Obama signs 'big win' tax bill
WASHINGTON (AFP) – President Barack Obama Friday savored "a big win" just six weeks after his rebuke by mid-term election voters, signing a 858-billion-dollar tax law after a contentious deal with Republicans.
The White House meanwhile also expressed confidence that two other priority agenda items -- the repeal of a ban on gays serving openly in the military and a new nuclear pact with Russia would also soon win Senate backing.
"The legislation... is a substantial victory for middle-class families across the country. They're the ones hit hardest by the recession we've endured. They're the ones who need relief right now," Obama said.
The president argued that the bill, which extends tax cuts passed by former president George W. Bush along with unemployment benefits, would help speed up so far sluggish economic growth after the worst recession in decades.
And he said the bill could be a harbinger of a period of cross-party cooperation when Republicans take control of the House of Representatives in January, after routing his Democrats last month in mid-term elections.
"The final product proves, when we can put aside the partisanship and the political games, when we can put aside what's good for some of us in favor of what's good for all of us, we can get a lot done," he said.
Unusually, Obama was joined at the bill signing by Republican Senate Majority leader Mitch McConnell, who has spent the last two years doing everything he could to thwart Obama's agenda.
But McConnell signed on to the deal after Republicans won inclusion of an extension of tax cuts for the wealthy and a cut in inheritance taxes -- provisions Obama does not like, but accepted to get the bill passed.
"Republicans have fought hard for this legislation. Up until last week, most Democrats resisted, but in the end the American people were heard," McConnell said.
"That?s a welcome change from the past two years."
The pre-Christmas rush of legislation in the previously logjammed Senate helped confound perceptions that Obama would be constrained after his Democrats got an election pounding.
"I think it is a big win for the president," White House spokesman Robert Gibbs said.
But some Democrats are furious that the bill extended tax breaks for the wealthiest Americans and rolled back inheritance tax on the richest estates.
"This measure does not create a single job or stimulate the economy in any way," said number-three Democratic Representative James Clyburn, who urged lawmakers to "restore some fairness to the tax code."
Democrat Linda Sanchez from California called the measure "reckless," and Democrat Jay Inslee from Washington state derided it as "deja-voodoo economics."
Gibbs said that the White House was also increasingly hopeful that the bid to scrap the "Don't Ask, Don't Tell" provision on gays in the military and the START nuclear disarmament treaty would also pass before the end of the year.
Obama's Democratic allies in the US Senate have set the stage for a critical weekend test vote on the bill.
Supporters fear they will lose their best chance in years of overturning "Don't Ask, Don't Tell" when a new US Congress musters in January with Republicans -- who largely oppose repeal -- in charge of the House.
The Senate is also forging ahead on Obama's top foreign policy priority, the new Strategic Arms Reduction Treaty (START) with Russia, even as Republicans sought to put off a vote until next year or even kill the deal.
Top US military officials rebuffed Republican charges that the pact will cripple US missile defense plans, as Democratic Senate Majority Leader Harry Reid set the stage for a likely ratification vote next week.
The agreement -- which has the support of virtually every present and past US foreign policy or national security heavyweight -- restricts each nation to a maximum of 1,550 deployed warheads, a cut of about 30 percent from a limit set in 2002, and 800 launchers and bombers.
The accord would also return US inspectors who have been unable to monitor Russia's arsenal since the treaty's predecessor lapsed in December 2009.
Congress Tells Commercials to Quiet Down
About four years ago, Representative Anna G. Eshoo, a 10-term Democrat from Silicon Valley, was resting at home one evening, with the television on. At the time, Eshoo's elderly parents, who have since passed away, were living with their daughter. "They had a hearing problem, so the TV volume was high to begin with," she recalls. Then, the commercials came on. "It was enough to make me want to run away from home," she said of the loudness. "It was more than anyone should have to bear." She complained about the noise to her brother-in-law. And "he said, 'hey, you're the one in Congress,'" she says. "Why don't you do something about it?"
She did, and now millions of American television viewers might benefit from her decision to speak up about turning the volume down. (See the top 10 TV commercials of 2010.)
