Weak Quarter Weighs on JPMorgan's 2011 Profit

JPMorgan Chase's credit card business and commercial lending operation showed signs of improving.Justin Sullivan/Getty ImagesJPMorgan Chase’s credit card business and commercial lending operation showed signs of improving.

JPMorgan Chase kicked off bank earnings season on Friday with news that its quarterly profit dropped 23 percent last year, results that weighed on the full-year profit.

The bank turned a $19 billion profit in 2011, up 9 percent from $17.4 billion a year earlier, as its credit card business and commercial lending operation showed signs of improving. The results amounted to $4.48 a share, up from $3.96 a share last year.

But the profit engine stalled in the fourth quarter, when JPMorgan earned $3.7 billion, or 90 cents a share, down 23 percent from the same quarter a year earlier. The results matched analysts’ estimates for the period.

The fourth-quarter slump was owed in part to declining revenue and a slowdown in JPMorgan’s sprawling investment bank, which suffered from the sluggish economic recovery in the United States and concerns that the European debt crisis would sweep across the Continent.

The investment bank booked a $567 million accounting loss in the fourth quarter tied to the perceived riskiness of its own debt, reversing a one-time gain from the previous quarter that propped up earnings across Wall Street. In all, the unit’s profit sank 52 percent to $726 million in the fourth quarter.

Shares of JPMorgan were down more than 3 percent, to about $35.55, in morning trading.

Despite the turmoil in the fourth quarter, Jamie Dimon, JPMorgan’s chairman and chief executive, highlighted the firm’s gradual progress since the financial crisis. He also sounded a note of cautious optimism about the broader economic recovery.

“We have a mild recovery that might actually be strengthening,” Mr. Dimon said in a conference call with reporters, adding that the comeback appears to be “broad.”

JPMorgan Chase

The bank’s earnings report comes a day after Mr. Dimon announced the second major shuffling of his management team in a year. Among the changes, Jay Mandelbaum, head of strategy and business development, will leave the bank. And Barry Zubrow, JPMorgan’s risk management chief who guided the bank through the financial crisis, will now head corporate regulatory affairs.

With the steady growth in profit last year, JPMorgan has emerged from the crisis as one of Wall Street’s most dominant firms. In 2011, JPMorgan stripped Bank of America of its title as the nation’s biggest bank by assets. Bank of America is still struggling to shed the legacy of the subprime mortgage mess.

“JPMorgan is in the best position for no other reason than they don’t have the troubles that Bank of America has,” said Jim Sinegal, an analyst with the research firm Morningstar.

While JPMorgan had some recent bright spots in its core businesses, the gains were padded by the bank’s decision to set aside $730 million in fewer reserves for loan losses. Additions to the reserve are an expense.

Much of the change came from reserves held for the bank’s credit card portfolio, which has steadily improved. The move also benefited Chase Retail Financial Services, the bank’s consumer banking arm that offers everything from mortgages to checking accounts. The unit earned $533 million in the fourth quarter, up from $459 million a year earlier.

Commercial lending was a particular strong point for the bank. The unit’s profit rose to a record $643 million, a 21 percent increase from the prior year, as lending to corporations grew for the sixth consecutive quarter.

“I believe that you are seeing real loan growth,” Mr. Dimon said on the conference call. “And I think that will continue.”

But his bank’s earnings improvement last year was overshadowed by the fourth-quarter woes and a drop in revenue. Revenue fell to $99.8 billion, down from $104.8 billion last year, as new federal rules reined in fees tied to overdrafts and debit cards. The $567 million accounting loss also weighed down revenue.

The revenue struggles are not unique to JPMorgan, a diversified bank seen as a gauge for the performance of Wall Street. When the nation’s other big banks — Goldman Sachs, Morgan Stanley, Citigroup and Bank of America — report earnings next week, most are expected to detail similar slowdowns in revenue.

“It’s hard to think of a bright spot on the revenue side,” Mr. Sinegal said. “That issue is going to linger.”

Scottish independence: Bannockburn divided on everything except the euro | Politics | The Guardian

After weeks of storm-force winds and heavy skies, the sharp glare of the morning sun picks out every detail of the out-sized bronze statue of Scotland's most famous king, and fine shadows etch out the heavy, masculine features, chainmail and coronet of Robert the Bruce.

