Moody’s shares slide on gloomy 2010 outlook

Moody’s shares tumbled Thursday on a gloomy outlook for 2010, though the ratings agency beat most performance expectations for the fourth quarter.

Moody’s generates most of its business by rating debt and bond offerings by companies and municipalities. Investment markets are recovering slowly after debt markets essentially shut down when Lehman Brothers collapsed.

Moody’s said it expects 2010 earnings to range between $1.75 per share and $1.85 per share, short of a consensus forecast of $1.87 per share.

The New York company earned $101.9 million, or 43 cents per share, during the final three months of 2009, compared with $88.7 million, or 37 cents per share, during the same quarter in 2008.

Moody’s revenue jumped by 20 percent to $485.8 million from $403.7 million. Most of the increase came from growth at Moody’s Investors Service, the credit rating division of the company. [Read the full article]

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Moody’s said it expects 2010 earnings to range between $1.75 per share and $1.85 per share, a 4 to 9 percent increase from the $1.69 per share it earned in 2009. Analysts polled by Thomson Reuters forecast Moody’s will earn $1.87 per share in 2010.

Shares of Moody’s fell $1.44, or 5.1 percent, to $26.66 in morning trading following the disappointing outlook.

The company also announced Thursday that its fourth-quarter profit rose 15 percent and topped analysts’ expectations.

The boost in profit is due to an expected high-single-digit increase in revenue for the year. Moody’s generated $1.8 billion in revenue in 2009.

A 5 percent jump would equate to $1.89 billion in revenue for 2010, while a 10 percent increase would mean revenue of about $1.98 billion for the year.

The bulk of the revenue increase would come from the company’s credit ratings unit, Moody’s Investors Service. [Read the full article]

(Berkshire Hathaway article updated with news of Berkshire’s loss of its AAA credit rating.) Berkshire revealed that it has cut approximately 3,000 jobs since December, and on Thursday, lost its last-remaining AAA rating, a point of pride for Warren Buffett. In an SEC filing on Thursday related to the issuance of $8 billion in senior notes to help finance the Berkshire Hathaway acquisition of Burlington Northern(BNI Quote), Berkshire noted that it and its subsidiaries employ about 222,000 people. The 222,000 employee level is 1.3% less than the figure that Berkshire Hathaway reported six weeks ago , and almost 10% below the 246,083 disclosed in the company’s 2008 annual report, according to Bloomberg. Many of the Berkshire operating subsidiaries, such as housing company Clayton Homes and carpet maker Shaw Industries, are intricately linked in performance to a cyclical rebound in housing and a sustained recovery in the U.S. economy. [Read the full article]

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