Google’s Eric Schmidt on the New World

Jeff Jarvis submits:

Here’s video from the Aspen Ideas Festival with Google CEO Eric Schmidt responding to my question about what follows the industrial age.

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Eric Schmidt: Google ‘Unlikely’ to Buy Twitter

Erick Schonfeld submits:

It must be Google (GOOG) Week on Charlie Rose. Thursday, Rose interviewed product chief Marissa Mayer, and last night he had an hour-long conversation with CEO Eric Schmidt (see above). The wide-ranging interview touches upon everything from Google’s origins and how it fell upon its advertising business model by accident to how search and other technologies will change society over the next twenty years.

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Wall Street Breakfast: Must-Know News

• Pfizer-Wyeth goliath? Pfizer (PFE) is in talks to acquire rival Wyeth (WYE) in a deal that could be worth more than $60B. An acquisition of this size would redraw the boundaries of the global pharma industry, creating a drug giant with combined revenue of around $75B and a strong line of blockbuster drugs. However, the move is a potentially risky one for Pfizer which has been hurt by pricey acquisitions in the past. Sources say the talks have been going on for several months and a deal isn’t imminent, but an acquisition would be in line with an industry-wide consolidation trend.
• GE says goodbye to a brutal year. General Electric’s (GE) profit fell for a fourth straight quarter as the global credit crisis reduced profits at GE Capital. Profits fell 44%, led by a 67% drop at GE Capital and an 86% decline at its lighting and appliance unit. NBC Universal profits fell a moderate 6% (more numbers below). Shares of GE have tumbled about 60% over the past year, bidding farewell to some $200B market cap. Shares +4% premarket.
• Lewis sends Thain packing. John Thain, former CEO of Merrill Lynch, has been shown the door by Bank of America (BAC) CEO Kenneth Lewis. Thain was supposed to take a top spot in the new, combined bank that shareholders approved three weeks ago. However, Lewis began to lose faith in Thain in December, when Lewis learned of Merrill’s unexpectedly large Q4 loss from members of his own merger-integration team rather than from Thain himself, and when Merrill moved up large bonus payments to execs to go through before the deal was completed. Thain’s departure adds to concerns about employee retention and company integration, while some analysts believe the deal could ultimately cost Lewis his job as well.
• GM settles accounting probe. General Motors (GM) has agreed to settle with the SEC over a probe concerning accounting violations, including disclosures related to pensions, derivatives and precious metals. GM agreed to settle the claims ‘without admitting or denying’ them, has promised not to violate certain securities rules again and will not have to pay any fines or penalties. The SEC had been investigating GM’s accounting practices since 2004.
• FDA gives stem cell approval. Geron Corp. (GERN) has received FDA approval to perform the world’s first ever human clinical trial of embryonic stem cell therapy. Geron will begin a trial for patients with acute spinal cord injury. Tests could begin by the summer and while the primary purpose of the trial is to ascertain whether injecting these cells into patients is safe, scientists will also monitor patients for improvements in their injuries. Shares +54% premarket. (Watch a video of how the therapy works.)
• Google earnings beat. Google (GOOG) released better-than-expected Q4 earnings, posting EPS of $5.10 vs. consensus of $4.95 (more details below). Despite an overall gloomy tech sector, the search giant saw strong advertising sales. Aggregate paid clicks increased 18% Y/Y and rose 10% from the previous quarter. CEO Eric Schmidt struck a note of caution, however, warning that Q4 got a boost from the holiday season when many users were searching online for retail bargains. The company also took a $1B writedown on the value of its stakes in AOL and Clearwire.
• Microsoft miss. Microsoft missed earnings expectations (more details below), and said it can’t offer quantitative EPS and revenue guidance for the rest of the year. The announcement sent shares down almost 12% to $17.11, close to decade-long lows. In an effort to save $1.5B annually, the company will cut 5,000 jobs over the next 18 months, though it will continue hiring in key areas. CEO Steve Ballmer explained ‘we’re not used to down markets,’ but many analysts think that’s an insufficient excuse for not taking tougher action.
• Buyers, board mull Satyam fate. U.S.-listed IT and outsourcing firm iGATE Corp. (IGTE) has expressed an interest in taking over some of Satyam’s (SAY) businesses. Other bidders are reportedly interested as well, drawn by Satyam’s diversified client roster, including Nestle (NSRGY.PK) and General Electric (GE). Satyam’s new government-appointed board has been meeting to discuss how to secure emergency funding to tide the company over, and may announce a new leadership team soon.
• Smooth sailing on Geithner confirmation. Tim Geithner won Senate Finance Committee backing on Thursday, with an 18-5 vote in his favor despite an embarrassing past episode of tax underpayments. Senate Majority Leader Harry Reid said he expected the full Senate to confirm Geithner as Treasury Secretary and hopes to hold a vote on Monday. Geithner got an early start on the job, saying ‘a strong dollar is in America’s national interest,’ and warned China against manipulation of its currency.
• New SEC head. The Senate confirmed Mary Schapiro to the SEC yesterday by a unanimous vote. Schapiro promised to take the ‘handcuffs off’ the SEC’s enforcement division and go full force against anyone who violates investors’ trust.
• Mortgage apps drop. Mortgage applications fell 9.8% from a week ago, MBA reported, on a seasonally adjusted basis. The average interest rate on 30-year fixed-rate mortgages increased to 5.24% from 4.89%.
• Housing starts [.pdf]. Housing Starts fell 15.5% in December from a month ago to 550K/year. Permits dropped 10.7% from November to 549K. Completions declined 5.2% to 1.015M/year. From a year ago, the trio are down 45%, 36.2% and 25.7% respectively.
• Jobless claims spike. Initial Jobless Claims soared 62,000 to 589,000, exceeding consensus of 543,000. Continuing claims +97K to 4.607M.

Earnings: Friday Before Open

• GE (GE): Q4 EPS of $0.37 in-line. Revenue of $46.21B vs. $50.07B. Dividend stays. Expects 2009 to be "extremely difficult." (PR)
• Harley-Davidson (HOG): Q4 EPS of $0.34 misses by $0.23. Revenue of $1.29B (-6.8%) in-line. (PR)
• Schlumberger (SLB): Q4 EPS of $1.03 misses by $0.02. Revenue of $6.87B (+9.9%) vs. $6.99B. (PR)
• Xerox (XRX): Q4 EPS of $0.30 misses by $0.04. Revenue of $4.37B (-10.5%) vs. $4.71B. (PR)

Earnings: Thursday After Close

• Advanced Micro Devices (AMD): Q4 EPS of -$0.68 misses by $0.14. Revenue of $1.16B (-33.1%) vs. $1.23B. Gross margin 23%. Sees Q1 revenue down amid very limited visibility and continued corrections in the supply chain. (PR)
• Canadian National Railway Company (CNI): Q4 EPS of $1.21 beats by $0.20. Revenue of $2.2B (+13.3%) vs. $2.04B. Announces 10% dividend hike. (PR) (all figures $Cdn)
• Capital One (COF): Q4 EPS of -$1.59 misses by $19.2. Revenue of $3.17B vs. $4.24B. (PR)
• Consolidated Edison (ED): Q4 EPS of $0.72 beats by $0.04. Revenue of $2.99B vs. $3.27B. (PR)
• Federated Investors (FII): Q4 EPS of $0.51 beats by $0.01. Revenue of $302M (+0.5%) in-line. (PR)
• Google (GOOG): Q4 EPS of $5.10 beats by $0.15. Revenue of $4.22B vs. $4.12B. (PR)
• Intuitive Surgical (ISRG): Q4 EPS of $1.27 in-line. Revenue of $232M (+22.2%) in-line. (PR)
• Microsemi (MSCC): FQ1 EPS of $0.36 in-line by $0.011. Revenue of $131M (+5.7%) in-line. Sees FQ2 EPS of $0.15-0.20 vs. $0.32 and revenue of $104-109M vs $128M. (PR)
• Synaptics (SYNA): FQ2 EPS of $0.84 beats by $0.22. Revenue of $141.5M (+43.5%) vs. $131M. (PR)
• Tempur-Pedic International (TPX): Q4 EPS of $0.17 beats by $0.02. Revenue of $189M (-34.6%) vs. $198M. (PR)
• Werner (WERN): Q4 EPS of $0.26 in-line. Revenue of $491M (-6.7%) vs. $530M. (PR)
• MEMC Electronic Materials (WFR): Q4 EPS of $0.65 beats by $0.04. Revenue of $426M vs. $408M. "The fourth quarter of 2008 saw deteriorating semiconductor and solar market conditions, amid the rapidly weakening global macroeconomic environment." Q1 revenue could decline by as much as 50% from Q4 (Q4 sales=$426M, Q1 consensus=$383M), and gross margin could drop to 20% range. (PR)

Today’s Markets

• Asia markets struggled Friday, led by Japan. Nikkei -3.81% to 7,745. Hang Seng -0.63% to 12,579. Shanghai -0.71% to 1,991. BSE Sensex -1.58% to 8,674.
• Europe opened mixed but moved swiftly to the downside, where stocks remain at midday. London -1.2%. Paris -2.2%. Frankfurt -2.3%.
• U.S. futures fell in tandem with Europe’s weakness. Dow -2% to 7932. S&P -2.1% to 808.50. Nasdaq -1.9%. Crude -2.6% to $42.55. Gold +1.7% to $873.40. Treasurys are higher: 30-year +0.38%. 10-year +0.47%. 5-year +0.23%. 2-year +0.03%.

Friday’s Economic Calendar

• 10:30 EIA Natural Gas Report
• Notable earnings before Friday’s open: GE, HOG, SLB, XRX

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Eric Schmidt Talks Google, Apple, Energy and Obama with Jim Cramer

Michael Arrington submits:

Google CEO Eric Schmidt was on Jim Cramer’s Mad Money Wednesday evening to talk about a wide range of issues, from Obama to Steve Jobs.

On Google killing its print ads business: “That particular product didn’t work particularly well and we’re trying other solutions. Print is a hard one because they have declining ad revenue and higher print costs. And so we’re trying other solutions. Ultimately most people will get their information online.”

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