As her energetic terriers Benny and Buddy squabble, nipping and harassing half a dozen other spaniels and terriers tearing after tennis balls on the softly sloping hill that marks the Battle of Bannockburn, Gail NcNeill looks up at the greatest hero of Scottish independence and grimaces.

McNeill, a 47-year-old health worker, lives in Bannockburn, a comfortable suburb of bungalows and neat semis on the outskirts of Stirling, and is proud of it. She seems proud, too, that tens of thousands of tourists visit the park each year to see this icon of Scottish nationalism and the sadly decrepit concrete memorial nearby to the country's most celebrated victory over the English, in 1314. "There's so much heritage here," she remarks.

In a little over two years' time, Bannockburn will be the focus of much more than trophy-hunting tourists, expatriates on a cultural pilgrimage and casual patriots. In 2014, it will be the 700th anniversary of Bruce's rout of Edward II's army on the nearby plain. Ordinarily, that would be cause enough for celebrations for many Scots and the vast diaspora overseas.

Four days ago, 2014 was given an additional, startling resonance by Alex Salmond, Scotland's first minister. Later that year, probably in October, 4 million Scots will likely be asked to vote in a referendum on whether Scotland's 300-year-old political union with England should end; potentially provoking the greatest constitutional crisis in the United Kingdom's history.

And it is this that leaves McNeill unnerved. "I think what Alex Salmond is doing is, he's waiting until 2014 because this is going to be a major part of it; 700 years from the Battle of Bannockburn and people will feel very patriotic but may make the wrong vote," she says.

"How can we walk away from something so successful? We've been part of Britain for such a long time. I used to be really for independence, but I don't think we can go it alone, to be honest. When you look at the armed forces, how secure would our country be? There's the economy, too. Jobs. Are companies going to invest in our country in future as we're going to be independent?"

McNeill feels "really quite undecided" but veers towards voting no in the referendum. While support for independence is edging upwards, nudging over 35% in some surveys, all opinion polls still put her in the majority. And for a large majority of voters, it is the economy that weighs most heavily.

McNeill's hospital is suffering already from deep cuts, but she fears most for her adult children. They are casualties of Scotland's worsening youth unemployment; more than 100,000 under-24-year-olds are currently out of work. "My son, he's 23. He's done an apprenticeship but at the moment he's doing absolutely nothing, and there's not a lot of future for him at the moment," she says. "My daughter is 20, and she's away working in holiday camps in England. She could come back up here, but there's absolutely nothing for her. She's done everything, she's tried her hardest."

Christine McCaffery, another dog-walker enjoying the brilliant sunshine at the memorial, has other grievances. A passionate Catholic and Celtic season ticket holder, McCaffery is furious about Salmond's highly controversial drive to further penalise religious and sectarian chants at football matches.

So much so, it is making her reconsider voting for independence. She fears that independence could see religious divisions between Catholics and Protestants in Scotland deepen, yet unlike McNeill, she is an upfront, even strident nationalist with republican tendencies.

"I would leave England at the drop of a hat; always have thought that. I don't class myself as British. I'm Scottish," she says. "It's not that I dislike England, but I think England takes everything from our country. I don't like the Union Jack; they're not my royal family. I don't dislike the Queen, but she's not my queen."

Yet McCaffery also betrays some of the tensions and complexities, critics would say contradictions, in modern Scottish nationalism. There are some emblematic British institutions she would rather keep. She disavows the armed forces – she raises the Iraq and Afghanistan invasions – but likes the Remembrance day poppy, symbol of the Royal British Legion.

"I would take the pound," she adds quickly. "I don't want the euro. The euro is falling apart, for a kick-off. It's your identity, isn't it?"

For the vast majority of Scots, this seems to be a red-line issue. Few wish to leave the European Union, but no one wants the euro. Many experts believe that an independent Scotland would, under the Lisbon treaty, have to accept the euro if it joined the EU. It was no accident that George Osborne, the chancellor, raised doubts as to whether Scotland could retain sterling after independence in an ITN interview on Thursday evening.

In the city of Stirling, even Robert Scott, 45, a committed nationalist who used to vote Labour, balks at the thought of giving up the pound. A slight man with pepper-grey hair, Scott talks quickly as his scissors dart around a customer's hair in the Barton Street barbers.

"I think the way the euro is, no one wants to go into the euro," he says. "I think the people of Europe would rather get out of the euro if they could."

