Archive for July 21st, 2009

SAN FRANCISCO (Reuters) — Advanced Micro Devices Inc. posted a wider than expected loss and disappointing margins Tuesday, sending its shares spiraling more than 12% lower.The company said second quarter gross margins — which it called “disappointing” — slid to 37% from 43% in the previous quarter. And it forecast that chip revenues would rise just marginally in the current quarter.AMD’s (AMD, Fortune 500) tepid showing stood in stark contrast to much-larger rival Intel Corp., (INTC, Fortune 500) which surprised markets this month and lifted industry sentiment by reporting sharply better than expected earnings.”While we increased cash, exceeded our revenue plan and reduced operating expenses in the second quarter, gross margin was disappointing,” CEO Dirk Meyer said in a statement.Investors had hoped rosy forecasts from Intel, and to a lesser degree IBM (IBM, Fortune 500), signaled the tech industry slump might have hit bottom.Also Tuesday, Apple Inc. (AAPL, Fortune 500) blew past quarterly expectations.But AMD, which has struggled to safeguard its market share against Intel, reported a net loss in the second quarter ended June 27 of 335 million, or 49 cents a share.Excluding certain items, AMD posted a 62 cent loss, compared with the 53 cent loss forecast by analysts, according to Reuters Estimates.Revenue slid 13% from a year ago to 1.18 billion from 1.36 billion, a tad above expectations of 1.13 billion.AMD, which has effectively split itself into a chip designer and a semiconductor foundry, said revenues from the chip arm would be “up slightly” in the fiscal third quarter.In contrast, Intel, saying consumer PC demand was improving, projected current-quarter revenue far above Wall Street forecasts.The shares of Sunnyvale, Calif.-based AMD fell more than 12% in after-hours trading after closing down 2.16% at 4.08 on the New York Stock Exchange.

LOS ANGELES (Reuters) — Starbucks Corp. posted much better-than-expected quarterly earnings Tuesday as the coffee chain began reaping rewards from slashing costs and closing stores, sending its shares up 9.7%.Net income for its fiscal third-quarter ended June 28 was 151.5 million, or 20 cents per share. A year earlier, Starbucks (SBUX, Fortune 500) reported a net loss of 6.7 million, or 1 cent per share — its first quarterly net loss as a public company.Excluding restructuring charges, Starbucks earned 24 cents a share in the latest quarter. Results were helped by cost cuts, eliminating unproductive stores, lower tax rates and higher interest income, Edward Jones analyst Jack Russo said.That bested analysts’ average forecast of 19 cents per share, according to Reuters Estimates.”You saw adjusted EPS rise year-over-year for the first time in six quarters,” said Greg Schroeder, analyst at Wisco Research LLC, an independent research firm.For fiscal 2010, Starbucks expects earnings per share growth of 13% to 18%, excluding restructuring charges.Starbucks is not seeing its dominant market share dented by lower-cost rivals such as fast-food giant McDonald’s Corp., (MCD, Fortune 500) Chief Financial Officer Troy Alstead told Reuters Television.Alstead declined to say when the company’s closely-watched sales at established restaurants would turn positive, adding that he expects the economy will take a long time to recover.”We’re not prepared to make that projection yet … it’s still a very, very uncertain economy. Consumers are having a difficult time, unemployment continues to rise,” Alstead said.The CFO forecast earnings for the current fourth quarter to range from 19 cents to 20 cents per share, excluding items, below Wall Street’s average expectation for 21 cents per share, according to Reuters Estimates.Russo said the forecast for the current quarter was roughly in-line with expectations.”The guidance for next year was a little a bit above where most consensus estimates were, but not that much,” Russo said.Total revenue fell to 2.4 billion from 2.6 billion.Starbucks global same-store sales fell 5%. Sales at restaurants open at least 13 months were down 6% in the United States and were off 2 % internationally.Starbucks has cut jobs, attacked expenses and targeted more than 1,000 stores around the world for closure. It also has selectively lowered prices to attract and retain consumers in a lingering recession.The shares finished down 1.5% at 14.69 on the Nasdaq in the regular trading session but jumped to 16.11 in extended trade.

