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

Thursday, May 7, 2009

Wall Street Breakfast: Must-Know News

Reader Impact Email

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby


WSB sponsor
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.

  • Final countdown to stress test results. With just hours to go before the Federal Reserve releases its official stress test report, results continue to leak out. At least seven of the nation's biggest banks reportedly need to boost capital by $65B; Bank of America (BAC) likely has the largest hole to plug with a capital shortfall of around $34B, followed by Wells Fargo (WFC) with $13-15B, GMAC (GJM) with $11.5B, Citigroup (C) with $5B and Morgan Stanley (MS) with $1.5B. At least six institutions won't need any capital at all, including JPMorgan Chase (JPM), Goldman Sachs (GS), MetLife (MET), American Express (AXP), Bank of New York Mellon (BK) and Capital One Financial (COF). Geithner said the results will give a 'reassuring' picture of the banking system's ability to withstand crisis. Financial shares continue to do well in the run-up to the official release: AXP +2.2%, BAC +5.2%, C +7.8%, GS +0.9%, JPM +1.4%, MS +0.5%, WFC +2.5% (7:00 ET).
  • Addressing too-big-to-fail. FDIC's Sheila Bair and Minneapolis Federal Reserve's Gary Stern offered up various solutions for the too-big-to-fail problem in Senate testimony yesterday. Bair wants to see the creation of a systemic-risk council to monitor potentially problematic companies because, as one lawmaker put it, "we cannot afford to replace Citi-sized financial institutions with Citi-sized regulators." Bair also wants the FDIC to be able to wind down bank and thrift holding companies as it now does with failed lenders. Stern suggested stress tests with pre-specified policy requirements, automatic capital protection regimes and insurance premiums on risky activity. (Read Bair's full testimony and Stern's full testimony)
  • Senate fights foreclosures. The Senate approved a bill to reduce home foreclosures, including a provision that would shield mortgage service companies from lawsuits if they participate in federal loan modification programs. The bill did not include a controversial mortgage cramdown proposal some Democrats had been advocating. Lawmakers also raised the FDIC's borrowing authority to $100B from $30B, and extended the $250,000 deposit insurance limit through 2013.

  • WSB sponsor
    Twice the Profit Potential, Without Using Options or Futures
    The yen rises 10%...you earn 20%. The euro jumps 20%...you 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

  • Chrysler update. In the words of Fiat CEO Sergio Marchionne, "Chrysler is on track to re-emerge from bankruptcy in 60 days. I will become Chrysler CEO after that." He said the idea has already been discussed with the Treasury.
  • GM seeks stake in Fiat. General Motors (GM) is reportedly asking for a 30% stake in Fiat in return for giving the Italian automaker its Latin American and European operations, while Fiat is offering less than 10%. The talks are the latest development in Fiat's sudden bid to grow into a global auto powerhouse, by acquiring GM's Opel, and a 20% stake in Chrysler.
  • Murdoch: brighter outlook for News Corp. News Corp. (NWS) reported in-line quarterly earnings yesterday (see details below) and a 47% drop in operating income as advertising revenues declined. The company reaffirmed earlier guidance that FY '09 operating income would fall 30%. However, CEO Rupert Murdoch stressed "it is increasingly that the worst is over. There are emerging signs in some of our businesses that the days of precipitous decline are done." Murdoch has no plans to buy additional newspapers, and will initiate cost-cutting at MySpace and Fox Interactive Media.
  • SocGen posts loss on writedowns. Societe Generale (SCGLY.PK) reported an unexpected Q1 loss on writedowns connected to U.S. bond insurers and on higher provisions for risky loans. The bank had a net loss of €278M ($370M) vs. analysts' forecasts for a €332M profit, and noted that "acute tensions remain in the financial markets." CEO Frederic Oudea was named chairman, after Daniel Bouton stepped down from the position at the end of April. Shares -3.8% in Paris (7:00 ET).
  • New Kindle for students, newsies. As expected, Amazon (AMZN) released a new and larger e-reader designed for textbooks and newspapers. The Kindle DX will cost $489, a mark-up of $130 over earlier versions of the e-reader, and will go on sale this summer.
  • GE's health-care push. General Electric (GE) plans to announce a health-care initiative today, unveiling its efforts to improve the 'sustainability of global healthcare systems' in the areas of health technology, independent living, rural health and cost containment. The initiative will likely involved at least $1B of R&D spending. Shares +3.1% premarket (7:00 ET).
  • MSFT still open to Yahoo deal. Microsoft (MSFT) CEO Steve Ballmer sees room to work with Yahoo (YHOO) to create a 'better search product' and says a tie-up would have been 'valuable.' He declined to comment on whether the two companies are holding formal talks. Premarket: MSFT +1.1%, YHOO +1.0% (7:00 ET).
  • House hearing on BoA-Merrill. Bank of America (BAC) CEO Ken Lewis and top federal officials will reportedly be asked to testify in the House of Representatives next month regarding claims that the government pressured Bank of America into completing its Merrill Lynch acquisition.
  • Dell may use Android. Dell (DELL) may use Google's (GOOG) Android operating system for future products, according to a press release put out by a small software company. The company's spokeswoman and a Dell representative later said the release was 'issued in error,' but the Dell spokesman confirmed the firm is assessing technology options.
  • Weak April for Costco. Costco (COST) said its April same-store sales were 8% lower than a year ago, even worse than the 6.8% drop analysts expected. The decline was led by a 12% drop internationally, and 7% in the U.S. Total sales fell 6% to $5.18B.
  • Job cuts decline. Firing announcements fell 12% in April M/M to 132,590, marking the third month in a row of job cuts declines, but are up 47% Y/Y. The report by Challenger, Gray & Christmas Inc noted that "job cuts are still at recession levels, but the fact that they are falling is certainly promising." According to ADP, private sector employment fell by 491,000 in April vs. 708,000 in March (revised from 742K) - much less than the 645,000 decline economists expected. Improvement was widespread across industries and across business sizes, but "this is still a major decline in employment."
  • BoE stays put, boosts bond buys. Bank of England kept its key lending rate unchanged at 0.5%, but raised its bond purchase target by £50B to £125B. "The global banking and financial system remains fragile despite further significant intervention by the authorities," the Bank said, noting it expects U.K. inflation to drop below its 2% target later this year. "But surveys at home and abroad show promising signs that the pace of decline has begun to moderate."

