Even as regulators begin to bear down on too-big-to-fail institutions, JPMorgan Chase (JPM 0.29%) and Wells Fargo (WFC +1.76%), two of the largest U.S. banks, flexed their muscles in their earnings reports. Both beat the consensus estimate by a significant margin: $1.60 versus $1.44 for JPMorgan and $0.98 versus $0.93 for Wells Fargo. For their efforts, both shares are up sharply this morning, and investors can expect the banking sector to outperform today. The news could also help the indexes set another record high today: Due to the national footprint of both these institutions, strong earnings data provides additional evidence that the economy continues to improve.
Despite this, the S&P 500 (^GSPC +0.78%) and the narrower, price-weighted Dow Jones Industrial Average (^DJI +0.49%) are essentially unchanged this morning. As of 10:05 a.m. EDT, the S&P is down about a point, while the Dow is up a meager 10 points.
At Microsoft, Ballmer muddies the waters
Yesterday, Steve Ballmer, CEO of software giant Microsoft (MSFT +0.34%), announced a sweeping reorganization of the company's businesses that is meant to break down the barriers between existing product divisions in order to adapt to the shift toward mobile and "cloud" (i.e., Web-based) computing.
It's worth a try, I suppose. The company can hardly become more clumsy when it comes to non-PC-based platforms. I love Office products, for example -- I use them every day -- but Microsoft's Web-based Office platform is unwieldy and confusing. I initially wanted to use the cloud version Microsoft Word, but I ultimately gave up on it out of frustration.
I don't have a problem with a chief executive reversing strategic direction, particularly in the technology industry, which moves at warp speed. And there is a certain logic to the new organizational structure. My concern is rather more with Steve Ballmer himself: I don't think he has provided much evidence that he is the right person to continue leading Microsoft through another restructuring, if the company is to have any chance of joining the pack of tech front-runners.
Furthermore, the nature of the reorganization compounds an existing problem at Microsoft: It appears to strip divisional managers of their autonomy and to centralize power at the top level -- that is, with Ballmer. That doesn't exactly send a healthy message for a company that doesn't have a clearly articulated succession plan.