Source:CNN

SAN FRANCISCO (Reuters) — Yahoo Inc. projected a drop in income from operations for the current quarter from the second quarter, and the Internet company’s shares fell more than 4%.Yahoo (YHOO, Fortune 500) projected that income from operations in the current quarter will range between 55 million to 65 million, down from 76 million in the second quarter.Yahoo said revenue in the second quarter decreased 13% year-over-year to 1.57 billion. Excluding traffic acquisition costs — the portion of revenue that is shared with Yahoo partners — Yahoo had net revenue of 1.14 billion, in line with the average of analysts’ expectations, according to Reuters Estimates.Yahoo posted net income of 141 million, or 10 cents a share compared with net income of 131.2 million, or 9 cents a share, at this time last year. Analysts, on average, were looking for EPS of 8 cents a share.Yahoo projected sales of 1.45 billion to 1.55 billion for the current quarter.Shares of Yahoo fell 67 cents, or 4.7%, to 16.08 in after-hours trade on Tuesday.

NEW YORK (Fortune) — The Obama administration sent Congress its latest plan to spruce up the much maligned credit rating business. But the proposal sidesteps a key issue, and legislators don’t seem to be in any rush to act on it. The Treasury Department says its plan, which it formally introduced Tuesday, would “increase transparency, tighten oversight and reduce reliance on credit rating agencies.” Assistant Treasury Secretary for Financial Institutions Michael Barr told reporters on a conference call that the proposal — which would also create a new watchdog office within the Securities and Exchange Commission — would “make an important difference” for investors. The ratings reform effort is part of the administration’s plan to shore up the financial system in the wake of last year’s financial market collapse. Poor performance and conflicts of interest at big ratings agencies such as Moody’s (MCO) and the Standard & Poor’s unit of McGraw-Hill (MHP, Fortune 500) have drawn intense scrutiny on Capitol Hill. Former Securities and Exchange Commission chief accountant Lynn Turner charged in congressional testimony this year that raters “became blinded by the dollars they were billing rather than providing insight to the public into the perfect storm that was forming.” 0:00
/6:25Rating agencies need reformThe Treasury plan would bar ratings agencies from doing consulting work with companies whose bonds they rate, and would force rating companies to disclose fees paid by bond issuers in each report. It would also oblige raters to use different ratings scales for plain vanilla corporate bonds and so-called structured securities — bonds made up of slices of other bonds, for instance. Downgrades and defaults on highly rated structured products have been commonplace during the crisis.One thing the administration plan wouldn’t do is restrict the practice of bond issuers paying for ratings — a conflict of interest that some observers put at the center of the credit crisis. The two leading U.S. ratings agencies, S&P and Moody’s, are paid by issuers. Sean Egan, who runs the Egan-Jones subscriber-paid rating agency in Pennsylvania, says the administration’s proposal “changes nothing” because it fails to address the issuer-pays conflict. Barr said the administration took the conflict issue “head on” and would put in place “tough rules” to manage conflicts of interest. He added that subscriber-paid agencies such as Egan’s are hardly beyond reproach, given that “investors would still have a conflict because they own these securities being rated.” But Egan scoffed at the administration’s attempts to diminish the importance of the issuer-pays conflict. “That conflict isn’t manageable,” he said. “What I’m admiring is the amazing lobbying power of S&P and Moody’s, getting Treasury behind this sort of nonanswer.” A spokesman for S&P said the company was “studying” Treasury’s proposal. Moody’s didn’t immediately respond to a request for comment.Whether Congress will get behind the plan remains to be seen. Barr said the ratings overhaul should be viewed as part of a series of changes to the nation’s financial regulatory system, including a consumer financial product safety panel and new rules on executive pay. “The prospects for our package of reforms is strong,” he said. “We have an enormous amount of support.” Barr said Treasury was working with the appropriate committee chairs — House Financial Services Chairman Barney Frank, D-Mass., and Senate Banking Committee chief Chris Dodd, D-Conn. — to introduce the ratings legislation. But ratings reform is hardly a new issue — the SEC has been studying it for 15 years — and just when Congress might take up the reform mantle isn’t clear. Frank said Tuesday he was told by House leadership that no piece of regulatory reform will hit the House floor before September. Barr said the administration is “mindful of the chairman’s desire to run the process the way he thinks effective.” CNNMoney.com senior writer Jennifer Liberto contributed to this report.

