What Is Important in the Financial World (4/1/2013)

AT&T Inc. (NYSE: T) is yet another company that has given up on opportunities for innovation and lost its appetite for large M&A transactions. It will use the power of its balance sheet to buy back more shares — a means often used to improve earnings per share, among other things. The company announced:

The board of directors of AT&T Inc. today declared a quarterly dividend of $0.45 a share on the company’s common shares. The dividend is payable on May 1, 2013, to stockholders of record at the close of business on April 10, 2013.

At the same time, the board authorized the repurchase of up to 300 million shares, representing approximately 5.5 percent of AT&T common shares outstanding, with no expiration date. This authorization is in addition to two other 300 million share repurchase authorizations approved by the board of directors in December 2010 and July 2012. The company completed repurchases under the December 2010 share authorization last year.

Tesla Earnings Outlook

Electric luxury car company Tesla Motors Inc. (NASDAQ: TSLA) said its sales were well ahead of schedule, and it revised earnings estimates higher. There has been a great deal of skepticism about whether any significant market for these cars exists. Electric cars in general have sold poorly. Tesla cars are expensive, and there are worries that their batteries do not hold enough of a charge for more than modest length trips. The company announced:

Tesla Motors announced today that sales of its Model S vehicle exceeded the target provided in the mid February shareholder letter. As customers who note their Model S serial number this weekend will realize, vehicle deliveries (sales) exceeded 4,750 units vs. the 4,500 unit prior outlook. As a result, Tesla is amending its Q1 guidance to full profitability, both GAAP and non-GAAP.

“I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution,” said Elon Musk, Tesla Motors co-founder and CEO. “I would also like to thank our customers for their passionate support of the company and the car. Without them, we would not be here.”

It is hard to make the case that 4,750 sales is at all impressive.

China’s Environmental Problems

Reuters points out that there are probably no short-term solutions to the huge amount of water and air pollution in China, and that the trouble will get even worse. While the central government may want to improve the quality of the air and water, large businesses do not, if they have to curtail production. The tension pits the desire for improved quality of life against China’s chance to keep GDP improvement above 8% in the next several years. The news agency reports:

When Zijin Mining Group threatened to move its headquarters some 270 kms from its home county of Shanghang to Xiamen on China’s southeast coast, a local Communist Party boss rushed to confront the company’s chairman Chen Jinghe.

“If you want to move, you’ll have to move the Zijin Mountain to Xiamen as well,” the official told Chen, referring to a vast local mine that has helped transform the firm into China’s top gold producer and second-biggest copper miner.

The exchange, recited with some pride by local residents, reflects the anxieties felt by regional governments as they consider the prospect of losing their biggest cash-cows.

It also highlights the challenges facing Beijing as it tries to take on entrenched local bureaucracies and the powerful state-owned polluters they sponsor and protect, with the central government desperate to address decades of chronic environmental damage and force growth-addicted provinces to raise standards.