which he said improved the customer experience.

Once a laggard in on-time rankings, United has finished with above-average numbers each of the last nine months for which figures are available, according to the U.S. Department of Transportation.

United Continental Holdings shares closed up $1.10 at $77.97. They were up $1.53 in after-hours trading.

J&J reports

quarterly loss

Johnson & Johnson posted a rare quarterly loss, a whopping $10.71 billion, due to a $13.6 billion charge related to last month’s tax overhaul.

While the loss was expected and the company’s adjusted results beat Wall Street expectations, shares fell more than 4 percent, an unusually big swing for the health care giant.

On Tuesday, J&J reported a big jump in sales, but that was offset by sharply higher spending on production, marketing, administration and research, partly due to one-time charges.

The $13.6 billion charge is for a tax payment on years of accumulated foreign earnings, now being brought back to the U.S., that amount to more than $66 billion, Chief Financial Officer Dominic Caruso said in an interview. About $18 billion of that was held in cash and was taxed at 15 percent, while the remainder was taxed at 8 percent.

Caruso told analysts on a conference call that “$12 billion will come back immediately,” and it will be used to fund operations in the U.S.

That will include investing in innovative products and paying shareholder dividends, he said. J&J won’t necessarily go on a shopping spree, having made 16 acquisitions totaling $35 billion last year, including its biggest-ever, the $30 billion purchase of Swiss biopharmaceutical company Actelion.

J&J shares closed down $6.31 at $141.83.

Media

Sky setback

for Murdoch

Rupert Murdoch’s years-long effort to secure an even larger presence in the international media market suffered a new setback Tuesday, when a British regulator provisionally rejected 21st Century Fox’s bid to acquire full control of Sky, the British satellite broadcaster.

Murdoch has made several attempts to acquire the part of Sky not already under his control, only to find himself thwarted by a phone-hacking scandal and the British authorities.

The decision was the latest blow to 21st Century Fox’s bid to buy the 61 percent of Sky it does not now own. The decision could also affect Murdoch’s agreement to sell most of his entertainment empire to the Walt Disney Co.

The Competition and Markets Authority said that Murdoch would have too much control over Britain’s media if the deal for Sky were to go through. It described the proposed $16.3 billion transaction as “not in the public interest.”

The deal’s fate is now in the hands of Britain’s culture minister, Matt Hancock, who must rule by May 1.

employees

Disney plans

to pay bonuses

The Walt Disney Co. will give more than 125,000 eligible employees a one-time $1,000 cash bonus, and invest $50 million in an education funding program.

The media company said Tuesday that the bonuses will go to all full-time and part-time nonexecutive employees, either hourly or salaried, who have been with the company since Jan. 1 and are based in the U.S.

Nearly 88,000 hourly employees will be eligible for the education program which will cover tuition costs. Along with the initial $50 million investment, the Burbank company will provide up to $25 million annually for the program.

Acquisitions

Facebook adds

authentication

Facebook has acquired a company that digitally authenticates government identification, a move that may help it verify profiles on its social network.

Facebook didn’t disclose terms of the acquisition of Confirm, a 3-year-old Boston company. The startup is shutting down its technology while it transitions to Facebook, according to its website. The news was initially reported by Reuters.

“Their technology and expertise will support our ongoing efforts to keep our community safe,” a Facebook spokeswoman said in an email, without elaborating. Facebook has been working to address activity by fake accounts on its site after a Russian effort to spread false and incendiary information around the 2016 U.S. presidential election.

Retail

Claire’s looks

to handle debt

Struggling teen chain Claire’s Stores has hired investment bank Lazard to help the company address its debt.

“We believe this is the right time to undertake this initiative,” CEO Ron Marshall said in a news release this week.

Claire’s said its operations remain strong. Sales at stores open at least a year were up 1.1 percent during the third quarter of 2017, Marshall said during a December call with investors. The chain hasn’t announced when it will release fourth-quarter earnings.

But the retailer’s total long-term debt topped $2.1 billion as of Oct. 28, more than $1.4 billion of which is due in 2019.

Claire’s said it is working to adapt to changes in consumers’ shopping habits while dealing with those debts, including giving shoppers more ways to buy that don’t require a trip to its mall stores. Claire’s plans to have its products in roughly 4,000 CVS stores this year and is working to boost its online business, Marshall said.

Toys R Us gets

an extension

Toys R Us has bought more time to decide how many of its 840 U.S. stores will close, as it tries to get out of bankruptcy in time for the next holiday season.

The company won court approval Tuesday to pay landlords to extend a 210-day deadline that the bankruptcy code usually mandates to decide whether a company will reject leases. The deadline, which can make it harder for big retailers to reorganize than other companies, could have disrupted the ability of Toys R Us to come up with a plan to survive bankruptcy.

By promising to pay some landlords’ attorneys fees and other expenses related to the Chapter 11 case, the company can put off an April deadline to decide which leases to cancel and which to adopt. It’s one of the key decisions Toys R Us must make while putting together a new business plan.

As part of the deal, Toys R Us also agreed to finish closing all U.S. stores that it plans to shutter by the end of August. If not, the company will keep open any stores on the shutdown list until after the 2018 holiday season.

In a court filing, the retailer said it is working to emerge from Chapter 11 and implement its new strategy prior to the 2018 holiday season.

Chronicle News Services