But what about Scotland no longer having the BBC, an institution effectively established by a Scot, Lord Reith, or the UK armed forces? (The Scottish National party has spoken of setting up Scottish television stations, and argues that its armed forces after independence would mirror those in Ireland or Norway; small standing armies designed for territorial defence, not post-colonial overseas wars.) "Why should we lose any of them? We've not got to lose everything. There could always be a Scottish armed forces. An independent Scotland is still going to be part of the British Isles and still have the Queen."

The one thing Scott would give up would be nuclear weapons; Scotland is now home to the UK's entire nuclear submarine fleet, including the Trident weapon system, at Faslane on the Clyde. That remains one of the greatest nationalist grievances. But on those other symbols, Scott, like the SNP leadership, insists independence will be a gentle separation; Scotland and England should still share many institutions.

He shrugs when asked whether the referendum causes him any anxiety. "No, it doesn't really. This is going to make history. We're no' going to go back to fighting the English, are we?," he asks rhetorically, adding, with a small grin, "You never know, mind you."

Close to the city's sheriff court, John Kelly, 23, a shift manager in a local McDonald's restaurant, believes the economic impact of independence is exaggerated. "I just don't think it would be as bad a thing as people make out. I think any harm it would do to the economy would be fairly small," he says, as he walked into town with his 14-month-old daughter Abbie and partner Emma Currie.

He plans to vote yes to independence, although the Bannockburn references had passed him by. "I genuinely wouldn't have known it was the 700th anniversary if I hadn't looked at the news yesterday," he says.

Another fan of the pound, he declares himself "fairly indifferent" to the monarchy. But one prime motivation for Kelly – and this issue is something the SNP believe the UK government critically misunderstands – is that Scotland voted against the two parties now in control at Westminster, the Tories and Liberal Democrats, at the last UK general election. The Lib Dems' popularity in particular has since slumped dramatically.

Kelly is one of the soft nationalists whom Salmond hopes to capture, if he can, by posing three questions at the referendum: maintain the status quo, full independence, and a halfway-house alternative: far greater powers for the Scottish parliament while staying within the UK, the option known as "devo max" or "devo plus". Many opinion surveys suggest that around two-thirds of Scots favour this.

"I would be happy at least if we ended up with more devolved powers," he said. "I find it quite weird that Scotland is governed by a government we didn't vote in. Basically, if Scotland voted completely differently from England, I don't see why the powers should be shared between the two of them."

Outside Marks & Spencer, Pam and John Nicholls, married for 47 years, appear to be in that middle ground of voters whom the SNP believes are "willing to be persuaded". Pam, 68, a retired secretary, is English and has, like many resident in Scotland, encountered anti-English racism, yet is undecided about independence. "I'm not sure. I'm just listening to both sides of the argument at the moment," she says. "I can see the Scottish side of it."

But it does cause some friction with their extended family in England. John, a retired senior prison officer and a Scot, listened closely to the idea of the "social union" that Salmond insists will remain intact, even blossom, between England and an independent Scotland. But, fundamentally, he opposes independence, despite the in-laws.

"I have relations down there and my brother-in-law says to me, 'Maybe we should built Hadrian's wall back up and keep you lot up there.' I say, 'Well, what are you going to do without our oil?'" Independence, he believes, will harm Scotland's relationship with England far more than many Scots realise. "The English don't like us, no matter what you say, and every chance they get, they put the dig in."

Fundamentally, John does not, he says, trust Salmond. "My experience of Alex Salmond is he's a very charismatic guy and he talks a fantastic job but a lot of the stuff that he promises never comes to fruition; he has always got some great reasons or excuses and people to blame."

The message from Stirling appears both simple and complex. The voters are primarily concerned with their material lives: ideology seems to play little part in their thinking. And there are deep, significant bonds and shared institutions connecting the two countries which the nationalists will have to approach very carefully indeed if they wish to win.

Bear Stearns name set for scrapheap

Farewell, then, Bear Stearns. More than 86 years after Joseph Bear, Robert Stearns, and Harold Mayer pooled $500,000 in capital and founded an equity trading house named after the first two, the Bear Stearns name is to be consigned to the dustbin of history.