What bothered Eshoo that fateful day has happened to all of us - you're watching a show, and when the ads are broadcast, you notice that the car commercial is piercing your ears, even though you didn't turn up the volume on your remote. The FCC, in fact, has been fielding complaints from viewers about amped-up ads since the 1960s.
So thanks to Eshoo's work, Congress on Dec. 2 passed the Commercial Advertisement Loudness Mitigation Act, replete with a fitting acronym, CALM. The CALM act, which was sponsored by Eshoo in the House, requires that broadcast and cable stations adopt industry technology that ensures that commercials aren't louder than regular television programming. This is a rare piece of legislation that attracted overwhelming bipartisan support. President Obama signed the bill into law on Wednesday. (See more from NewsFeed on the CALM Act.)
So why were commercials so loud to begin with? "Because the producers wanted them that way," says Tim Carroll, founder of Linear Acoustic, a company that makes volume-control equipment. The thought was that the louder the ad, the more likely viewers would pay attention during a station break, instead of getting off the couch to make a sandwich. "It's like the old trick the speaker salesmen would rely on," says Carroll. "The louder the speaker, the better it must be." Carroll says producers can use a technique called compression to increase the density of the audio, which makes it sound louder. To illustrate, he compares sound with snow. "If I took a handful of light snow and threw it at you it wouldn't hurt that much," says Carroll. "But if I packed that same amount of snow into a ball and threw it at you, it would hurt a lot more. That's compression."
Dick O'Brien, director of government relations for the American Association of Advertising Agencies, denies that advertisers intentionally made commercials too loud. "Advertising works best when the public is engaged, not alienated," O'Brien says. "It makes sense that we'd want viewers to be in a good mood, not a bad mood." O'Brien insists that since advertisers work separately from programmers, there's often discordance in the decibel levels. His organization supports the law. (See the best and worst Super Bowl commercials of 2010.)
Indeed, the bill has drawn little opposition, and both the industry and lawmakers insist it will bring relief to the ears of viewers. After the FCC adopts the law, broadcast stations and cable operators have a year to comply with it, though smaller outlets, decimated by the economy, might have more trouble affording the sound-correcting equipment. "These days, the chief engineer of many local stations is also doing the plumbing and painting the halls," Carroll notes. The law, however, permits such distressed stations to apply for a temporary waiver from the FCC.
The law has turned Eshoo into a rock star. "I just thought my family would notice," she says. "That I'd come home, say 'mission accomplished,' they'd applaud and that would be that." Instead, she received dozens of thankful e-mails and phone calls, and strangers have come up to her in the grocery store expressing thanks. "Oh my goodness, I could have saved 50 million children from some horrible malady, and there would be five lines written about it," Eshoo says. "This has been astounding."
See the top 10 campaign ads of 2010.
See the top 10 super bowl ads of the decade.
View this article on Time.com
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SEC expands mortgage probe: sources
NEW YORK/WASHINGTON (Reuters) – Securities regulators have broadened their inquiry into the mortgage industry, asking big banks about the early stages of securitizing home loans, two sources familiar with the probe said.
The Securities and Exchange Commission launched the new phase of its investigation by sending out a fresh round of subpoenas last week to big banks including Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs Group Inc and Wells Fargo & Co, the sources said.
Months ago, the SEC began looking into the banks' foreclosure practices following allegations that mortgage servicers were using shoddy paperwork to evict delinquent borrowers from their homes.
Now the SEC is looking at how the lenders packaged up mortgages for sale to investors, said the sources, who requested anonymity because the probe is not public.
Questions from the SEC include information about the role of so-called "master servicers" -- specialized firms that oversee the selection and maintenance of the large pool of home loans that go into every mortgage-backed bond.
In many cases, Wall Street banks that underwrite mortgage-backed securities either own their own master servicing firms or are closely aligned with one.
The Justice Department, banking regulators and the attorneys general in all 50 U.S. states are also probing potential wrongdoing.
The state of Arizona sued Bank of America on Friday, accusing the bank of misleading consumers about its home loan modification process.