Earnings: Thursday Before Open

  • AECOM Technology (ACM): FQ2 EPS of $0.40 in-line. Revenue of $1.5B (+28.7%) vs. $1.6B. (PR)
  • Ansys (ANSS): Q1 EPS of $0.37 beats by $0.01. Revenue of $121M (+10.9%) vs. $125M. (PR)
  • ATP Oil & Gas (ATPG): Q1 EPS of $0.05 beats by $0.40. Revenue of $82M (-63.9%) vs. $92M. (PR)
  • CapitalSource (CSE): Q1 EPS of -$0.36 misses by $0.11. (PR)
  • Continental Resources (CLR): Q1 EPS of -$0.03 misses by $0.03. Revenue of $97M (-57.6%) vs. $112M. (PR)
  • Corrections Corp. of America (CXW): Q1 EPS of $0.29 beats by $0.03. Revenue of $404M (+6.5%) vs. $403M. (PR)
  • Dynegy (DYN): Q1 EPS of -$0.40 misses by $0.36. Revenue of $904M (+66.5%) vs. $683M. (PR)
  • Frontier Communications (FTR): Q1 EPS of $0.12 misses by $0.02. Revenue of $538M (-5.5%) vs. $547M. (PR)
  • GM (GM): Q1 EPS of -$9.66 beats by $1.39. Revenue of $22.4B (-47.1%) vs. $20.2B. Shares +4.8% premarket (7:20 ET). (PR)
  • Holly (HOC): Q1 EPS of $0.44 beats by $0.14. Revenue of $651M (-56%) vs. $590M. (PR)
  • Lamar Advertising Company (LAMR): Q1 EPS of -$0.23 beats by $0.06. Revenue of $247M (-12.6%) vs. $244M. (PR)
  • MetroPCS Communications (PCS): Q1 EPS of $0.12 beats by $0.03. Revenue of $795M (+20.1%) vs. $818M. (PR)
  • Omega Healthcare Investors (OHI): Q1 FFO of $0.37 in-line. Revenue of $49M (+20.3%) vs. $42M. Reaffirms FY '09 FFO of $1.47-$1.50. (PR)

