Wednesday, August 5, 2009

Wall Street Breakfast: Must-Know News

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby


  • Bottlers get a pop from Pepsi deal. PepsiCo (PEP) reached a deal to buy its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS), for $7.8B, a 20% premium over its previous offers in April. PepsiCo will pay $36.50/share for Pepsi Bottling Group and $28.50/share for PepsiAmericas; the news sent Pepsi Bottling Group up 8.5% and PepsiAmericas up 9% in trading yesterday. PepsiCo says the purchases will speed the decision-making process and increase efficiencies.
  • Sony's very cheap e-reader. Sony (SNE) is raising the stakes in its battle with Amazon (AMZN), introducing a new e-reader for $199, with a larger touchscreen version available for $299. The lower-priced e-reader will be the cheapest one sold in the U.S. as Sony looks to take a bigger share of the small but fast-growing market. The devices will go on sale in retail outlets like Best Buy and Wal-Mart, and Sony will also lower the prices it charges for downloads of best-sellers and new releases to bring its pricing largely in line with Amazon's.
  • SEC ban could come in a flash. The SEC is considering a ban on flash trading to "eliminate the inequity that results from flash orders." Sen. Charles Schumer, who is strongly pushing for an end to flash trading, said SEC's Mary Schapiro assured him a ban is imminent. NYSE Euronext (NYX), which is the only one of the four major U.S. exchanges that doesn't use flash trading, hopes a ban will help it regain marketshare from fast-growing rival Direct Edge Holdings.
  • More Microhoo details. As part of their search partnership, Microsoft (MSFT) will hire at least 400 Yahoo (YHOO) employees, affecting around 3% of Yahoo's workforce. According to a regulatory filing, Microsoft will also pay Yahoo $150M over three years to help cover Yahoo's costs in getting the partnership started. Yahoo's 88% revenue share could rise to 93% or drop to 83% in five years, depending on whether Microsoft terminates Yahoo's exclusivity for premium search advertising.
  • GE settles civil suit. General Electric (GE) agreed to pay $50M to the SEC to settle civil fraud and other charges that its 2002 and 2003 financial statements misled investors. The SEC alleged that GE used improper accounting methods to raise earnings and avoid disappointing investors. GE neither admitted to nor denied the allegations.
  • GMAC turns to Fed for money. Battered lender GMAC reported that its Q2 loss widened to $3.9B, with revenues falling 22% to $1.03B and loan loss provisions rising 50% from the year before to $1.16B. GMAC also confirmed it's in discussions with the Federal Reserve over $5.6B in new capital it needs to raise by November to satisfy the government's stress test requirements. Since the government has already invested $12.5B in GMAC, the lender is unlikely to find external investors willing to help with capital raising.
  • Lloyds' loss. Lloyds Banking Group (LYG) reported a loss of £3.1B ($5.2B) in H1, in large part from its HBOS acquisition in January, but said loan loss provisions will come down 'significantly' in H2 and will continue to fall in 2010. The bank set aside £13.4B in H1 to cover bad loans vs. consensus of £11.3B. Shares +12% premarket (7:00 ET).
  • GM position weakens on Opel bid. General Motors' opposition to Magna's (MGA) Opel bid is weakening, said German officials, and it will be up to Chancellor Angela Merkel to step in and remove any final obstacles holding up a deal. An agreement between the U.S., GM and Germany could be reached by the end of the week.
  • Personal income falls. Personal income fell 1.3% in June as the effects of one-time stimulus checks wore off, marking the largest drop since January 2005 and a sharper decline than the expected -1%. Spending rose slightly more than expected, coming in at +0.4% vs. consensus of +0.3%. High unemployment, tight credit and falling home values contributed to the fall in personal incomes, and will continue to hurt consumer spending.
  • MBA apps rise. Mortgage applications rose 4.4% from last week, MBA said. The average interest rate on 30-year fixed-rate mortgages fell to 5.17% from 5.36%.
  • Retail sales. Chain store sales fell 1.6% in the first four weeks of July, Redbook said, worse than the -0.9% expected. According to ICSC, weekly sales were down 0.2%, and 0.7% Y/Y. A later sales-tax holiday trimmed comparisons but should lift sales this coming week.
  • Home sales rise. June Pending Home Sales increased +3.6% from May to 94.6, the fifth straight monthly gain. May's index was revised from 90.7 to 91.3. The last five-month streak was in July 2003. NAR chief economist Lawrence Yun noted activity is much stronger for lower-priced homes.