TRUSTS AND TRANSFERS
One of the sources said the SEC is seeking information about the role banks had in mortgage securitization. The regulator is also looking at the role trustees for the trusts that issued the mortgage-backed securities had in monitoring the performance of the underlying loans.
The SEC is looking at whether loans were properly transferred to the trusts that issued the securities, the source said.
The renewed look at the securitization process is an extension of the SEC's preliminary probe into the mortgage mess. The SEC's regional offices are all looking at some aspect of the foreclosure crisis.
The SEC had no comment.
Separately, the SEC is still investigating banks, credit rating agencies and individuals in connection with the 2007-09 subprime crisis. Those investigations center around potential misrepresentations to investors about the value of the mortgage-backed securities that helped fuel the crisis.
The agency has filed some high-profile cases, including one against former Countrywide Financial chief Angelo Mozilo and another against Goldman Sachs.
Banking regulators, including the Federal Reserve, are reviewing lenders' foreclosure practices and are expected to reveal their findings in January.
In particular, the Fed is concerned about investors accusing lenders of misrepresenting the loans that underpin mortgage securities, and demanding repayment.
That has already happened with Bank of America, which has started negotiating with a group of angry mortgage investors, including BlackRock Inc.
Bank of America, Citigroup, JPMorgan and Goldman had no comment. Wells Fargo said it is "always working with regulators and others who are interested in its servicing business" but declined to comment on whether the bank had received a subpoena.
(Additional reporting by Elinor Comlay and Joe Rauch; editing by John Wallace and Tim Dobbyn)
Arizona, Nevada sue BofA over loan modifications
PHOENIX – Attorneys general in Arizona and Nevada filed civil lawsuits Friday against Bank of America Corp., alleging that the lender is misleading and deceiving homeowners who have tried to modify mortgages in two of the nation's most foreclosure-damaged states.
Bank of America violated Arizona's consumer fraud law by misleading consumers who tried to reduce their monthly payments to keep their homes, state Attorney General Terry Goddard said. The bank also violated the terms of a 2009 consent agreement requiring its Countrywide mortgage subsidiary to implement a loan modification program, the Arizona lawsuit alleges.
Hundreds of homeowners kept making their mortgage payments because Bank of America repeatedly assured them that their loans were being modified, Goddard said. Instead, many lost their homes anyway.
"Those people could have used that money for something else," Goddard told The Associated Press. "They were deceived into continuing to make mortgage payments when they had no hope of saving their homes."
Nevada Attorney General Catherine Cortez Masto told the AP that the Silver State's lawsuit was a last resort to try to get the bank to change its ways. It was filed after several discussions with bank managers led to assurances but little more.
"Clearly there is a disconnect between what Bank of America tells me at the management level and what's happening on the front line," Masto said.
Masto said separate lawsuits show the bank's problems with consumers are widespread.
"The only thing that I'm asking is that (Bank of America) give them a reasonable response in a timely manner," she said. "It is, in my perspective, a callous disregard for what we are telling them."
Nevada and Arizona are among the states hardest hit by homeowners who have defaulted on mortgages in the last few years as adjustable payments soared, people lost their jobs, and home values collapsed. One out of every 99 households received a foreclosure notice last month, according to RealtyTrac Inc., and Arizona's rate wasn't far behind.
The Arizona attorney general's office was deluged with consumer complaints and launched an investigation more than a year ago, Goddard said. Settlement talks with Bank of America began in April but ultimately collapsed Thursday.
Goddard, a Democrat, is leaving office in January after an unsuccessful run for governor and will be replaced by Republican Tom Horne. A Bank of America spokesman criticized Goddard for filing the lawsuit in his last days in office while multistate negotiations on foreclosures were under way.
Dan Frahm, a senior vice president for the Charlotte, N.C.-based bank, said it shares the attorneys general's goal of helping homeowners. "We are disappointed that the suits were filed at this time, however, because we and other major servicers are currently engaged in multistate discussions led by Attorney General (Tom) Miller in Iowa to try to address foreclosure related issues more comprehensively," Frahm said in an e-mailed statement.
"Bank of America has been a cooperative partner with the attorneys general, has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers, and we are already under way with further improvements to our processes and programs for Bank of America customers," Frahm said.