Earnings: Wednesday After Close

  • Anadarko Petroleum (APC): Q1 EPS of -$0.53 beats by $0.09. Revenue of $1.6B (-46.4%) vs. $1.7B. Shares +0.85% AH. (PR)
  • Atwood Oceanics (ATW): FQ2 EPS of $0.88 beats by $0.09. Revenue of $141M (+24%) vs. $139M. Shares +4.4% AH. (PR)
  • Avis Budget Group (CAR): Q1 EPS of -$0.44 beats by $0.19. Revenue of $1.19B (-17.4%) vs. $1.25B. Shares -5.75% AH. (PR)
  • Brookdale Senior Living (BKD): Q1 EPS of -$0.13 beats by $0.20. Revenue of $498M (+3.6%) vs. $495M. (PR)
  • Churchill Downs (CHDN): Q1 EPS of -$0.37 beats by $0.21. Revenue of $73.7M (+12.2%) vs. $67.6M. (PR)
  • Cisco Systems (CSCO): FQ3 EPS of $0.30 beats by $0.05. Revenue of $8.2B vs. $8.07B. CEO John Chambers' comments on the earnings call will be critical, as always. Shares +2.5% AH. (PR)
  • Eagle Bulk Shipping (EGLE): Q1 EPS of $0.37 in-line. Revenue of $56M (+52.6%) vs. $54.4M. Utilization rate 99.6%. Shares -4.5% AH. (PR)
  • Embarq (EQ): Q1 EPS of $1.39 beats by $0.10. Revenue of $1.35B (-7.6%) in-line. (PR)
  • Federal Realty Investment Trust (FRT): Q1 FFO of $0.99 in-line. Revenue of $131M (+3.8%) vs. $130M. Shares flat AH. (PR)
  • Global Industries (GLBL): Q1 EPS of $0.17 beats by $0.10. Revenue of $269.5M (-10.6%) vs. $264M. Shares +2.6% AH. (PR)
  • Goodrich Petroleum (GDP): Q1 EPS of -$0.05 misses by $0.02. Revenue of $28.5M (-38.6%) vs. $21M. Shares -1.8% AH. (PR)
  • Home Properties (HME): Q1 FFO of $0.79 beats by $0.01. Revenue of $129M vs. $122M. Shares flat AH. (PR)
  • ION Geophysical (IO): Q1 EPS of -$0.10 misses by $0.02. Revenue of $107M (-23.8%) vs. $133M. Shares -9.5% AH. (PR)
  • Limelight Networks (LLNW): Q1 EPS of -$0.02 beats by $0.02. Revenue of $33.2M (+9.9%) vs. $32.7M. Shares -0.4% AH. (PR)
  • Macrovision (MVSN): Q1 EPS of $0.31 beats by $0.10. Revenue of $111.2M (+7.2%) vs. $106.7M. Narrows full-year guidance essentially in-line with previous range. Shares +4.7% AH. (PR)
  • Murphy Oil (MUR): Q1 EPS of $0.37 beats by $0.12. Revenue of $3.45B (-47.1%) vs. $4.09B. Sees Q2 EPS in-line. Shares flat AH. (PR)
  • News Corp. (NWS): FQ3 EPS of $0.16 in-line. Revenue of $7.4B vs. $7.71B. Says results "directly reflect the continuing weakness of the global economic climate." Shares +3.3% AH. (PR)
  • ON Semiconductor (ONNN): Q1 EPS of $0.03 beats by $0.10. Revenue of $379M vs. $362M. "Due to the slowdown in the macro economy, along with the reduction of inventory levels throughout the supply chain, we believe the semiconductor industry and ON Semiconductor shipped fewer products than the end-market consumed." Shares +8.9% AH. (PR)
  • Penn Virginia (PVA): Q1 EPS of $0.06 in-line. Revenue of $199M (-20.1%) vs. $221M. Shares +0.3% AH. (PR)
  • Prudential Financial (PRU): Q1 EPS of $1.05 beats by $0.22. Revenue of $1M vs. $1M. Shares +4% AH. (PR)
  • Regency Centers (REG): Q1 FFO of $0.78 beats by $0.01. Cuts quarterly dividend by 36% to $0.46. Shares flat AH. (PR)
  • Symantec (SYMC): FQ4 EPS of $0.38 beats by $0.03. Revenue of $1.49B (+1.49%) in-line. Sees FQ1 EPS and revenue in-line. Shares -0.8% AH. (PR)
  • Sunoco (SUN): Q1 EPS of $0.50 beats by $0.16. Revenue of $6.44B. "We continue to expect a challenging market for petroleum and chemical products due to ongoing economic weakness and additional global supply." Expects 2009 capex to be $200M lower than planned. Shares +0.5% AH. (PR)
  • Tenaris (TS): Q1 EPS of $0.62 misses by $0.06. Revenue of $2.45B (-6.7%) vs. $2.5B. Shares -1% AH. (PR)
  • Tesoro (TSO): Q1 EPS of $0.37 in-line. Revenue of $3.28B (-50.3%) in-line. Shares -2.5% AH. (PR)
  • The Andersons (ANDE): Q1 EPS of $0.27 beats by $0.33. Revenue of $697M (-2.2%) vs. $579M. Shares +14.2% AH. (PR)
  • THQ (THQI): FQ4 EPS of -$0.54 misses by $0.20. Revenue of $170M vs. $149M. Expects year-end cash balance at least $50M higher next year. Secures $35M credit line with BofA (BAC). Shares -0.3% AH. (PR)
  • USEC (USU): Q1 EPS of $0.02 misses by $0.07. Shares -5.1% AH. (PR)

Today's Markets

Another day of solid gains for overseas markets. Tokyo, open for the first time this week, led the way.

  • Asia: Nikkei +4.55% to 9,386. Hang Seng +2.28% to 17,218. Shanghai +0.19% to 2,597. BSE +1.37% to 12,117.
  • Europe at midday: London +2.6%. Paris +1.8%. Frankfurt +1.9%.
  • Futures at 7:00: Dow +0.7% to 8527. S&P +0.6% to 923. Nasdaq +0.2%.Crude +2.7% to $57.88. Gold +0.7% to $917. Euro -0.15% vs. dollar. Yen -0.95%. 30-year Tsy -0.93% to 121-07. 10-year -0.49% to 120-16. 5-year -0.35%. 2-year -0.06%.

Thursday'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
 

0 comments: