California regulators take aim at JPMorgan, and Amazon tries 3D, without the glasses.
The S&P 500's streak of five straight record high has ended. The index fell 6 points yesterday, the Dow Industrials lost 22, and the Nasdaq lost 4.
JPMorgan Chase (JPM) has been sued by the state of California for allegedly using robo-signing and other illegal practices to collect debts from 100,000 credit card holders in the state. The charges are similar to those that plagued the home foreclosure process a few years ago.
Amazon (AMZN) is going 3D. The Wall Street Journal reports the company is expanding its line of electronics beyond the Kindle. A smartphone in development will allow users to see three-dimentional images without using special glasses. Amazon has also been working on a new set-top box.
Separately, the Journal says Microsoft's (MSFT) effort to produce a set-top box for video streaming and other entertainment is now uncertain.
There are also reports that Apple's (AAPL) effort to launch a music streaming service has hit a snag over much it will pay in royalties.
Two of Dell's (DELL) largest shareholders are offering an alternate to the company's $24 billion bid to go private. Billionaire Carl Icahn and Southeastern Asset Management will offer shareholders a complex deal that includes cash, stock and new debt.
Priceline (PCLN) is booking flights, hotels and healthy profits. Its quarterly net jumped 34 percent, easily beating expectations. But the company warns of economic uncertainty in some regions, and intense competition in the online travel business.
Shares of Molycorp (MCP) are set to rally. Its quarterly loss was not nearly as bad as expected. Molycorp is a leading miner for rare earth minerals.
Shares of Gap (GPS) are set to rally after the retailer said its earnings will sail past Street expectations.
And as expected, Google's (GOOG) YouTube unit is testing out a subscription service for certain channels of video. It will cost 99¢ a month or more to view channels such as Sesame Street and Ultimate Fighting Championship.
–Produced by Drew Trachtenberg
10 Most Profitable Companies
Market Minute: JPMorgan Sued by California Over Credit Card Robosigning
Fortune 500 rank: 2
2012 profit (millions): $44,880
The ink on Exxon Mobil's balance sheet comes in one grade: Premium. The energy giant fell just short of setting a company -- and world -- record for profits this year. The last world record was set by -- you guessed it -- Exxon Mobil, back in 2008. The abundance of cheaper domestic energy both hurt and helped the company in 2012. A greater supply of U.S. crude and natural gas drove production revenues down. But it was Exxon's refineries that saved the day. With supplies close at hand, making fuel was a lot cheaper, which helped boost profits.
Fortune 500 rank: 6
2012 profit (millions): $41,733
In its first year without Steve Jobs, Apple managed to climb a notch on our list of most profitable companies. How long it can stay there is another story. 2012 results were driven by the iPhone. In the fourth quarter alone, sales of the smartphone spiked 58% year over year. But sales growth for the iPad dropped, disappointing fanboys and investors used to blowout results. Meanwhile shares have dropped about 40% since September's all-time high on worries over demand, supply issues, shrinking profit margins, and the looming threat of rival Samsung and its Android-driven devices.
Fortune 500 rank: 3
2012 profit (millions): $26,179
Like Exxon Mobil, Chevron relied on its refineries to hold up its bottom line in 2012. When oil prices were climbing, integrated energy companies were urged to dump their low-margin refining units. But Chevron and Exxon didn't listen, and when crude prices dropped, the hedge paid off. Profits at Chevron's U.S. downstream operations jumped by a third year over year on increased supply of domestic energy. That wasn't enough to keep overall profits from slipping, however, as big bets on upstream ops, like natural gas exploration, have yet to pay off.
Fortune 500 rank: 18
2012 profit (millions): $21,284
It was a year of records and reckoning for J.P. Morgan Chase. The bank's highest annual profit ever was tainted by the $6.2 billion "London Whale" trading loss on risky bets. The scandal also cut into CEO Jamie Dimon's bottom line when the board hit him with a 50% pay cut. But as Mr. Dimon likes to say: Life goes on. 2012 marked strong results across all of J.P. Morgan's units. Until interest rates finally rise from rock-bottom levels, however, the bank will continue to get pinched on the profit it makes off its loans.
Fortune 500 rank: 25
2012 profit (millions): $18,897
For the bank that provides a third of all U.S. mortgages, the housing recovery has been a boon. Wells Fargo posted record annual profits last year on the back of an industry-wide refi-renaissance. But in the final quarter of 2012, Wells rang a warning bell that the boom might be ending. Mortgage lending slowed for the first time in more than a year, and like J.P. Morgan, the bank continues to suffer from low interest rates. Wells Fargo's net interest margin -- a key measure that tracks loan profitability -- shrank in the quarter and continues to contract into 2013.
Fortune 500 rank: 12
2012 profit (millions): $17,220
If you're still not convinced the housing recovery is well under way, take a look at Fannie Mae. The mortgage financing giant posted record profits for 2012 on a sharp drop in foreclosures and delinquencies on the loans it owns or guarantees. That's quite the turnaround from four years ago, when the federal government had to take control after the housing bubble burst. Now that Fannie Mae is profitable, it's well on track to pay back the $116 billion Uncle Sam put up to bail the company out.
Fortune 500 rank: 1
2012 profit (millions): $16,999
The profit machine at the world's largest retailer continues to chug along. Walmart's net for 2012 climbed a respectable 8%, capped by a solid holiday shopping season at the end of the year. But the bellwether for consumer spending spooked market watchers when it warned of sluggish sales in the first quarter of 2013. Walmart said consumers are getting hit especially hard by higher payroll taxes and rising gasoline prices. Whether that hurts lower-income customers or drives more of them to the discount retailer remains to be seen.
Fortune 500 rank: 35
2012 profit (millions): $16,978
Reporting your first quarterly loss ever is not the way a company wants to end its fiscal year. But a bad bet on online ad unit aQuantive forced Microsoft to report a $6.2 billion writedown in its fourth-quarter results last June. The software giant has redeemed itself since then. Microsoft released Windows 8 last fall, and despite a dying PC market, sales jumped 23% last quarter. The company's smartphone and tablet offerings have yet to make a dent against their rivals, but with boosts from the Xbox and a move to cloud computing, Microsoft is growing again and meeting expectations.
Fortune 500 rank: 20
2012 profit (millions): $16,604
In her first year at the helm, Ginni Rometty steered IBM toward higher profits in 2012, despite a dip in sales. A long-term shift to higher-margin software and services has helped prop up results, but Big Blue faces tough revenue challenges amid continued weak corporate tech spending at home and abroad. Despite a weaker-than-expected showing in the first quarter of 2013, IBM is sticking by its full-year earnings guidance. But as sales continue to slide, the company has indicated job cuts to meet its goals.
Fortune 500 rank: 5
2012 profit (millions): $14,824
Perhaps no one was more disappointed with Berkshire Hathaway's 2012 results than Warren Buffett, who called his performance "subpar" in his annual letter to shareholders. Over the year, Berkshire's book value per share rose a substantial 14.4%. But that wasn't enough to beat the competition, i.e., the S&P 500, which rang in a 16% total return for 2012. Earnings per share jumped 44% from the year before, but Buffett prefers book value as the truer performance measure, because it includes all of Berkshire's capital gains, realized or unrealized.
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