Bank of America has completed nearly 750,000 loan modifications and has foreclosed on fewer than half that many, Frahm said. Many of the foreclosures did not qualify for loan modifications.
The Arizona lawsuit, filed in Maricopa County Superior Court, alleges that the bank has repeatedly violated the consent agreement that was expected to lead to loan modifications for thousands of Countrywide customers in Arizona. But Bank of America, which had acquired Countrywide in July 2008, failed to make timely decisions on modification requests and went ahead with foreclosures, Goddard said.
"The quick summary is they violated our court-imposed agreement as to Countrywide borrowers, and then as to many of Bank of America's borrowers, they committed fraud," Goddard said. "They told them things that they did not do."
The lawsuit asks for contempt citations against the bank for violating the consent agreement. It also seeks restitution for consumers, civil penalties, legal fees, plus $25,000 for each consent agreement violation and up to $10,000 for each violation of the Arizona Consumer Fraud Act.
Nevada's complaint accuses the bank of operating its loan modification program in violation of the Nevada Deceptive Trade Practices Act. It seeks civil penalties and restitution along with other fees.
Bank of America shares rose 5 cents to $12.57 Friday.
___
Associated Press writer Oskar Garcia in Las Vegas contributed to this report.
Spanish PM insists on raising retirement age to 67
MADRID – Spain's prime minister said Friday the government is set on raising the retirement age to 67 from 65 in the new year, despite strong resistance from some opposition parties and labor unions who are threatening another general strike.
Spain's central bank and other financial institutions have urged Zapatero to make changes in the pension system as part of reforms crucial to helping the country slash its deficit to prepare for a coming wave of retirements and emerge from the economic crisis.
His comments came as the central bank issued more negative news about the shaky banking sector, a key factor in Europe's effort to keep its government debt crisis from spreading. The bad loans ratio for the country's banks and financial institutions had risen to its highest level in 14 years, it said.
"The government maintains its proposal that the retirement age should be 67 years," Zapatero told reporters in Brussels following a European Union meeting.
"We can do it now progressively without any traumatic measures" that might be necessary 15 years down the line, he promised.
The government is intent on seeking consensus with other parties but the reform will be approved either way by Jan. 28, Zapatero said.
Spain's main parties have already agreed to extend the number of working years on which pensions are calculated. It is currently based on wages from the last 15 years. The parties have yet to set a new figure but it is expected to be either 20 years or 25 years. This means workers will have to contribute taxes for longer before being able to draw a pension.
But several parties are opposed and reject the reform, and union leaders have said it could spark another general strike similar to one held Sept. 29 that brought tens of thousands of people onto the streets, canceled some flights and halted produce shipments.
That national stoppage to protest government austerity measures and labor market reforms, the first in Spain in nearly a decade, was only partially successful. Labor Minister Celestino Corbacho said the strike had an uneven following and "a moderate effect."
Also Friday, Spain's central bank said the bad loans ratio for the country's banks and financial institutions rose to 5.66 percent in October, its highest level in 14 years. It said that of total loans of euro1.83 trillion ($2.42 trillion), bad debts accounted for euro103.7 billion in October, up from euro101.3 billion in September.
Greece and Ireland have already needed bailouts, with heavy banking losses helping push Ireland into needing a rescue. Spain is trying to avoid the same fate.
Spanish banks, particularly the savings banks, have been saddled with foreclosed property since the collapse of the key real estate sector. Many of these entities are being forced to merge under a consolidation process that Zapatero said would be finished by Dec. 24.
Moody's ratings agency this week said it was maintaining its negative outlook for Spanish banks and would review the country's debt rating for a possible downgrade.
Spain's central bank also reported that public debt was now the equivalent of 57.7 percent of gross domestic product (GDP), its highest proportion in a decade and just below the 60 percent EU limit.
Spain's major task is to slash a swollen deficit from 11.2 percent of GDP in 2009 to within the EU limit of 3 percent by 2013.
The country's third-quarter economic growth was flat after two quarters of weak growth, although it was up 0.2 percent year-on-year — the first such rise in seven quarters.
