Tuesday, February 24, 2009

Wall Street Breakfast: Must-Know News

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby

  • AIG wants new loan terms, again. Sources say AIG (AIG) is looking to overhaul its $150B government bailout to reduce its financial burden, and in the process would further expose taxpayers to the troubled insurer's balance sheet. The new plan would have $60B of the government's loan repaid with a combination of debt, equity, cash and operating businesses. It would also mark a complete turnaround for the government, changing its approach to the insurer from that of a creditor to one of a potential owner. Sources say AIG would like to announce the changes next week when it releases Q4 earnings but talks, though in advanced stages, have not yet produced a final deal. The company is expected to post a heavy quarterly loss of over $60B, marking the biggest loss in corporate history.
  • Thain testifies on bonuses. John Thain, former CEO of Merrill Lynch, will answer questions posed by New York AG Andrew Cuomo's staff today, and will disclose the names of Merrill employees who received $3.6B in bonuses just before the bank merged with Bank of America (BAC). Thain had already answered some general questions from Cuomo's office but had refused to identify individual recipients, citing orders from Bank of America to keep that information private. A judge on the New York Supreme Court ruled that Thain is required to provide those details, and the judge will later decide if that information should become public.
  • Hedge funds face off on more regulation. One of the world's largest hedge fund groups is ready to propose new measures that would push money managers to open up their businesses. The Alternative Investment Management Association, a U.K. group with members in the U.S. and many other countries, could release a proposal as early as today suggesting hedge fund managers take such steps as registering with regulators and having regular contact with authorities about their businesses. These changes have faced resistance from many U.S. funds, but global pressure is growing to institute financial reform and extend hedge fund regulations.
  • JPMorgan slashes dividends. JPMorgan (JPM) cut its common stock dividend by 87%, to $0.05 from $0.38. The surprise move will save JPMorgan around $5B a year, money it hopes to use to speed its repayment of $25B in TARP funds. CEO Jamie Dimon said the firm cut its dividend out of a "normal abundance of caution," and that "extraordinary times must call for extraordinary measures." The bank also said it has been 'solidly profitable' this quarter and quarterly outlook is 'roughly in line' with consensus forecasts.
  • Roche bid still too low. Roche Holding (RHHBY.PK) will likely have to raise its bid for the 44% of Genentech (DNA) it doesn't already own after Genentech urged shareholders to reject Roche's $42B bid, saying it substantially undervalues the company. Before Roche went forward with its $86.50/share hostile offer, Genentech's banker had proposed $112/share as an acceptable price, showing just how far apart the two sides are on a fair valuation of the deal. Analysts believe the companies will ultimately meet somewhere in the middle, around the $95-$100 range.
  • Employee churn at News Corp. Peter Chernin, the highly regarded President and COO of News Corp. (NWS), plans to leave the company when his contract expires this summer. Chernin has run News Corp.'s Fox television and film production, one of the company's largest divisions, for over 12 years. No replacement was named, and businesses Chernin oversaw will instead report directly to CEO Rupert Murdoch. Chernin's departure comes at a difficult time for the media giant, whose stock price has dropped by more than two-thirds in the past year.
  • Yahoo upgrades ad services. Trying to win back business as the economy falters, Yahoo (YHOO) will unveil several new tools today to help create better matches between online ads and their target audiences. Among the services offered, ads can be customized based on which websites consumers have visited and their behavior on those sites, and marketers will be able to buy text ads targeted to users at a certain time of day or based on other factors like age or gender. Though other companies already offer some similar features, Yahoo is betting on its ability to harness a user base of hundreds of millions of monthly visitors.
  • Here's $300. Now shoo! American Express (AXP) is offering select customers a $300 prepaid AmEx gift card to pay off their balances and close their accounts. The unusual move underscores how badly the credit card market has deteriorated and the steps companies are willing to take to avoid what could become a massive surge in credit card defaults. American Express declined to disclose the specifics of which customers are eligible for the offer, but said the offer applied to a "relatively small number of cardmembers who have sizeable balances and little spending and payment activity."
  • Dark news from regional Feds. The Chicago Fed's National Activity Index inched up to -3.45 from -3.65 in December, but the three-month average of -3.41 was the lowest since at least 1975. According to the Dallas Fed's Texas Manufacturing Outlook Survey, factory activity deteriorated further in December. New orders and capacity utilization fell precipitously, with declines outnumbering increases 5 to 1.
  • German confidence keeps falling. German business confidence fell to a 26 year low in February as the worst recession since WWII led companies to slash production and fire workers. The IMF expects Germany's economy to contract 2.5% this year, despite stimulus efforts.

