Lazard Ltd. (NYSE:LAZ-Free Report)is a leading global financial advisory and asset management firm with $187 billion in AUM, as of December 31, 2013. It operates from 40 cities across 26 countries in North America, Europe, Asia, Australia, Central and South America.
The firm provides advice on mergers and acquisitions (M&A), strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services.
Lazard reported operating results for the fourth quarter on February 5,, 2014. Financial advisory gained momentum, with M&A revenue up 43% from the third quarter. Asset Management also has strong quarterly revenue of 20% on record AUM.
Adjusted earnings came in at $0.81 per share, significantly ahead of the Zacks Consensus estimate of $0.60 per share. Operating revenue increased 8.2% to $620 million, ahead of the Zacks Consensus Estimate of $561 million.
Operating margin increased to 22% from an average of 19% during 2010-12 and the company expects to achieve a margin of 25% this year.
Mitcham Industries (Nasdaq:MIND-Free Report) specializes in leasing and sale of advanced seismic equipment that help oil companies explore for pockets of oil.
The company operates in two main business segments: equipment leasing and equipment manufacturing. During fiscal year ended January 1, 2013, leasing accounted for 52% of revenues; manufacturing 30% and 18% of revenues came from other equipment sales.
Founded in 1987, the company now has nine locations around the world, providing support and service to geophysical contractors.
MIND reported its fiscal 2014 fourth quarter ended January 31, 2013 financial results on April 2, 2014. Total revenues for the quarter were $23.6 million down from $28.4 million in the same quarter last year.
Net income was also down and was at $1.8 million, or $0.14 per share, compared to $3.4 million, or $0.26 per share, in the prior-year quarter.
On the positive side, core leasing revenues were up about 6% from Q1 of 2013, thanks mainly to improved activity in Latin America, Europe, Russia and the US. However, Canada leasing revenues suffered due to significant decline in the seismic exploration. Sales of lease pool equipment and Other equipment were also down.
The management believes that their fiscal 2015 results will show some improvement over fiscal 2014 but that improvement will likely not be seen until after the first quarter of this year.
Senators Demand Late-Recall Penalty from GM
General Motors Co. (NYSE:GM-Free Report) has been facing tough times lately due to a series of vehicle recalls. Recently, a House subcommittee released documents showed that the automaker is reluctant to address the safety problems.
In Feb 2014, General Motors announced the recall of 2.6 million older-model small cars associated with 31 crashes and 13 front-seat fatalities due to faulty ignition switches. The recalled vehicles mainly include Chevrolet Cobalts and Saturn Ions. Considerable costs associated with the repair are a potential reason behind the delayed recall. If replaced in 2007, the switches would have cost the automaker $100 million. However, the expenses will be much higher now with higher prices of parts.
General Motors identified the switch problem in 2001. The engineers provided different options to rectify the defect but none of them were accepted due to cost concerns. Delphi Automotive plc (NYSE:DLPH-Free Report), the parts supplier of General Motors, also said that the ignition switches did not match the GM specifications.
According to General Motors, a heavy key ring or uneven roads can cause the ignition switch to shift away from the run position, thus turning off the engine and electrical power. In such a situation, the front air bags will not inflate in case of a crash.
The documents also confirm that the present CEO of General Motors, Mary Barra, has been aware of the faults in the Saturn Ion power steering since Oct 2011. However, the company recalled the vehicles more than two years later.
The U.S. senators requested the Department of Justice to take steps which will hinder the efforts taken by General Motors to avoid financial responsibility related to the late recall of vehicles with faulty ignition switch.
The senators want General Motors to create a victims compensation fund which will ensure that consumers are warned about cars with potential ignition switch problems. General Motors will record a $750 million charge in the first quarter of 2014 due to the increased number of recalls. The expenses include a $300 million charge incurred on three recalls in March and the ignition switch recall.
Recently, Mary Barra had to face a congressional committee hearing due to the delayed recall of vehicles with faulty ignition switches. Barra revealed that the company is determined to resolve the issue without further delay.
Barra also announced that it has hired Kenneth Feinberg, known for handling the compensation funds for the victims of 9/11, the Boston Marathon bombing and the BP oil spill, to find out ways to compensate the victims of the accidents. Allocation of separate funds for victims is not yet confirmed.
General Motors currently holds a Zacks Rank #5 (Strong Sell).
Better-ranked automobile stocks worth considering include Tesla Motors, Inc. (Nasdaq:TSLA-FreeReport), which carries a Zacks Rank #2 (Buy).
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