Source:CNN

NEW YORK: Want a sense of how the typical American company is faring these days? Look no further than the balance sheets of the nation’s banks and lenders. Small business lender CIT Group (CIT, Fortune 500) has been the highest profile case of how problems in the commercial loan market are wreaking havoc on finance firms. The New York City-based specialty lender teetered on the brink of bankruptcy before managing to secure last-minute financing from its bondholders on Monday.But CIT is far from being alone. Banks of all sizes across the U.S. are facing difficulties due to souring commercial loans.Two smaller regional lenders – S&T Bancorp (STBA) of Indiana, Pa. and the Houston-based Sterling Bancshares (SBIB) – both took charges in the second quarter on loans made to companies in the energy industry. Many energy firms were hit hard when oil prices plunged during the second half of 2008.Farther up the banking food chain, JPMorgan Chase (JPM, Fortune 500) revealed last week that the value of non-performing loans in its commercial banking division, which caters to other large corporations as well as municipalities and not-for-profits, more than quadrupled to 2.26 billion from 510 million during the same period a year ago.Unlike residential real estate and other consumer-related loans, banks’ commercial and industrial loan portfolios have remained relatively trouble-free so far. But with the country still in the throes of the recession, there are fears that banks’ commercial loan portfolios could be another, albeit less painful, problem for lenders.”I don’t think it should surprise anyone that we are just now starting to see stress,” said Terry McEvoy, an analyst for Oppenheimer & Co.Mixing it upCommercial loans are not a major source of concern just yet. Based on the most recent industry-wide data published by the Federal Deposit Insurance Corp., only 1.82% of all the outstanding commercial and industrial loans, were considered uncollectable by banks.But that number has been rapidly rising lately and is now within striking distance of the recent highs reached during the last two recessions of 1991 and 2001. The net charge-off rates for commercial loans hit 2.37% in 2001 and 2.6% in 1991 .Experts say banks have worked hard to diversify their corporate loan portfolios, taking care not to become too concentrated in any one particular sector, like aircraft, energy or retail. That may be one reason why commercial loan losses have not exceeded the levels from the prior downturns.”It is across a pretty broad spectrum,” said Fred Cummings, a former bank analyst and president of the hedge fund Elizabeth Park Capital Management in Beachwood, Ohio. “That is what gives you some comfort.”Still, some experts point out that the current recession is touching so many different parts of the economy that banks’ diversification efforts may only insulate their balance sheets so far.More than 14,000 companies filed for bankruptcy in the first quarter of this year according to the American Bankruptcy Institute. Since then, there have been many more bankruptcies, including from some of the most widely-recognized names in corporate America, such as auto companies General Motors and Chrysler, amusement park operator Six Flags and retailer Eddie Bauer.Banks typically get hit hard when a company they’ve loaned money to goes bankrupt since many commercial and industrial loans are unsecured. As a result, banks are sometimes forced to write off bigger portions of the loan should borrowers default than they would with a real estate loan, which might be secured with collateral like a piece of land or a home.0:00
/3:57Saving CITAt last count, the amount of outstanding commercial and industrial loans held by U.S. banks stood at just under 1.5 trillion, according to recent figures published by the Federal Reserve.Most of those loans, however, tend to be concentrated within regional banks as well as some of the nation’s largest lenders such as JPMorgan Chase, Citigroup (C, Fortune 500) and Wells Fargo (WFC, Fortune 500). All of these banks have aggressively set aside money for future loan losses in recent quarters.Determining the scope of those losses, however, is anyone’s guess.In a report published last month, credit rating agency Moody’s warned that of the 415 billion in charge-offs the U.S. banking industry is expected to take during the second half of this year and in 2010, 53 billion is expected to come from commercial and industrial loans.But Kevin Mixon, an analyst with RiskMetrics Group, maintains that the figure will ultimately be at the mercy of the broader economy and how quickly it bounces back.”Until the economy really starts to recover, it is unlikely those [losses] will start to moderate,” he said.