Earnings: Tuesday Before Open

  • Foster Wheeler (FWLT): Q4 EPS of $1.03 beats by $0.08. Revenue of $1.6B (+11.9%) vs. $1.8B. (PR)
  • GrafTech International Ltd (GTI): Q4 EPS of $0.49 beats by $0.11. Revenue of $265M (-1.7%) vs. $280M. (PR)
  • Heinz (HNZ): FQ3 EPS of $0.76 beats by $0.12. Revenue of $2.4B (-7.5%) vs. $2.5B. (PR)
  • Home Depot (HD): Q4 EPS of $0.19 beats by $0.04. Revenue of $14.6B (-17.3%) vs. $14.7B. (PR)
  • Magna International (MGA): Q4 EPS of -$0.68 in-line. Revenue of $4.8B (-29.3%) vs. $4.7B. (PR)
  • Medco Health Solutions (MHS): Q4 EPS of $0.59 beats by $0.01. Revenue of $13.0B (+13.9%) vs. $12.7B. (PR)
  • Quanta Services (PWR): Q4 EPS of $0.24 beats by $0.05. Revenue of $921.5M (+4.8%) vs. $913.5M. (PR)
  • RadioShack (RSH): Q4 EPS of $0.50 misses by $0.20. Revenue of $1.3B (-7.7%) vs. $1.4B. (PR)

Earnings: Monday After Close

  • DTE Energy Company (DTE): Q4 EPS of $0.80 misses by $0.18. Revenue of $2.17B (-1.8%) vs. $2.1B. Shares -2.4% AH. (PR)
  • Forest Oil (FST): Q4 EPS of $0.32 beats by $0.01. Revenue of $281M (-15.7%) vs. $331M. Shares +2.4% AH. (PR)
  • General Growth Properties (GGP): Q4 FFO of $0.70 misses by $0.15. Revenue of $1B (-2.8%) vs. $830M. Shares +16.7% AH. (PR)
  • Health Management Associates (HMA): Q4 EPS of $0.07 in-line. Revenue of $1.11B (+3.3%) in-line. (PR)
  • Healthcare Realty Trust (HR): Q4 EPS of $0.38 in-line. Revenue of $57.1M (+13.5%) vs. $58.3M. Shares +7.6% AH. (PR)
  • Hecla Mining Company (HL): Q4 EPS of -$0.24 misses by $0.13. Revenue of $27.5M (-24.1%) vs. $73M. Shares -1.2% AH. (PR)
  • Hertz Global (HTZ): Q4 EPS of -$0.22 misses by $0.17. Revenue of $1.79B (-16.4%) vs. $1.95B. (PR)
  • Mohawk Industries (MHK): Q4 EPS of -$1.87 vs. consensus of $0.24. Revenue of $1.49B (-17.8%) vs. $1.54B. Sees Q1 EPS of -$0.89 to -$0.80 vs. $0.28 consensus. Shares -15.1% AH. (PR)
  • Nordstrom (JWN): Q4 EPS of $0.31 beats by $0.01. Revenue of $2.3B (-8.5%) in-line. Sees 2009 EPS of $1.10-1.40 vs. $1.22. Shares +13.3% AH. (PR, earnings call transcript)
  • ONEOK (OKE): Q4 EPS of $0.65 misses by $0.02. Revenue of $2.84B (-28.7%) vs. $3.49B. Shares +1.6% AH. (PR)
  • St. Mary Land (SM): Q4 EPS of $0.43 misses by $0.11. Revenue of $258M (-6.2%) vs. $264M. Shares -2.1% AH. (PR)
  • Whiting Petroleum (WLL): Q4 EPS of -$0.07 misses by $0.01. Revenue of $224M (-3.7%) vs. $220M. Shares +2.5% AH. (PR)

Today's Markets

  • Asia markets declined Tuesday, largely a reaction to the lack of buying in Monday's U.S. session. Nikkei -1.46% to 7,269. Hang Seng -2.86% to 12,798. Shanghai -4.56% to 2,201. BSE Sensex -0.24% to 8,882.
  • In Europe markets opened down and moved lower, but are off from their lows at midday. London -1.1%. Paris -1.35%. Frankfurt -2.1%.
  • U.S. futures are up in the overnight session. Dow +0.6% to 7,160. S&P +0.6% to 749. Nasdaq +0.4%. Crude +0.3% to $38.56. Gold -0.5% to $989.40.

Tuesday'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
5th Floor (Regus)
11 Penn Plaza
New York, NY 10001
Tel: 646-248-7597
ReaderImpact Enterprise API