_____
Associated Press writer Harold Heckle in Madrid contributed to this report.
Two states sue Bank of America on mortgage servicing
SAN FRANCISCO (Reuters) – The states of Arizona and Nevada sued Bank of America Corp on Friday, accusing the largest U.S. bank of routinely misleading consumers about home loan modifications.
The two lawsuits, filed by each state attorney general in Arizona and Nevada state courts, seek potentially massive fines against the bank and compensation for customers.
Arizona accuses Bank of America of violating a 2009 consent judgment in which it committed to widespread home loan modifications. The bank failed to follow through, leaving borrowers in limbo, according to the suit.
The bank is also accused of violating the state's consumer fraud act.
Arizona is seeking $25,000 per violation of the consent decree, and up to $10,000 for consumer fraud breaches. Both states also ask that Bank of America pay restitution to customers.
The lawsuits could complicate Bank of America's efforts to quickly resolve inquiries into its mortgage foreclosure practices. The probes include a 50-state investigation that is also looking at JPMorgan Chase & Co, Ally Financial and other major mortgage servicers.
Last month Bank of America Chief Executive Brian Moynihan said a quick settlement of the 50-state probe would be the best solution for all involved.
Arizona Attorney General Terry Goddard, who is on the executive committee of the 50-state investigation, recently lost a run for governor in Arizona.
Nevada Attorney General Catherine Cortez Masto won reelection this past November.
"This was an opportunity for the two states which have felt the biggest impact of the foreclosure crisis to stand up and say, 'This has got to stop,'" Goddard said in a phone interview.
Bank of America Home Loans spokesman Dan Frahm said the company is disappointed Goddard filed the suit during his last days as attorney general, and that the bank would continue to work with the multi-state process.
"That is the approach that will best broaden programs for homeowners who need assistance," Frahm said in an email.
Iowa Attorney General Tom Miller, who heads the multi-state probe, said the legal activity "neither changes, nor dilutes, the strong and resolute multi-state effort to address serious problems that have been identified with a number of mortgage servicers."
Mortgage servicers have come under fire in recent months for abuses of the foreclosure process. In another foreclosure probe, the U.S. Securities and Exchange Commission sent out a fresh round of subpoenas last week to big banks including Bank of America.
Bank of America temporarily halted home repossessions in October as it reviewed its internal processes.
James Tierney, director of the National State Attorneys General Program at Columbia Law School, said it would be difficult for incoming Arizona AG Tom Horne to simply withdraw the lawsuit when he takes office.
But if Bank of America cuts a deal with the multi-state investigation, Horne could decide to endorse it and argue against continued litigation.
"That's perfectly fine," Tierney said. "That's what AGs do."
According to Goddard, Bank of America representatives contacted Horne in a bid to head off a lawsuit. Goddard called the outreach "highly inappropriate," and said Horne took the same position.
Frahm said he was not aware of those interactions, and Horne did not respond to requests for comment.
In 2009 Bank of America agreed to a consent judgment over home loans made by its Countrywide unit. The bank committed to loan modifications which it valued at roughly $8.4 billion nationally, the Arizona lawsuit says.
The company violated the judgment by failing to make decisions on loan modifications, according to the suit.
Bank of America also misled consumers by telling them that their modifications were declined because investors in mortgage-backed securities had not approved them, even though in some cases no such permission was necessary, the lawsuit says.
Bank of America shares closed up 5 cents at $12.57 on the New York Stock Exchange.
The case in Superior Court of the State of Arizona, County of Maricopa is State of Arizona v. Countrywide Financial Corporation et al, 2010-033580.
The case in District Court for Clark County, Nevada is State of Nevada v. Bank of America Corp. et al, 10-631557.
(Reporting by Dan Levine; Editing by Steve Orlofsky, John Wallace and Richard Chang)
Wall Street hovers at highs; profit-taking eyed
NEW YORK (Reuters) – The S&P clung to a two-year high on Friday as investors predicted a pause as volumes are expected to dry up in the days ahead, and after a 5 percent gain already so far in December.
The last two weeks of the year are traditionally quiet, and therefore market moves are less meaningful to the overall trend, which took the S&P 500 to a two-year high early this week.