JPMorgan Chase & Co. Chief Executive Jamie Dimon made a 2.29 million pretax profit by exercising stock options and then selling most of the resulting shares of the second-largest U.S. bank.According to a regulatory filing, Dimon on July 17 exercised 660,000 options under a pre-existing trading plan at 29.96 per share, at a cost of 19.77 million. He then sold 601,279 of the resulting shares at 36.69 per share, for gross proceeds of 22.06 million, the filing shows.Following the transactions, Dimon and his wife controlled about 5.04 million JPMorgan (JPM, Fortune 500) shares worth roughly 185.8 million, based on that day’s closing price of 36.89, the filing shows.Dimon conducted the transactions a day after New York-based JPMorgan reported a larger-than-expected 36% increase in second-quarter profit.Several other JPMorgan officials also exercised stock options on July 17, other regulatory filings show.Among them, retail banking chief Charles Scharf exercised 200,000 options and sold 180,739 of the resulting shares, for a pretax profit of about 641,000, one of the filings shows.JPMorgan shares were down 15 cents to 36.83 in Tuesday afternoon trading on the New York Stock Exchange.

Source:CNN

PRINCETON, N.J. (Fortune) — An epic takeover battle that began nine months ago with a terse phone call from one giant power-company CEO to another, Exelon’s John Rowe to NRG’s David Crane, ended today in a Princeton hotel ballroom, when Exelon formally abandoned its hostile bid minutes after NRG shareholders overwhelmingly rejected Exelon’s rival slate of board candidates. “That’s the end of it,” Exelon (EXC, Fortune 500) vice president Bill Von Hoene said, shortly after NRG’s annual meeting. “We’ve withdrawn our offer.” The fight over the proposed merger, chronicled in detail in the latest issue of Fortune, was the most dramatic takeover battle in the U.S. at a time when M&A activity is down sharply.Exelon, already the nation’s largest electric utility, was trying to create what would have become the nation’s largest electricity producer, and for a long time it looked like it might succeed. What made NRG (NRG, Fortune 500) attractive, among other things, was its plan to build the first new nuclear power plant in America in more than a generation.Rowe launched his bid during last fall’s global economic meltdown, offering NRG shareholders a 37% premium and the relative safety of Exelon’s stronger balance sheet. Crane and NRG’s board opposed the deal from the start, arguing that the proposed .485 share-exchange ratio was too low, and that Exelon’s offer of greater security in turbulent times was a “false promise.” But many NRG shareholders were tempted, and by late February, more than half had conditionally accepted Exelon’s tender offer.0:00
/3:44Kennedy on energy alternatives”I never lost confidence, but apparently I was the only one confident,” Crane told Fortune after today’s annual meeting. “Right then in early March, if Rowe had approached me and said, ‘We’re at .485 and I can get slightly into the point-five range’ — not even as high as they ended up going — it would have been decisive.”But three factors ultimately turned the tide of shareholder sentiment against the deal, Crane believes. One was NRG’s acquisition in early March of Houston power company Reliant’s retail business, which added value that Exelon’s offer failed to take into account. Second was Exelon’s awkward admission last spring that it was not nearly so well hedged against fluctuations in energy prices as analysts had believed. Third was the dramatic rebound in global markets, which boosted confidence in NRG’s growth prospects as a stand-alone company.When Exelon finally did raise its offer last month, to .545, it was too little, too late. Afterwards, NRG execs tried not to gloat but couldn’t help themselves. One, reacting with incredulity to Von Hoene’s claim that as recently as this weekend the outcome of the shareholder vote remained in doubt, called Exelon “the most transactionally inept company I’ve ever seen.” And NRG’s advisors? They’re happy. Total fees generated by NRG’s win, according to NRG’s M&A specialist Jonathan Baliff? About 37 million.

Source:CNN

(breakingviews.com) — Why is Morgan Stanley hiring a hedge fund manager to run its fixed income client trading business? After all, the Wall Street firm is supposed to have disavowed proprietary trading. So putting a risk-taker in charge looks odd. But bringing Jack DiMaio on board could be a smart move.For starters, DiMaio was a seasoned sell-sider before he turned his hand to alternative investments. He spent 14 years at Credit Suisse First Boston (CSGN), rising to be head of the fixed income business that was so successful that in 2001 Barclays Capital boss Bob Diamond tried — and almost succeeded — in a mass hiring of DiMaio and 39 members of his team.What’s more, after almost six years in the hedge fund business, DiMaio knows what buy-siders want from their investment banks — and he might be glad of a respite from what has been a tough environment for most hedge funds. The only question is how easily DiMaio will adapt to being a line manager again rather than the ultimate boss.The switch should be made easier by his good working relationship with Morgan Stanley (MS, Fortune 500) chief John Mack — forged after Mack took the reins at CSFB in 2001, even though one of his first tasks was to persuade scores of bankers, DiMaio included, to part with multi-year guaranteed bonuses.That should give Mack comfort that he’s got the right man for the job. And should Morgan Stanley ever restart risk-taking, DiMaio would be an obvious asset.

