Wednesday, April 22, 2009

Wall Street Breakfast: Must-Know News

Reader Impact Email

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby

$2,500-Per-Month Alternative Energy Loophole
I have found what might be the easiest way in America to get an extra $2,500 per month.
It involves installing an alternative energy device (paid for mostly by the government)... then collecting checks every month.
More details in my full write-up here...

  • Geithner: most banks have enough cash. Testifying in Congress, Geithner indicated the 'vast majority' of the 19 banks undergoing stress tests have more than enough capital, and those that need additional aid may get a mix of converted government preference shares and private money. His testimony helped allay investors' concerns about the possibility of political interference and widespread stock dilution, sending financial stocks up. Geithner also pointed to signs of a credit market thaw, but said the banking rescue is showing only 'mixed' signs of success and toxic assets are still 'congesting' the financial system. (Read Geithner's prepared testimony (.pdf))
  • Dems consider bank limits. In a closed-door meeting with House Democrats, FDIC's Sheila Bair suggested the size of banks should be limited and their growth regulated in order to prevent lenders from becoming 'too big to fail.' Bair didn't elaborate on her proposal, but the idea was well received by those at the meeting. Bair also endorsed Rep. Nancy Pelosi's efforts to launch a comprehensive inquiry into the causes of the financial crisis.
  • Banks lobby to cut TARP exit costs. The banking industry is aggressively lobbying the Treasury to make it less expensive to exit TARP. At issue are warrants that allow the Treasury to buy common stock in bailed out banks at a set price for ten years. Most of the warrants are worthless today, but banks seeking to expunge them after repaying TARP funds must get a third-party valuations of the warrants' worth, negotiate with the Treasury if there is disagreement on the valuation and allow the warrants to be sold to private investors if no compromise is reached. Bank reps say the repurchase terms are onerous, equivalent to 60% annual interest on short-term loans, but those on the other side of the aisle think it's unreasonable for banks that have been bailed out to try and get out of TARP free.

  • Complimentary $50K Forex Practice Account
    Trade Forex with FXCM - Low spreads, trading from charts, real-time price alerts, & complimentary trading signals with a live account!
    Open Practice Account Now!
    Currency trading involves significant risk of loss.

  • Chrysler lenders offer debt deal. In a counter-offer to the Treasury, Chrysler's first-lien lenders agreed to take equity in a restructured automaker with a Fiat tie-up in exchange for writing off around 35% of the $7B they are owed. The lenders would retain around $4.5B in debt and take more than a one-third stake in the reinvented Chrysler. The suggested deal is significantly richer than the Treasury's proposal to cut lenders' debt to $1B, and was immediately criticized by a White House official for giving creditors an 'unjustified return' given the circumstances. The Treasury made clear it doesn't plan to accept the lenders' terms.
  • Citi's Pandit faces angry shareholders. Speaking at a six-hour long annual meeting, embattled Citigroup (C) CEO Vikram Pandit promised to repay 'every dollar' to the government and fielded questions from furious investors. Despite the anger, shareholders elected every director the board had nominated, including some accused of weak oversight. With his job security a topic of speculation, Pandit told investors "I intend to see this through."
  • Yahoo cuts jobs, product cuts to follow. Though "not immune to the ongoing economic downturn," Yahoo (YHOO) posted better-than-expected quarterly earnings (see details below) and plans to cut 5% of its workforce. The job cuts are the first by CEO Carol Bartz, who said the company may also eliminate more products. Bartz mentioned the importance of the search business to Yahoo but declined to comment further on Microsoft (MSFT).
  • Roche drug misses goal. In a much anticipated study, Roche Holding's (RHHBY.PK) Avastin cancer drug failed to keep tumors at bay. Roche plans further tests for early-stage use. Shares -8.1% in Zurich (6:45 ET).
  • IMF sees rising writedowns. In its Global Financial Stability Report, the IMF noted financial institutions are now facing losses of up to $4.1T on loans and other assets, and urged governments to take 'bolder steps,' including nationalization when necessary, to bolster firms. The IMF sees total writedowns on U.S. assets at $2.7T, up from a $2.1T estimate in January. Efforts to purge toxic assets and replenish capital have been 'piecemeal and reactive.'
  • Chain store sales. Retail chain store sales fell 0.4% from a week ago, ICSC reported, and dipped 0.1% Y/Y. After three weeks of increases, "consumers took a pause in the latest week with discounters and specialty stores, such as books and jewelry, which were particularly weaker." According to Redbook, national chain store sales rose 1.5% in the first two weeks of April, and rose 0.5% Y/Y.
  • Mortgage apps rise. Mortgage applications rose 5.3% from a week ago, MBA reported. The average interest rate on 30-year fixed-rate mortgages inched up to 4.73% from 4.70%.

