Adding to the momentum provided July 14 by better than expected revenues and earnings from bellwether chipmaker Intel, computing and services giant IBM reported on July 16 a 12% rise in second quarter profits and 18% jump in diluted earnings per share. The news lifted IBM shares by 3% and sparked a rally in tech stocks on optimism for a second-half recovery. IBM added to the sentiment by lifting its full-year earnings outlook by 50 cents per share, to $9.70.

The strong profit performance came despite sales declines in IBM’s key businesses. Revenues for its global services unit fell 12% year-over-year, but earnings rose 23%. Similarly, profits for IBM’s software unit rose 24% despite a 7% decline in sales. Analysts praised the company’s cost controls and ability to grow profits amid challenging business conditions.

Sources: Financial Times, MarketWatch

Tough Times for Nokia

If a tech turnaround is underway, it hasn’t lifted Nokia’s fortunes yet. On July 16, the world’s top seller of mobile phones reported a 25% drop in sales and 71% plunge in earnings compared with the second quarter of 2008, although the results were better than the company’s dismal first quarter. Nokia suggested that the worst may be past for the mobile industry, but investors were spooked by the company’s forecast of flat market share and weaker margins for the rest of 2009. Shares fell nearly 15%, their worst decline in five years.

Sources: BusinessWeek, Reuters

CIT Scrambles to Avoid Bankruptcy

The century-old commercial lender is in talks with potential lenders to raise rescue funds after the U.S. government declined to come forward with a second bailout. Analysts say CIT Group needs to raise about $2 billion by July 17 to avoid bankruptcy. Obama administration officials concluded that the economy is now strong enough to absorb CIT’s failure because it isn’t among the largest lenders in the U.S. But it provides financing to 1 million clients, so its bankruptcy would have ripple effects on many other companies.

Sources: Bloomberg, Washington Post

Two Giants Emerge from Wall Street Wreckage

The worst of the financial crisis appears to be over, and as the dust clears, Goldman Sachs and JP Morgan Chase have emerged as the two biggest winners. Both reported huge profits this week, even as smaller rivals continue to struggle after the worst crisis since the Great Depression.

Source: New York Times

General Electric Results Slump

The largest U.S. conglomerate reported a 17% decline in sales and 47% plunge in profits on July 17, disappointing analysts who had expected revenues to be down just 10%. Weakness in GE’s media and finance arms spread to its industrial units, as the economy trimmed demand for medical equipment, jet engines, and power generation.

Source: Reuters

British Airways Raising Liquidity via Bond Sale

Facing tough business conditions and a potential strike threat this summer by cabin crews, British Airways moved July 17 to raise nearly $1 billion to ensure a comfortable cash cushion. The airline is selling $500 million in convertible bonds and will be allowed to draw on up to $540 million in cash from its pension fund. CEO Willie Walsh said the moves “put to bed any suggestion that BA is in any sort of risk short term.”

Source: Wall Street Journal

Porsche CEO Says End to VW Power Struggle is Close

Wendelin Wiedeking, the CEO of German sports car maker Porsche, said in an interview that the protracted power struggle between Porsche and Volkswagen could be resolved within days. The supervisory boards of both companies are set to meet separately on July 23 in Stuttgart, and it’s expected that VW will end up with a controlling stake in Porsche. The Qatari Investment Authority also is likely to invest as much as €7 billion ($10 billion) in Porsche shares and VW options.

Source: Bloomberg

China Revs Up Its Dealmaking Machine

The Chinese are in the midst of an M&A craze, doubling their overseas investments last year, to $52 billion. While overseas Chinese investments are still dwarfed by U.S.’s, the Chinese are getting a knack for takeovers. The potential benefits to the global economy are many.

Source: BusinessWeek

China Dismisses Rio Tinto Concerns as “Noise”

The diplomatic and business dispute over China’s detention of four employees of Anglo-Australian mining giant Rio Tinto took a new turn July 16. In one of the government’s few public comments on the case, a spokesman for the Chinese Foreign Ministry dismissed concerns raised by the Australian government as “noise.” Qin Gang cautioned that calls by Australian Prime Minister Kevin Rudd for fairness and transparency amounted to “interference in China’s judicial sovereignty.”

Source: New York Times

Toyota Will Build Hybrid Car in Britain

Japanese auto giant Toyota confirmed plans July 16 to build a hybrid version of its Auris hatchback starting mid-2010 at its plant in Burniston, England. The program will safeguard 400 jobs at the plant and comes as a boost to British auto manufacturing, which has been hammered by the global economic downturn.

Source: Times of London

Videogame Industry Sales Plunged 31% in June

In their worst monthly decline since 2000, sales of video games and consoles slumped by nearly one-third in June compared with the same period in 2008. Worst hit were sales of game consoles, which fell 38%. Analysts attributed the decline to the overall economy and expect hardware suppliers—especially Sony—to trim prices to spur demand heading into the crucial fourth quarter.

Source: Los Angeles Times