Source:CNN

NEW YORK: The independent overseer of the 700 billion bailout has caused a ruckus over an important question: How much do taxpayers have on the line? Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program, said the total amount committed for federal programs supporting companies, industries and consumers affected by the economic meltdown was 23.7 trillion.Lawmakers seized on the number as evidence that the government rescues are a runaway train. Treasury Department officials shot back that the number was overblown.To be sure, the federal government is taking unprecedented — and expensive — measures to address the financial crisis and salvage the economy.Make no mistake: Taxpayers have a lot of skin in this game. But just how much? The actual amount taxpayers have on the line is much, much less than 23.7 trillion. Barofsky notes that his calculation contains programs that the government is no longer on the hook for, bank debt backed by the Federal Deposit Insurance Corp. and bailouts that banks have paid back.Here are some facts about the government rescue investments and bailout programs.AIG: Taxpayers have given the troubled insurer 117.5 billion since it nearly collapsed in September. Of that, 83 billion is in direct loans to the company, and AIG (AIG, Fortune 500) can borrow up to 30 billion more. In late June, outgoing CEO Edward Liddy said there was an “excellent chance” the company could pay back its loan to the taxpayers, and reiterated the company’s payback timeline of three to five years.The other 34.5 billion is in toxic assets that the New York Federal Reserve purchased from the company in exchange for the forgiveness of a 38 billion loan. The Fed actually purchased close to 50 billion in assets, but the value of those assets has since plummeted. The Fed said they lost 4.9 billion in value in the first quarter alone.To end up in the black, the government needs AIG to repay its loans and sell its assets for at least as much as what the Fed originally paid.Automakers: The government has lent General Motors, Chrysler, GMAC and the now defunct Chrysler Financial just less than 80 billion.So far, 2.1 billion has been repaid.But the vast majority of those loans will likely never get paid back. That’s because U.S. taxpayers took large stakes in GM and Chrysler in exchange for forgiveness of large portions of the loans.The government has given GM 50 billion — 6.7 billion of which the company must pay back. The automaker has stated that it hopes to do that before the 2015 deadline. The Treasury agreed to convert the other 43.3 billion into GM equity, so the government’s ability to recover its investment will depend on the future market value of that stake. GM’s stock is not expected to trade publicly until 2010 at the earliest.Chrysler still owes about 8 billion of its 15.2 billion federal loan. Like with GM, the government is banking on the value of its stake in Chrysler rising down the road.Bank bailouts: U.S. taxpayers have given 534 financial institutions 204.2 billion in capital injections, of which 70.2 billion has been paid back.Banks are eager to pay back their bailout dollars, as public scrutiny has grown about the inner workings of bailed-out banks, including executive compensation packages, lending decisions and earnings. Furthermore, bailed-out banks have to pay the government hefty dividends.The money was supposed to go to healthy financial institutions, but the health of some of those banks, namely Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), has since worsened. They had to get bailed out again. They have yet to pay back the 45 billion they each owe taxpayers.One of the hundreds of TARP recipients has been in the news of late: Troubled commercial lender CIT Group, which warned in a government filing Tuesday that it could be forced to declare bankruptcy if it can’t strike a deal with private lenders. Taxpayers have 2.3 billion at stake.Federal Reserve programs: The Fed has created more than 6 trillion in programs aimed at restoring liquidity to banks, about 1.5 trillion of which has been used so far. The majority of the programs charge financial institutions interest for using the facilities, and the Fed actually made money on those programs, taking in 3.3 billion in interest payments in the first quarter. Many of those programs are set to end in October, and others will end early next year.But some programs won’t be paid back at all. Like AIG, the Fed invested 29 billion in some of the failed Bear Stearns’ assets that are now worth 26 billion.And through its conservatorship of mortgage finance giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), the Fed has given the companies 85 billion of a possible 400 billion bailout. That money is not expected to be returned.