JPMorgan Chase, which bought the investment bank for a cut-price as it tottered on the brink of collapse in March 2008 has decided to emblazon its own name on the last remnant of the Bear empire: a brokerage unit serving rich, but not too rich, people (“Single-digit millionaires,” is how one employee coyly describes his target audience).

Once the business cards and client statements of Bear Stearns Private Client Services have been changed to “JPMorgan Securities”, the Bear name, which came to epitomise Wall Street’s scrappier, more swashbuckling side, will live on only in industry lore and the memory of employees.

One of them, Barry Sommers – a 13-year Bear veteran who stayed on to run the brokerage unit after the JPMorgan acquisition – on Friday preferred to look towards the future but not without a hint of nostalgia for the Bear of old.

“Bear Stearns has a special place in my heart and always will,” he told the Financial Times. “But we now have the ability to leverage one of the most respected names in the world, not just in financial services”, he said, referring to JPMorgan.

The problem was that for all of Bear’s achievements – a band of upstarts that challenged the more traditional “bulge bracket” firms at their own game and beat them often – it had become synonymous with the financial crisis.

“It must have been an easy decision,” said David Srere, co-president and chief strategy officer of the brand consultancy Siegel + Gale. “These days Bear Stearns is, rightly or wrongly looked upon as the poster child of the cratering of Wall Street”.

Jamie Dimon, JPMorgan’s chief executive, has a close connection to the unit he has just renamed. His father Theodore is one of the 386 brokers working for the newly minted JPMorgan Securities after joining his son’s bank in November.

With Bear going the way of names such as PaineWebber (a brokerage business bought by UBS) and Donaldson Lufkin & Jenrette (largely obliterated after Credit Suisse’s acquisition in 2000), it begs the question that has often haunted financial brands.

Will anybody in the real world care? Mr Srere, for one, thinks clients will not. “In financial services it is not about the name of the company, the client stays with the person that makes them money”.

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Dennis Ritchie, 70, Dies, Programming Trailblazer

Mr. Ritchie, who lived alone, was in frail health in recent years after treatment for prostate cancer and heart disease, said his brother Bill.

In the late 1960s and early ’70s, working at Bell Labs, Mr. Ritchie made a pair of lasting contributions to computer science. He was the principal designer of the C programming language and co-developer of the Unix operating system, working closely with Ken Thompson, his longtime Bell Labs collaborator.

The C programming language, a shorthand of words, numbers and punctuation, is still widely used today, and successors like C and Java build on the ideas, rules and grammar that Mr. Ritchie designed. The Unix operating system has similarly had a rich and enduring impact. Its free, open-source variant, Linux, powers many of the world’s data centers, like those at Google and Amazon, and its technology serves as the foundation of operating systems, like Apple’s iOS, in consumer computing devices.

“The tools that Dennis built — and their direct descendants — run pretty much everything today,” said Brian Kernighan, a computer scientist at Princeton University who worked with Mr. Ritchie at Bell Labs.

Those tools were more than inventive bundles of computer code. The C language and Unix reflected a point of view, a different philosophy of computing than what had come before. In the late ’60s and early ’70s, minicomputers were moving into companies and universities — smaller and at a fraction of the price of hulking mainframes.

Minicomputers represented a step in the democratization of computing, and Unix and C were designed to open up computing to more people and collaborative working styles. Mr. Ritchie, Mr. Thompson and their Bell Labs colleagues were making not merely software but, as Mr. Ritchie once put it, “a system around which fellowship can form.”

C was designed for systems programmers who wanted to get the fastest performance from operating systems, compilers and other programs. “C is not a big language — it’s clean, simple, elegant,” Mr. Kernighan said. “It lets you get close to the machine, without getting tied up in the machine.”

Such higher-level languages had earlier been intended mainly to let people without a lot of programming skill write programs that could run on mainframes. Fortran was for scientists and engineers, while Cobol was for business managers.

C, like Unix, was designed mainly to let the growing ranks of professional programmers work more productively. And it steadily gained popularity. With Mr. Kernighan, Mr. Ritchie wrote a classic text, “The C Programming Language,” also known as “K. & R.” after the authors’ initials, whose two editions, in 1978 and 1988, have sold millions of copies and been translated into 25 languages.

Dennis MacAlistair Ritchie was born on Sept. 9, 1941, in Bronxville, N.Y. His father, Alistair, was an engineer at Bell Labs, and his mother, Jean McGee Ritchie, was a homemaker. When he was a child, the family moved to Summit, N.J., where Mr. Ritchie grew up and attended high school. He then went to Harvard, where he majored in applied mathematics.

While a graduate student at Harvard, Mr. Ritchie worked at the computer center at the Massachusetts Institute of Technology, and became more interested in computing than math. He was recruited by the Sandia National Laboratories, which conducted weapons research and testing. “But it was nearly 1968,” Mr. Ritchie recalled in an interview in 2001, “and somehow making A-bombs for the government didn’t seem in tune with the times.”

Mr. Ritchie joined Bell Labs in 1967, and soon began his fruitful collaboration with Mr. Thompson on both Unix and the C programming language. The pair represented the two different strands of the nascent discipline of computer science. Mr. Ritchie came to computing from math, while Mr. Thompson came from electrical engineering.

“We were very complementary,” said Mr. Thompson, who is now an engineer at Google. “Sometimes personalities clash, and sometimes they meld. It was just good with Dennis.”

Besides his brother Bill, of Alexandria, Va., Mr. Ritchie is survived by another brother, John, of Newton, Mass., and a sister, Lynn Ritchie of Hexham, England.

Mr. Ritchie traveled widely and read voraciously, but friends and family members say his main passion was his work. He remained at Bell Labs, working on various research projects, until he retired in 2007.

Colleagues who worked with Mr. Ritchie were struck by his code — meticulous, clean and concise. His writing, according to Mr. Kernighan, was similar. “There was a remarkable precision to his writing,” Mr. Kernighan said, “no extra words, elegant and spare, much like his code.”

Co-author of my first programming book. 'Kernighan and Ritchie' The C Programming Language

RIP

You don't have to be big to be beautiful, says Donald | Reuters

You don't have to be big to be beautiful, says Donald

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    By Tony Jimenez

    DUBAI | Mon Dec 12, 2011 4:52am GMT

    DUBAI (Reuters) - Luke Donald has bucked a trend by landing a unique trans-Atlantic double despite lacking the power of many of his peers and he wants lesser players to know that in golf you do not have to be big to be beautiful.

    "I'm sure some golfers out there have looked at my success and figured out you don't need to hit it 100 miles," the world number one told reporters after adding the European money-list crown to the U.S. order of merit he won in October.

    "There is more to this game than hitting it far. I would love to hit it further but I've got to stick with what I have and what my talents are," added the Briton after finishing third behind Dubai World Championship winner Alvaro Quiros of Spain.

    "I've proved that if you have a good and proficient short game and good putting you can have a decent year no matter what.

    "I think people are taking notice of what I've done and how I've done it and will maybe change the way they approach practice."

    The 5-foot-9 Donald has been consistency personified this year, winning a total of four trophies in Europe and the U.S. and compiling 19 top-10 finishes in 25 starts.

    However, the hard work will not stop there for the record-breaking Englishman.

    "There are always ways to improve," said the 34-year-old Donald. "That's the beauty of our sport, and life.

    "I'll continue to try to do that. I made pretty big leaps this year with my driving. I was a lot better at hitting fairways and greens but they certainly weren't the best.

    "I can improve there and in other areas. I'll be working on that in the off-season."

    Donald, who will undertake his final assignment of the year at this week's Australian Masters, was under pressure to hold off European money-list rival Rory McIlroy in Dubai and acknowledged he was short of his best in the desert heat.

    "I felt very nervous and it showed in a couple of tee shots," he explained. "There are still a few flaws that creep into my game now and again.

    "I didn't swing it my best over the last three days and I didn't feel comfortable out there. But I was able to shoot 16-under-par in those three days and do what I needed to do."

    Despite his stunning achievements in 2011, an elusive first major victory has again eluded Donald and that is something he wants to put right next season.

    "A major is something missing from my resume," he said. "This year I've done everything but win a major but I'm excited about 2012.

    "I'm excited to bring my experiences of 2011 to the majors and hopefully that will help me."

    Donald's ultimate golfing dreams extend beyond a maiden major triumph though.

    "I'm not going to be greedy," he said. "I'd love to win one major but I guess winning the grand slam of four majors in one calendar year would be the ultimate thing.

    "The chances are very slim and no one has ever done it (in the modern era) but that would be the ultimate goal."

    (Editing by Greg Stutchbury)

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