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Jax Daily Record Monday, Mar. 17, 201412:00 PM EST

IBM bringing annual meeting to Jacksonville

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by: Mark Basch Contributing Writer

After a year where it was the only stock among the Dow Jones industrials to lose ground, International Business Machines Corp. CEO Virginia Rometty may face some tough questions from shareholders at the company’s annual meeting next month — and she’ll be doing it in Jacksonville.

Armonk, N.Y.-based IBM will hold its annual meeting April 29 at the Prime Osborn Convention Center, according to its proxy statement filed last week.

IBM spokesman Doug Shelton said by email that the company moves its annual meeting around to allow access to more shareholders across the country. The company has been pursuing a Southern strategy recently: Last year’s meeting was in Huntsville, Ala., and the previous year it was in Charleston, S.C.

It’s not uncommon for big companies to move their annual meetings around, such as Jacksonville-based CSX Corp.

CSX, which held its 2013 meeting in Birmingham, Ala., last met in Jacksonville in 2004. The company has not yet announced the site of this year’s meeting.

For IBM, there are likely to be some disgruntled shareholders who will find their way to Jacksonville.

IBM’s stock fell 2.1 percent last year, while the Dow Jones industrial average was rising 26 percent. It was the only stock among the 30 in the index to decline in 2013.

Rometty, who was promoted to chairman and CEO two years ago after more than 30 years with IBM, acknowledged in her annual letter to shareholders last week that the company’s 2013 performance did not meet its expectations.

“Our operating pre-tax income was down 8 percent. Our revenue in 2013, at $99.8 billion, was down 5 percent as reported and 2 percent at constant currency,” she said.

Rometty expressed confidence in the letter that IBM is taking the necessary steps to rebound.

“No company in our industry is positioned as strongly as 103-year-old IBM for the world now taking shape. We are confident in our vision, our strategy and our prospects,” she said.

Fortegra reports lower earnings

Fortegra Financial Corp. last week reported lower-than-expected fourth-quarter earnings but said it took steps to position itself for future growth.

The Jacksonville-based insurance services company reported adjusted earnings of 18 cents a share, 2 cents lower than the fourth quarter of 2012 and 6 cents lower than the average forecast of analysts surveyed by Thomson Financial.

“We view 2013 as a pivotal year in our company’s history and one that will be viewed as a critical turning point towards our future success,” CEO Richard Kahlbaugh said in Fortegra’s conference call with analysts last week.

During the fourth quarter, Fortegra completed the sale of Bliss & Glennon, an excess and surplus lines wholesale insurance broker and managing general agency, and eReinsure, an online platform for managing the placement of facultative reinsurance. Kahlbaugh said that was part of a plan to focus on areas that offer more opportunities for growth.

“Our goal is to become an industry leader in niche insurance products, service contracts, extended warranty, credit and other similar products. Admittedly that is no small goal. However, we believe that the objective is realistic and we have a well thought-out strategy to achieve it,” he said.

“We see many attractive and underserved markets where we have the ability to market and make a real impact. The key to our success will be how well we identify new channels to introduce tailored products addressing underserved and unmet consumer need.”

After going public in December 2011 at $11 a share, Fortegra has struggled for the last three years to get back to that level. The stock has been trading recently below $7.50.

Sandler O’Neill & Partners analyst Paul Newsome doesn’t expect the stock to rise much in the near future, keeping a “hold” rating and an $8 price target for Fortegra.

“We think that given that volatility in its earnings and the issues it has had on expense control, it warrants the continuation of our hold rating,” Newsome said in a research note last week.

Stein Mart beats forecasts

Stein Mart Inc. last week reported earnings of 29 cents a share for the fourth quarter ended Feb. 1, a penny higher than last year and 3 cents higher than the average forecast of analysts polled by Thomson.

The Jacksonville-based fashion retailer had previously reported that comparable-store sales (sales at stores open for more than one year) rose 3.7 percent in fiscal 2013 but comp store sales in the first month of fiscal 2014 fell 2.1 percent, as harsh winter weather kept customers away.

During the company’s conference call last week, Chairman and CEO Jay Stein remained confident about sales growth once the weather improves.

“When it’s warm, our business is up significantly. Our first quarter will certainly be impacted by a slower start and will not be typical of what we expect for the full year. Overall, however, we remain very, very encouraged by what we’re seeing,” Stein said.

Avondale Partners analyst Mark Montagna said the weather will impact first-quarter earnings, but he expects Stein Mart to extend its streak of seven straight quarters with comp store sales gains.

“We expect pent-up demand for spring product and a 21-day later (than last year) Easter will provide a strong back half to the first quarter,” Montagna said in a research note.

Montagna has a “market outperform” rating on Stein Mart’s stock.