NEW YORK: Lawmakers are still far from consensus on how to fix the health care system. So it’s too soon to know exactly what reform would mean for individual Americans.But a picture has started to emerge from two key bills put out by Democrats in the House and Senate. A third bill is expected soon from the Senate Finance Committee.The first two bills propose:a national insurance exchange on which insurers would compete for consumers’ business; a public health plan that would compete with private insurers on that exchange; and subsidies for financially strapped Americans eligible to buy health insurance on the exchange.Both bills would also set minimum standards for health insurance policies and require insurers to guarantee coverage for those with pre-existing conditions.Considered in broad terms, here’s how those bills are likely to affect three groups of Americans: those who are currently insured through their employer; those who buy insurance on their own; and the 49 million Americans who are expected to go uninsured next year. You get coverage at workUnlikely to see much change: The more than 160 million Americans with employer-sponsored insurance today wouldn’t see much change, said Congressional Budget Office Director Douglas Elmendorf after doing a preliminary analysis of the two bills.That would accomplish one of lawmakers’ goals for health reform — to preserve the employer-based health insurance system. But it doesn’t prevent companies from changing workers’ plans if they decide to change the benefits menu or switch policy providers.At the same time, workers with insurance through their employers are not likely to see lower premiums, Elmendorf told lawmakers last week. In fact, at least initially, their premiums may continue to increase apace as they have for years.And if workers don’t like the health options provided by their employers, they may not have the option of buying insurance on the exchange. That’s because the bills include “firewalls” that would prevent them from doing so. Under the House bill, for instance, only workers who today pay more than 11% of their income for employment-based coverage would be allowed to purchase a policy on the exchange and would qualify for a subsidy.In all, the CBO estimates that the House bill might allow about 3 million workers with employer-based coverage to qualify to buy subsidized insurance on the exchange. The added advantage for them is that they wouldn’t have to change insurance policies bought on the exchange if they changed jobs.May have to pay a new tax: The most controversial debate over health reform is how to cover the cost. Roughly half is likely to be paid for with new tax revenue.The House bill calls for a surtax on high-income earners — starting at 280,000 for singles and 350,000 for married couples. The surtax would run as high as 5.4% on income over 1 million.But on Monday, House Speaker Nancy Pelosi let it be known that she may push to increase those thresholds so the surtax would only affect individuals making at least 500,000 and couples making 1 million or more.”It narrows the number of people who would be affected. I think it probably goes a long way in protecting the small businesses we were concerned about and it puts more pressure on our House colleagues who are writing the bill to identify more in savings.” Rep. Gerry Connolly, D-Va., told CNN.The Senate Finance Committee had been heavily focused on taxing a portion of the health benefits that workers currently receive as tax-free income from their employers. But that idea has run into political headwinds.Whether a benefits tax of some kind ends up in the final package is still anyone’s guess. If it does, however, not everyone would have to pay it. That’s because a benefits tax can be set up so that it only targets a certain group of people — for example, those with very expensive health insurance plans, or high earners with expensive plans.It’s also possible a benefits tax would not be included at all. Another idea reportedly under consideration is a tax on insurers and employers that offer expensive or “Cadillac” plans. Of course, if that happens, it is possible the cost of the tax would be passed along to workers in the form of higher premiums.You get it on your ownLikely to see lower costs: The people most likely to see a decrease in what they pay for health insurance are those who currently buy policies on their own, Elmendorf said.That group could see their costs go down for three reasons: the creation of an insurance exchange; the additional competition from a public plan; and guarantees that insurers could not refuse coverage to anyone with a pre-existing condition, he noted.If their income qualifies them for a federal subsidy, consumers who currently buy insurance on their own could see their costs go down considerably from where they are today. Under the House bill a family of three making up to 73,240 this year could qualify for some subsidy.May get help from an employer: The CBO estimates that under the House bill roughly 3 million people could be added to the rolls of those with employer-sponsored insurance. That’s because the bill would require companies either provide workers with coverage or pay into the health insurance exchange to subsidize the cost of their policies.You have no insurance0:00
/2:12Uninsured get free health careMay get help from the government: Those who are uninsured may get a subsidy from Uncle Sam if their income qualifies. Or they may qualify for Medicaid since both the House and Senate bills would expand eligibility for the program — under the proposals, eligibility would be extended to those with income up to 150% of poverty level in the Senate health committee bill and up to 133% in the House bill.Will be required to have insurance: Both bills would mandate that most individuals be insured or pay a penalty. The CBO estimates the House bill would reduce the number of uninsured by more than 68% within 10 years.- CNN’s Dana Bash and Deirdre Walsh contributed to this report

Source:CNN