Some indicators imply investors have grown complacent. The CBOE Volatility index (.VIX), a measure of expected volatility on Wall Street, fell to its lowest level since April, dropping 7.4 percent to 16.11.
"The bullish camp is -- I'm sure -- very pleased at the day-after-day, slow steady increase they are engineering," said Larry McMillan, president of options research firm McMillan Analysis in a research note. "But below the surface, tensions are building, and they will likely explode to the downside in a sharp, but perhaps only short-lived, correction."
Some indicators are pointing to an overbought market such as high levels of bullishness, often seen as a contrarian indicator, as well as a high call to put ratio, indicating investors may be complacent about hedging a fall in prices.
Some of the year's biggest winners have endured selling of late and were down again Friday. Apple Inc (AAPL.O) fell 0.2 percent to $320.61, while Salesforce (CRM.N) fell 0.7 percent to $136.50.
This was offset on the Nasdaq by gains in both Oracle Corp (ORCL.O) and Research in Motion (RIMM.O) (RIM.TO) a day after they posted strong quarterly results. Oracle gained 3.9 percent to $31.46 while U.S.-listed shares of RIM were up 1.6 percent to $60.20.
The Dow Jones industrial average (.DJI) dropped 7.34 points, or 0.06 percent, to 11,491.91. The Standard & Poor's 500 Index (.SPX) gained 1.03 points, or 0.08 percent, to 1,243.90. The Nasdaq Composite Index (.IXIC) rose 5.66 points, or 0.21 percent, to 2,642.97.
While traders and investors were already nervous after the S&P 500 rallied over 5 percent so far this month, old concerns over European debt also resurfaced, with Moody's downgrade of Ireland's ratings hitting European bank shares in U.S. trade.
U.S.-listed shares of Banco Santander (STD.N) fell 2 percent to $10.52 while Royal Bank of Scotland (RBS.N) dropped 5.5 percent to $11.90. However, the impact on U.S. shares not directly linked to the Irish situation were limited.
"There are more shoes to drop in Europe, but precedent has been set to help these countries. That's why equity markets aren't reacting significantly negatively to the news," said Michael Gault, a senior portfolio strategist at the New York-based Weiser Capital Markets, which has about $150 million in assets under management.
"Unless that support won't be there, I think investors will in general be able to shake off the news and find positives, like the tech results," he added.
Regional banks traded higher after Canada's Bank of Montreal (BMO.TO) agreed to buy Marshall & Ilsley Corp (MI.N) for $4.1 billion, sending the stock up 18 percent to $6.85.
Peer regional bank KeyCorp (KEY.N) climbed 4.1 percent to $8.42 while Regions Financial (RF.N) added 1.8 percent to $6.24.
The KBW Regional Banks index (.KRX) rose 0.3 percent and has risen more than 11 percent this year, with most of that coming in December alone despite continued debt woes from European banks.
Mergers and acquisitions are up for the first full year since 2007 and may mark the start of a new, multiyear M&A cycle, according to Thomson Reuters data.
About 8.9 billion shares were traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, over the year's daily average of 8.5 billion.
Volume was increased by traders adjusting or exercising derivative positions on four different types of expiring equity futures and options contracts, also know as "quadruple witching."
(Reporting by Edward Krudy; Additional reporting by Doris Frankel; Editing by Chizu Nomiyama)
IMF unblocks 2.5-billion-euro loan for Greece
WASHINGTON (AFP) – The International Monetary Fund on Friday agreed to release 2.5 billion euros to Greece, as the country battles high borrowing costs and a rumbling debt crisis.
The disbursement, worth roughly 3.3 billion dollars, brings total IMF emergency loans to Greece to 10.58 billion euros, or 13.98 billion dollars.
After reviewing Greece's moves to slash its deficit, including tough and unpopular budget cuts, the IMF said reforms were working.
"The Greek authorities are to be commended for their determined implementation of difficult and ambitious macroeconomic policies and structural reforms," senior IMF official Murilo Portugal said.
"Inflation is falling and competitiveness improving," and that the "overall fiscal adjustment to date has been impressive," he said.
But it has not been without pain.
The country has been rocked by strikes and demonstrations that have paralyzed transport networks and occasionally turned violent.
Greece is caught in a debt crisis and a snowballing recession that followed a scare on the accuracy of government statistics and a resulting spike in its borrowing costs earlier this year.
The loan is part of a European Union and the International Monetary Fund 110-billion-euro loan approved in May that rescued the nation from bankruptcy.
BlackBerry Torch lights up RIM results
TORONTO (Reuters) – Research In Motion's Torch, a touchscreen challenger to Apple's iPhone, lifted the BlackBerry maker's quarterly profit above analyst expectations on Thursday and the company forecast strong results from the current holiday season quarter.
RIM said net profit jumped 45 percent in its third quarter. Its shares rose as much as 3 percent in after-market trade.
The Torch, which combines RIM's trademark mini keyboard with the glitzier touchscreen, shipped to dozens of carriers in the quarter after an August launch with AT&T in the United States.
"The results look pretty good. For the current quarter they definitely benefited from some new products... The guidance also looks quite strong," said Shaw Wu, of Kaufman Bros in San Francisco.
The Canadian company said it expects to earn between $1.74 and $1.80 per share in the December to February quarter, sharply higher than analysts had been expecting.
RIM said it shipped 14.2 million BlackBerry smartphones in the latest quarter, a figure that edged past average analyst expectations. It added a net 5.1 million new subscribers, matching the average forecast for this key metric.
This is the last quarter RIM will routinely publish its net subscriber additions, a measure with no direct comparison for RIM's peers, which do not operate their own wireless network.
"There is some concern that (guidance) could be too optimistic perhaps because of the ongoing pressure, particularly from Android, in international markets," said Wu.
Many analysts have been fretting over RIM's longer-term prospects in a booming market that includes relative newcomers Apple and Google, whose Android software is used by device makers including Motorola, Taiwan's HTC Corp and South Korea's Samsung.
"The concerns for this name don't go away, they don't go away with this quarter. What happens in the U.S. marketplace when the iPhone hits Verizon? (What happens) when the cheaper Android handsets start to crack into the international base," said Colin Gillis of BGC Partners
RIM made its name with secure, reliable communications for the world's business and government elites before branching out into a crowded consumer market.
It reported net profit of $911.1 million, or $1.74 per share, on revenue of $5.49 billion in the most recent quarter. That handily beat the average of analysts expected earnings of $1.65 per share and revenue of $5.4 billion, according to Thomson Reuters I/B/E/S.
RIM's share price has rallied since it launched the Torch with a revamped browser in August and showed off its new PlayBook tablet in late September.
RIM is working hard to get the 7-inch PlayBook tablet -- its challenger to Apple's iPad -- into the market by early in 2011. It says the device will combine the security of the BlackBerry with iPad's user-friendly features.
Co-CEO Jim Balsillie told a conference call that the PlayBook is likely to ship in the United States in March, but RIM does not plan to book revenues from the device in its fiscal fourth quarter, which ends on February 26.
Analysts have been expecting between 1.3 million and 8.4 million PlayBook sales for RIM's fiscal 2012.
The tablet's launch will likely coincide with updated versions of the iPad and with Samsung's Android-powered Galaxy Tab.
(Additional reporting by Euan Rocha; editing by Janet Guttsman and Frank McGurty)
Irish debt downgraded as EU eschews crisis
DUBLIN/BRUSSELS (Reuters) – Ratings agency Moody's gave an emphatic thumbs-down on Friday to Europe's efforts to resolve a debt crisis, slashing Ireland's credit rating as EU leaders took no new action to prevent market turmoil spreading.
Moody's cut Ireland's rating by a stunning five notches during a European Union summit meant to restore confidence in the euro zone by creating a permanent financial safety net from 2013 and vowing to do whatever it takes to protect the euro.
Moody's cut Ireland's rating to Baa1, three notches above junk, with a negative outlook from Aa2 and warned further downgrades could follow if Dublin was unable to stabilize its debt situation, caused by a banking crash after a decade-long property bubble burst.