Earnings: Wednesday Before Open

  • Air Products and Chemicals (APD): FQ2 EPS of $0.89 beats by $0.07. Revenue of $1.95B (-23.1%) vs. $2.1B. (PR)
  • AirTran (AAI): Q1 EPS of $0.21 beats by $0.17. Revenue of $542M (-9.1%) vs. $535M. (PR)
  • Continental (CAL): Q1 EPS of -$1.07 beats by $0.12. Revenue of $2.96B (-17%) vs. $2.98B. (PR)
  • Dover (DOV): Q1 EPS of $0.45 misses by $0.02. Revenue of $1.4B (-24.7%) vs. $1.5B. Sees FY '09 EPS of $2.00-$2.30. (PR)
  • Elan (ELN): Q1 EPS of -$0.17 misses by $0.03. Revenue of $245M (+14.2%) vs. $265M. (PR)
  • EnCana (ECA): Q1 EPS of $1.26 beats by $0.57. Revenue of $4.6B (-15.2%) vs. $4.0B. (PR)
  • Knight Capital Group (NITE): Q1 EPS of $0.33 beats by $0.04. Revenue of $254M (+31.1%) vs. $253M. (PR)
  • Pepsi Bottling Group (PBG): Q1 EPS of $0.10 beats by $0.05. Revenue of $2.5B (-5.4%) in-line. Raises FY '09 guidance to $2.20-2.30 EPS vs. $2.19 consensus. (PR)
  • Precision Drilling (PDS): Q1 EPS of $0.30 misses by $0.06. Revenue of $448M (+30.9%) vs. $458M. (PR)
  • WellPoint Health Networks (WLP): Q1 EPS of $1.16 misses by $0.09. Revenue of $15.3B (-0.4%) vs. $15.6B. Issues downside guidance for FY '09, sees EPS of $5.14-5.20 vs. $5.62 consensus. (PR)

Earnings: Tuesday After Close

  • Altera (ALTR): Q1 EPS of $0.17 beats by $0.01. Revenue of $265M (-21.3%) vs. $258M. Sees revenue up 2-7% in Q2 vs. Q1. "Q1 business environment was better than we originally anticipated yet overall remains quite challenging." (PR)
  • Advanced Micro Devices (AMD): Q1 EPS of -$0.62 beats by $0.04. Revenue of $1.18B (-20.8%) vs. $978M. "Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be down for Q2 2009." (PR)
  • Ameriprise Financial (AMP): Q1 EPS of $0.58 beats by $0.09. Revenue of $1.72B (-13.7%) in-line. (PR)
  • Capital One (COF): Q1 EPS of -$0.39 misses by $0.31. Revenue of $3.7B (-5.6%) vs. $4.17B. Adds $124.1M to allowance for loan losses in anticipation of higher expected charge-offs; sees 2009 charge-offs higher than the $8.6B it forecast last quarter. (PR)
  • Gilead Sciences (GILD): Q1 EPS of $0.66 beats by $0.07. Revenue of $1.53B. (PR)
  • Nestle (NSRGY.PK): Q1 sales of 25.2B francs (-2.1%), short of 26B consensus. Organic sales were up 3.8% vs. 4.2% consensus. The shortfall was in part due to customers abandoning premium brands in favor of discount alternatives. Shares -0.2% in Zurich. (Bloomberg)
  • Norfolk Southern (NSC): FQ1 EPS of $0.47 misses by $0.07. Revenue of $1.94B (-22.3%) vs. $2.04B. Shares -9.1% AH. (PR)
  • SanDisk (SNDK): Q1 EPS of -$0.48 beats by $0.28. Revenue of $660M (-22.4%) vs. $538M. "Industry fundamentals improved in the first quarter. We are encouraged that industry supply and demand balance is becoming better aligned, resulting in higher flash pricing." (PR)
  • Seagate Technology (STX): FQ3 EPS of -$0.45 in-line. Revenue of $2.15B (-30.7%) vs. $2.01B. Sees FQ4 EPS of -$0.29 to -$0.39 vs. -$0.30 consensus. "Believes opportunities exist to reduce operating costs in product development, marketing/administrative and manufacturing areas to target a cost structure that generates positive cash flow and earnings within its FY2010." (PR)
  • Terex (TEX): FQ1 EPS of -$0.47 vs. consensus of -$0.08. Revenue of $1.3B (-44.9%) vs. $1.55B. "The turmoil from the global credit crisis and economic slowdown has quickly and deeply impacted sales for our industry, with certain sectors down almost 75% from year ago levels. In response, we are aggressively reducing costs... " Shares -7% AH. (PR)
  • Tupperware (TUP): Q1 EPS of $0.45 beats by $0.11. Revenue of $463M (-14.8%) vs. $459M. Sees Q2 EPS of $0.57-0.62 vs. $0.50. Shares +11.7% AH. (PR)
  • Vornado (VNO): Sees Q1 EPS of $0.77 vs. consensus of $0.83. Sees Q1 FFO of $1.70 vs. consensus of $1.52. Sees Q1 revenue of $682M vs. $651M. Will sell 12.5M shares, resulting in an 8% dilution. Shares -4.8% AH. (DJ)
  • Yahoo (YHOO): Q1 EPS of $0.15 beats by $0.07. Revenue of $1.16B (-14.5%) vs. $1.2B after traffic acquisition costs. Expects to reduce headcount by 5%. "Yahoo is not immune to the ongoing economic downturn, but careful cost management in Q1 allowed our operating cash flow to come in near the high end of our outlook range." (PR)

Today's Markets

Asia markets were mostly lower Wednesday despite solid Wall Street gains Tuesday. Europe stocks are positive for the morning. Futures are down.

  • Asia: Nikkei +0.18% to 8,727. Hang Seng -2.67% to 14,878. Shanghai -2.94% to 2,461. BSE -0.74% to 10,818.
  • Europe at midday: London +0.6%. Paris +0.6%. Frankfurt +0.9%.
  • Futures: Dow -0.5% to 7881. S&P -0.5% to 843. Nasdaq -0.5%. June crude +0.2% to $48.63. Gold +0.5% to $887. Euro is flat vs. dollar. Yen +0.8%. Pound -0.3%.

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!

Twice the Profit Potential, Without Using Options or Futures
The yen rises earn 20%. The euro jumps grab a quick 40%. Imagine earning those kinds of returns without going anywhere near options, futures...or even the Forex market itself. It's all possible with this new "rare breed" of currency plays revealed in our free special report, 26 Forex Plays You Can Trade From Your Online Stock Account. Get Your Copy Today

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