Earnings: Wednesday Before Open

  • Agrium (AGU): Q2 EPS of $2.35 beats by $0.54. Revenue of $4.1B (+6%) vs. $3.4B. (PR)
  • Baker Hughes (BHI): Q2 EPS of $0.41 misses by $0.05. Revenue of $2.3B (-22%) vs. $2.25B. Shares -0.9% premarket (6:40 ET). (PR)
  • Dean Foods (DF): Q2 EPS of $0.43 in-line. Revenue of $2.7B (-14%) vs. $2.8B. (PR)
  • Devon Energy (DVN): Q2 EPS of $0.71 beats by $0.12. Revenue of $2.1B (-41%) vs. $1.9B. (PR)
  • Fortress Investment (FIG): Q2 EPS of -$0.41 vs. consensus $0.07 (may not be comparable). Revenue of $117M (-29%) vs. $108M. Daniel Mudd becomes CEO effective August 11, 2009. (PR)
  • Foster Wheeler (FWLT): Q2 EPS of $0.98 beats by $0.36. Revenue of $1.3B (-23%) vs. $1.4B. (PR)
  • Garmin (GRMN): Q2 EPS of $0.83 beats by $0.32. Revenue of $669M (-27%) vs. $657M. (PR)
  • Overseas Shipholding Group (OSG): Q2 EPS of -$0.29 beats by $0.37. Revenue of $283M (-34%) vs. $260M. (PR)
  • PetroQuest Energy (PQ): Q2 EPS of $0.15 beats by $0.02. Revenue of $55M (-40.5%) vs. $54M. (PR)
  • Procter & Gamble (PG): FQ4 EPS of $0.80 beats by $0.01. Revenue of $19B (-11%) in-line. (PR)
  • Quanta Services (PWR): Q2 EPS of $0.20 beats by $0.04. Revenue of $813M (-15%) vs. $861M. Issues downside Q3 EPS guidance $0.23-0.24 vs. $0.28 consensus; sees Q3 revenue of $840-870M vs. $1.04B consensus. (PR)
  • R.R. Donnelley & Sons (RRD): Q2 EPS of $0.37 beats by $0.06. Revenue of $2.4B (-19%) in-line. (PR)

Earnings: Tuesday After Close

  • Avis Budget Group (CAR): Q2 EPS of -$0.06 beats by $0.09. Revenue of $1.3B (-17%) vs. $1.4B. (PR)
  • BMC Software (BMC): FQ1 EPS of $0.59 beats by $0.10. Revenue of $450M (+3%) vs. $441M. Sees full-year EPS of $2.47-2.57 vs. $2.42. Shares +0.3% AH. (PR)
  • Boston Beer Company (SAM): Q2 EPS of $0.83 beats by $0.21. Revenue of $118M (+1%) vs. $121M. (PR)
  • BRE Properties (BRE): Q2 FFO of $0.70 beats by $0.09. Revenue of $86M (flat) vs. $81M. Shares +8.6% AH. (PR)
  • CBL & Associates Properties (CBL): Q2 FFO of $0.71 beats by $0.08. Revenue of $267M (-2%) vs. $256M. (PR)
  • Central European Distribution (CEDC): Q2 EPS of $0.38 beats by $0.03. Revenue of $362M (-14%) vs. $338M. Shares +2.7% AH. (PR)
  • Cephalon (CEPH): Q2 EPS of $1.44 beats by $0.14. Revenue of $539M (+11%) vs. $541M. Sees full-year EPS of $6.30-$6.40 vs. $5.64. Shares -3.8% AH. (PR)
  • Coinstar (CSTR): Q2 EPS of $0.23 beats by $0.06. Revenue of $314M (+43%) vs. $305M. Sees full-year EPS of $0.80-0.86 vs. $0.77. Shares +3% AH. (PR)
  • Ctrip.com (CTRP): Q2 EPS of $0.39 beats by $0.10. Revenue of $70M (+27%) vs. $65M. (PR)
  • Denny's (DENN): Q2 EPS of $0.09 beats by $0.03. Revenue of $156M (-18%) in-line. Shares -1.6% AH. (PR)
  • Electronic Arts (ERTS): FQ1 EPS of -$0.02 beats by $0.11. Revenue of $816M (+34%) vs. $730M. Sees full-year EPS of $1.00 vs. $0.97. Shares +3.7% AH. (PR)
  • Exco Resources (XCO): Q2 EPS of $0.29 beats by $0.05. Revenue of $288M (-15%) vs. $270M. (PR)
  • Federal Realty Investment Trust (FRT): Q2 FFO of $0.97 beats by $0.03. Revenue of $130M (+1%) vs. $131M. Sees full-year FFO of $3.82-3.87 vs. $3.50. (PR)
  • GT Solar (SOLR): FQ1 EPS of $0.05 misses by $0.01. Revenue of $72M (+26%) vs. $86M. Shares -0.2% AH. (PR)
  • HealthSouth (HLS): Q2 EPS of $0.39 beats by $0.15. Revenue of $484M (+6%) vs. $472M. Raises full-year EPS guidance to $1.15-1.25 from $0.85-0.90 vs. $1.05. Shares +3.5% AH. (PR)
  • Jack in the Box (JACK): FQ3 EPS of $0.57 misses by $0.01. Revenue of $576M (-3%) vs. $585M. Q3 same-store sales down 1%. Shares -0.8% AH. (PR)
  • Jones Lang LaSalle (JLL): Q2 EPS of $0.30 beats by $0.14. Revenue of $576M (-13%) vs. $582M. (PR)
  • Kraft (KFT): Q2 EPS of $0.56 beats by $0.02. Revenue of $10.2B (-6%) vs. $10.4B. Shares -0.9% AH. (PR)
  • Papa John's International (PZZA): Q2 EPS of $0.51 beats by $0.17. Revenue of $277M (-2%) vs. $273M. Sees full-year EPS of $1.38-1.44 vs. $1.47. Shares -2% AH. (PR)
  • Petrohawk Energy (HK): Q2 EPS of $0.10 beats by $0.05. Revenue of $227M (-25%) vs. $258M. Shares -5.7% AH. (PR)
  • Pioneer Natural Resources (PXD): Q2 EPS of $0.16 beats by $0.37. Revenue of $371M (-42%) vs. $376M. (PR)
  • Protective Life (PL): Q2 EPS of $1.16 beats by $0.39. Revenue of $726M vs. $732M. Shares -1.8% AH. (PR)
  • Sotheby's (BID): Q2 EPS of $0.18 misses by $0.10. Revenue of $167M (-48%) vs. $153M. (PR)
  • Tessera Technologies (TSRA): Q2 EPS of $0.37 beats by $0.23. Revenue of $62M (+11%) vs. $60M. Shares +3.3% AH. (PR)
  • UDR Inc. (UDR): Q2 FFO of $0.35 beats by $0.04. Revenue of $152M (+9%) vs. $148M. Sees full-year FFO of $1.23-1.35 vs. $1.22. Shares +0.1% AH. (PR)
  • Unum Group (UNM): Q2 EPS of $0.65 beats by $0.04. Revenue of $2.6B (-2%) vs. $2.5B. Raises full-year EPS guidance to $2.50-2.60 vs. $2.48. (PR)
  • ValueClick (VCLK): Q2 EPS of $0.23 beats by $0.09. Revenue of $130M (-18%) vs. $128M. Sees Q3 EPS of $0.19-0.20 vs. $0.15. Shares +1% AH. (PR)
  • Whole Foods Market (WFMI): FQ3 EPS of $0.25 beats by $0.05. Revenue of $1.9B (+2%) in-line. Same-store sales down 1.1% in first four weeks of new quarter. Sees Q4 EPS of $0.16-0.18 vs. $0.14. Sees full-year EPS $0.80-0.82 vs. $0.75. Shares +7.7% AH. (PR)
  • Yamana Gold (AUY): Q2 EPS of $0.13 beats by $0.04. Revenue of $270M vs. $299M. Shares +1.4% AH. (PR)

Today's Markets

Asian markets closed mostly down, European markets are showing small gains and U.S. futures are sending no clear signals.

  • In Asia, Nikkei -1.2% to 10,253. Hang Seng -1.45% to 20,495. Shanghai -1.2% to 3,428. BSE +0.5% to 15,904.
  • In Europe at midday, London +0.3%. Paris +0.6%. Frankfurt +0.1%.
  • Futures: Dow flat. S&P +0.1%. Nasdaq -0.1%. Crude -0.4% to $71.13. Gold -0.2% to $967.80.

Wednesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.


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