"While a downgrade had been anticipated, the severity of the downgrade is surprising," Dublin-based Glas Securities said.
The blow to investor confidence came as the 27 leaders failed to agree any specific measure to stop contagion spreading from Greece and Ireland, which have received EU/IMF bailouts, to other high-deficit countries such as Portugal and Spain.
"The recent events have demonstrated that financial distress in one member state can rapidly threaten macrofinancial stability of the EU as a whole through various contagion channels," a final summit statement said.
The leaders spurned calls for immediate practical steps such as increasing the size of a temporary bailout fund or allowing it to be used more flexibly to buy bonds or open credit lines before troubled countries are shut out of the credit markets.
Barclay's Capital analyst economist Fabio Fois called it "another missed opportunity to calm the markets."
German Chancellor Angela Merkel, who led opposition to those options, sought to reassure citizens and markets, declaring: "We are doing everything to make the euro secure."
Merkel said the existing EU rescue fund was sufficient, and she was impressed by reforms announced by Spain and Portugal.
On the sidelines of the summit, non-euro member Britain won support from France, Germany and other countries for a drive to freeze the common EU budget in real terms over the next decade to take account of national spending cuts.
Prime Minister David Cameron said the EU's big three would issue a joint letter on Saturday calling for a lean budget in the seven-year spending plan after 2013, rising only in line with inflation "to stop this budget getting out of control."
"It is unacceptable to spend more and more and more through the EU budget," he said, playing to Eurosceptics in his Conservative Party who have been disappointed that he has not done more to confront Brussels.
Poland, set to become the biggest beneficiary of the 126.5 billion euro annual budget, voiced anger at the move.
LAST RESORT
The European Central Bank took action to bolster its firepower to fight the debt crisis by announcing on Thursday it would almost double its subscribed capital.
But analysts said this was chiefly to cover the risk of writedowns on the 72 billion euros ($95.83 billion) in euro zone sovereign bonds it has bought so far, not to step up such purchases to support governments in trouble.
At Germany's insistence, the 27 leaders said the long-term crisis-resolution mechanism, to be added to the EU's governing treaty, would only be activated "if indispensable to safeguard the stability of the euro as a whole," making it a last resort.
The premium investors charge to hold Greek, Irish, Portuguese or Spanish bonds rather than benchmark 10-year German Bunds crept up in thin pre-Christmas trading, and the cost of insuring their debt against default also rose.
"European leaders failed to address the issue of debt sustainability and possible insolvency problems prior to 2013," said Carsten Brzeski, senior economist at ING Belgium.
"Debt restructuring, a common euro zone bond or an increase of the EFSF? None of these issues have been addressed. But they have to be," he said.
Italian Prime Minister Silvio Berlusconi told reporters the leaders had discussed a proposal by two veteran finance ministers for common euro zone bonds but it would take time to convince all countries and Merkel was strongly opposed to it.
"I'd by them right away instead of the bonds of a single country -- it's Europe that's providing the guarantee," he said. "Merkel is very opposed, but many others are interested, not least because Europe need only provide the guarantees."
The record seventh summit this year approved a two-sentence amendment to the EU treaty at Germany's behest to permit the creation of a European Stability Mechanism to handle financial crises from June 2013.
The ESM, to replace the temporary fund created in May, will be empowered to grant loans on strict conditions to member states in distress, with private sector bondholders sharing the cost of any writedowns after 2013 on a case-by-case basis.
The aim is for all 27 member states to ratify the change by end 2012. European Council President Herman Van Rompuy, chairing the summit, said no country would need to put it to a referendum, removing one potential risk. Decisions will be taken by unanimity, ensuring that EU paymaster Germany retains a veto.
Many analysts expect Greece and Ireland to have to default before then, but ECB executive board member Lorenzo Bini Smaghi dismissed such talk in a Financial Times article, saying the cure could do more harm than the disease.
There has been a relative lull in financial market pressure in the past two weeks as investors and traders close their books ahead of the end of the year, but analysts expect turbulence to resume in 2011 as Spain and Portugal face refinancing crunches and the rating agencies clearly see no diminution of risk.