“The balance sheet remains very healthy, which enables the increased organic growth, and should allow for continued shareholder repayment programs, such as its recently renewed quarterly dividend,” he said.

In addition to its quarterly 5-cent-a-share dividend, Montagna thinks the company will have enough excess cash to consider a special $1-a-share dividend later this year.

Body Central report delayed

Jacksonville’s other fashion retailer, Body Central Corp., said in a Securities and Exchange Commission filing last week that its year-end report will be delayed.

The filing said “additional time is required to finalize year-end adjustments and complete the year-end audit due to delays connected with securing the new $17 million senior credit facility which closed on February 6.”

Body Central said it expects to report a pre-tax loss of $13.7 million to $16.7 million for the fourth quarter. It expects to file its annual report no later than March 28.

International Baler increases earnings

International Baler Corp. last week reported earnings rose 55 percent in the first quarter ended Jan. 31 to $180,513, or 3 cents a share. Sales rose 1.3 percent to $3.95 million.

The Jacksonville-based company, which produces balers and other recycling equipment, said in an SEC filing that earnings rose because of higher parts sales, which increased gross margins.

CSX confirms weather impact

CSX last week confirmed what some analysts have already been saying: the rough winter is having an impact on its first-quarter earnings.

At an investor conference last week, Chief Financial Officer Fredrik Eliasson said “the severe weather has challenged CSX operations and volume, with the impact on first quarter earnings now expected to approach 10 cents per share,” according to a news release from the company.

The average forecast of analysts for the quarter had been 43 cents a share, according to Thomson.

“We still expect full-year earnings growth in 2014, though at a more modest rate than previously anticipated, with the underlying strength in our merchandise and intermodal markets combined with visibility to several million new tons of domestic coal helping to offset the first quarter impact,” Eliasson said.

However, the company did say it may have trouble meeting its goal of compound annual earnings growth of 10 percent to 15 percent in 2014 and 2015.

Florida East Coast earnings rise

Florida East Coast Holdings Corp. reported in an SEC filing last week that its 2013 revenue rose 13 percent to $279.1 million and operating earnings rose 36 percent to $72.2 million.

The company operates the 351-mile Florida East Coast Railway from Jacksonville to Miami. It is owned by private equity funds managed by affiliates of Fortress Investment Group.

Buffett acquiring Graham TV station

Warren Buffett is gaining control of a television station owned by Graham Holdings Co., but not Jacksonville’s WJXT TV-4.

Buffett’s Berkshire Hathaway Inc. and Graham Holdings announced a deal last week in which Berkshire will acquire Miami station WPLG, one of six television stations owned by Graham Holdings.

Berkshire last month said it was discussing a deal to exchange its 1.7 million shares of Graham Holdings stock in exchange for some of Graham Holdings business assets, raising speculation that Buffett might be interested in the television stations. As it turns out, he is only acquiring the Miami station.

In addition to the Miami station, Berkshire will acquire some of its own shares currently owned by Graham Holdings and cash in exchange for 1.6 million of its Graham Holdings shares.

Web.com reportedly looking at acquisition

Jacksonville-based Web.com Group Inc. could be looking at another acquisition, according to a report last week by Reuters news service.

Reuters, citing unidentified sources, said Vocus Inc., which provides cloud marketing software, has put itself up for sale and Web.com is one of the interested parties.

Maryland-based Vocus, a publicly traded company, reported revenue of $187 million last year.

The story said bids for Vocus are due the first week of April.

Rayonier brings in investment executive

As Rayonier Inc. moves forward with plans to spin off its performance fibers business as a separate public company, it hired an investment banker to help grow that business.

Jackosnville-based Rayonier said last week it is hiring Frank Ruperto as senior vice president of corporate development and strategic planning. After the spinoff, he will be in charge of strategic growth and long-range planning initiatives for the yet unnamed performance fibers company.

The timberland and real estate businesses will retain the Rayonier name after the spinoff.

Ruperto has nearly 25 years of investment banking experience, most recently as managing director, mergers and acquisitions, for Bank of America Merrill Lynch.

Ranbaxy stock down after recall

Ranbaxy Laboratories Ltd.’s stock fell last week after the company had to recall its generic cholesterol-lowering pills from the U.S. market for the second time in 15 months.

According to a report from Bloomberg News, Ranbaxy had to withdraw 64,626 bottles of its generic version of Pfizer Inc.’s Lipitor drug after a complaint from a pharmacist.

India-based Ranbaxy’s U.S. sales and marketing division, Ranbaxy Pharmaceuticals Inc., is headquartered in Jacksonville.

The company’s stock trades on the Mumbai exchange, where it fell as much as 3.9 percent last Monday, according to Bloomberg.

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