Sign up for PayPal and start accepting credit card payments instantly.

Wednesday, February 11, 2009

Wall Street Breakfast: Must-Know News

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby


  • Geithner's big rescue. Treasury's Geithner unveiled a much-anticipated financial rescue plan yesterday. As expected, the rescue includes bank stress tests, greater transparency, a Public-Private Investment Fund to soak up as much as $1T in toxic assets, expanding TALF to up to $1T, and a comprehensive housing program which will be announced in the coming weeks. The aim is to get $1T-$2T in financing flowing through the economy to revive both consumer and business lending. The Treasury unveiled a new website, FinancialStability.gov, which will detail where all the money is going and how it's being used. Geithner said "our nation faces the most severe financial crisis since the Great Depression. It is a crisis of confidence, of capital, of credit, and of consumer and business demand." (Read the Financial Stability Plan factsheet (.pdf)) (Read Geithner's statement)
  • WSB Sponsor
    Attention Wall Street Breakfast Readers: Gain invaluable insight from some of the world's most successful investors. Register by 2/15 and save $400 off the Early Bird rate!

    Join us at the 4th Annual Value Investing Congress West (May 5&6 in Pasadena, CA) to find out how some of the world's best investors are recouping losses and finding great values in this tumultuous market. To see a full list of speakers, click here.

    Seeking Alpha readers save $400 off the Early Bird rate - a total savings of $1600 - when you register by 2/15 using discount code P09WSB1. Register today! Your next great investment idea could be waiting in Pasadena.

  • New plan gets panned. Lack of details in Geithner's rescue plan helped push markets down nearly 5% (Dow -4.6%, S&P -4.9%, Nasdaq -4.2%) in the worst selloff since Obama became president. The particulars of a $50B home foreclosure program were left to be settled in the next few weeks, along with just how a planned Public-Private Investment Fund would work. Several key questions remained unaddressed, including whether ailing banks will be forced to fail, how illiquid assets will be removed from banks' balance sheets and how to stop falling house prices. Although Obama officials called the minimal details intentional and said they'll work with Congress and the public to solidify aspects of the rescue, investors and economists were less sure. Kenneth Rogoff, formerly of the IMF, said there's a risk market reaction could sabotage the plan before it gets underway, so this version of the rescue plan "may just end being an interim step." Tom Petruno took the opposite approach, saying "the success of the new plan will rest in part on whether the government can persuade investors that it will stick with the idea, and won't switch gears as it has with other bailout efforts since last fall."
  • With Senate okay, stimulus moves to next round. Moving forward with the second prong of Obama's financial rescue plan, the Senate approved an $838B stimulus bill. Three Republicans threw their support behind the bill, bringing the final vote to 61-37. Aside from the differences House and Senate members will have to work out with each other to create one streamlined bill, Obama has his own requests and wants to restore some of the stimulus spending cut from the Senate's version. Congressional negotiators met late last night with White House officials to try and work out their disagreements over spending and tax cuts. Meanwhile, top lawmakers are struggling to bring the price of the two-year package down to the $800B mark.
  • Bank chiefs make their case. The CEOs of eight of the largest U.S. banks will meet before Congress today to defend the use of $165B in rescue funds. Critics are livid with the industry for handing out $18.4B in bonuses even as the companies reported losses and accepted government funds, and for lavish expenditures including private jets and expensive retreats. While acknowledging 'broad public anger,' bank execs are expected to defend their actions and point to increased lending. On tap to testify: Lloyd Blankfein of Goldman Sachs (GS), James Dimon of JPMorgan Chase (JPM), Robert Kelly of Bank of New York Mellon (BK), Ken Lewis of Bank of America (BAC), Ronald Loque of State Street Corporation (STT), John Mack of Morgan Stanley (MS), Vikram Pandit of Citigroup (C) and John Stumpf of Wells Fargo (WFC). (Watch the live hearing at 10:00 ET.)
  • GM slashes staff. General Motors (GM) will cut 10,000 white-collar jobs from its global workforce this year, or roughly 14% of its salaried staff. The announcement comes as GM rushes to pull together its restructuring plan by the Feb. 17 deadline, and could help push the company's main union into making larger concessions. Along with the job cuts, salaried workers remaining with the company will see their paychecks reduced by 3-10%. If GM doesn't win government approval of its plan, it could be forced to repay $13.4B of loans in April, triggering a possible bankruptcy filing.
  • Suisse miss. Credit Suisse (CS) posted a larger-than-expected Q4 loss of 6.02B Swiss francs ($5.2B), and a total 2008 deficit of 8.2B francs. The investment banking unit had a pretax loss of 7.8B francs in Q4 on 3.2B francs of writedowns on leveraged loans and structured products. The bank attracted 2B francs of net new money from wealthy clients in Q4, down from 11.3B francs in Q3, and saw 'positive' net new assets in January. The dividend was cut to 10 centimes for 2008 vs. 2.5 francs the previous year. CEO Brady Dougan tried to focus on the positive, telling investors "we have had a strong start to 2009 and were profitable across all divisions year to date. We have positioned our businesses to be less susceptible to negative market trends if they persist in the coming months." Shares +1.1% in Zurich (7:00 ET).
  • Steeled for loss at ArcelorMittal. ArcelorMittal (MT), the world's largest steelmaker, posted an unexpected Q4 loss of $2.63B vs. net income of $2.44B the year before (see earnings details below). The loss followed a one-off charge of $4.4B which included writedowns on inventories and raw-material contracts. The company expects the operating climate to remain 'challenging,' but sees Q1 Ebitda of around $1B. Shares +8.4% premarket (7:00 ET).
  • Wholesale inventories fall. Wholesale Inventories -1.4% in December, more than the -0.7% consensus, but remain up 3.4% vs. a year ago. Wholesale sales fell 3.6%, and are down 10.7% vs. a year ago. The surprise drop in inventories probably means initial Q4 GDP estimates of -3.8% - which factored-in a 1.6% boost from inventory levels - were too high. Estimates of -4.6% now seem more likely.
  • Retail sales. Retail chain store sales were unchanged compared to last week, ICSC reported, and declined 1.8% Y/Y. "Milder weather helped traffic flow a tad this past week, but consumers remain focused on staples... and continue to stretch their dollar by shopping at dollar stores." Redbook reported that national chain store sales fell 0.7% in the first week of February, slightly worse than the expected 0.5% fall. Sales were down 1.7% Y/Y.

Earnings: Wednesday Before Open

  • Agrium (AGU): Q4 EPS of $0.79 beats by $0.15. Revenue of $1.985B (+33.0%) vs. $1.96B. (PR)
  • ArcelorMittal (MT): Q4 EPS of $0.34 misses by $0.10. Revenue of $22.1B (-21.1%) vs. $19.7B. (PR)
  • Dean Foods Company (DF): Q4 EPS of $0.46 beats by $0.07. Revenue of $3.1B (-4.7%) vs. $3.2B. (PR)
  • Ingersoll-Rand (IR): Q4 EPS of $0.53 beats by $0.25. Revenue of $3.67B (+58.0%) vs. $3.75B. (PR)
  • Jones Apparel Group (JNY): Q4 EPS of -$0.04 beats by $0.01. Revenue of $847M (+1.0%) vs. $827M. (PR)
  • Macerich Company (MAC): Q4 EPS of $2.08 beats by $0.15. Revenue of $243.25M (-1.2%) vs. $229.55M. (PR)

Earnings: Tuesday After Close

  • Applied Materials (AMAT): FQ1 EPS of $0.00 in-line. Revenue of $1.33B (-36%) in-line. "We acted early and decisively to reduce costs in line with economic conditions that have resulted in an unprecedented decline in demand. With our leading technology and strong balance sheet, Applied is positioned to weather this recession and invest in new products and services." Shares -3% AH. (PR, earnings call transcript)
  • CB Richard Ellis Group (CBG): Q4 EPS of $0.37 beats by $0.10. Revenue of $1.28B (-30.1%) vs. $1.4B. Shares +11.4% AH. (PR)
  • Cerner (CERN): Q4 EPS of $0.65 beats by $0.04. Revenue of $466M (+18.1%) vs. $445M. Shares +5.2% AH. (PR, earnings call transcript)
  • CF Industries (CF): Q4 EPS of $3.59 vs. consensus of $2.11. Revenue of $1.07B vs. $892M. Shares +5.4% AH. (PR)
  • Choice Hotels (CHH): Q4 EPS of $0.41 beats by $0.04. Revenue of $154.5M (-8.6%) vs. $158.5M. Sees Q1 EPS of $0.24 vs. $0.27, but 2009 EPS of $1.68 vs. $1.64. Shares +2.6% AH. (PR)
  • Computer Sciences (CSC): FQ3 EPS of $1.06 beats by $0.04. Revenue of $3.95B (-5%) vs. $4.15B. Shares -0.2% AH. (PR, earnings call transcript)
  • DaVita (DVA): Q4 EPS of $0.94 beats by $0.04. Revenue of $1.46B (+7.8%) in-line. (PR)
  • Douglas Emmett (DEI): Q4 FFO of $0.38 beats by $0.05. Revenue of $156M (+11.9%) vs. $147M. Sees 2009 FFO of $1.24-1.30 vs. $1.34. (PR)
  • General Cable (BGC): Q4 EPS of $0.34 vs. consensus of $0.55. Revenue of $1.29B (-0.4%) vs. $1.38B. Shares +0.1% AH. (PR)
  • Great Plains Energy (GXP): Q4 EPS of $0.08 misses by $0.16. Revenue of $444M vs. $584M. Sees 2009 EPS of $1.10-1.40 vs. $1.44. Shares -21% AH. (PR)
  • Macrovision (MVSN): Q4 EPS from continuing operations of $0.09 vs. consensus of $0.21. Revenue of $118M (+182.1%) vs. $111M. Shares +2.7% AH. (PR, earnings call transcript)
  • Nvidia (NVDA): Q4 EPS of -$0.18 misses by $0.09. Revenue of $481M vs. $491. "The environment is clearly difficult and uncertain. Our first priority is to set an operating expense level that balances cash conservation while allowing us to continue to invest in initiatives that are of great importance." Shares -3.4% AH. (PR, earnings call transcript)
  • Protective Life (PL): Q4 EPS of $0.80 misses by $0.01. Due to extraordinary market volatility and potential impact of fair value accounting on reported results, won't provide 2009 earnings guidance. (PR)
  • Siliconware Precision Industries (SPIL): Q4 EPS of -$0.05 misses by $0.14. Revenue of $377.5M (-30.9%). (PR)
  • Quest Software (QSFT): Q4 EPS of $0.37 beats by $0.05. Revenue of $202M vs. $199M. Shares flat AH. (PR, earnings call transcript)
  • V.F. Corp. (VFC): Q4 EPS of $1.05 beats by $0.03. Revenue of $1.89B (-2.1%) vs. $1.92B. Sees Q1 EPS of $1.10-1.15 vs. $1.23, and revenue down 5-7%. Shares +0.2% AH. (PR, earnings call transcript)
  • XL Capital (XL): Q4 EPS of $0.58 beats by $0.20. Revenue of $1.11B vs. $1.66B. $990M non-cash goodwill impairment charge. Will reduce workforce by 10%. Shares +15.2% premarket. (PR)

Today's Markets

  • Asia markets reacted poorly to the U.S. financial rescue plan. Hang Seng -2.5% to 13,539. Shanghai -0.2% to 2,261. BSE -0.3% to 9,619. Kospi -0.7% to 1,191. Nikkei closed.
  • In Europe at midday, London +0.1%. Paris -0.2%. Frankfurt +0.4%.
  • U.S. futures: Dow +0.5%. S&P +0.05%. Nasdaq +0.3%. Crude +0.9% to $37.88. Gold +1.3% to $926.

Wednesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.


Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.

Found this interesting? Join the discussion!

Most Popular on Seeking Alpha

Most Read

Most Commented

Editors' Picks



Modify your selections or Unsubscribe completely
Powered by ReaderImpact

This email was sent to you by Seeking Alpha
C/O Frank, Rimerman & Co. LLP
1801 Page Mill Road Palo Alto, CA 94304
718-548-4666
ReaderImpact Enterprise API
 

0 comments: