Shares of investment banks fell in early Thursday trading after Lehman Brothers analyst Roger Freeman said banks are likely to face widening losses on asset write-downs.
Bear Stearns Cos. shares fell the furthest, declining $7.30, or 12.1 percent, to $54.28, after earlier hitting $52.43, their lowest point since the fall of 2002.
Freeman said any gains Bear Stearns would have received from wider spreads would be offset by write-downs on alt-A mortgage assets. Alt-A mortgages are loans given to customers with minor credit problems or who do not have the documentation to get a traditional, prime loan.
Freeman estimates Bear Stearns will earn 90 cents per share for the quarter ending Feb. 29.
Bear Stearns book value per share was $84.85 at the end of the quarter, Freeman estimated.
Bear Stearns is likely to lose $50 million in its merchant banking division and reduce the value of its alt-A exposure by about 8 percent during the quarter, Freeman wrote in a research note.
Among other investment banks with quarters ending Feb. 29, Freeman estimated Goldman Sachs Group Inc. earnings will likely be hurt by high losses in its investment portfolio. Freeman lowered his first-quarter earnings estimate for Goldman Sachs to $1.95 per share from $2.10 per share.
Shares of Goldman Sachs fell $3
.50, or 2.2 percent, to $159.51.
Morgan Stanley will also be negatively affected by asset write-downs and investment losses, which could be partially offset by some gains in structured debt, Freeman said.
Shares of Morgan Stanley fell 82 cents, or 2 percent, to $40.19.
Showing posts with label stock. Show all posts
Showing posts with label stock. Show all posts
Thursday, March 13, 2008
Wednesday, March 12, 2008
Tech stocks look for direction in early trading
Technology stocks put in a mixed early trading performance Wednesday. Gains came from Dell Inc. (DELL:19.98, +0.15, +0.8%) , Oracle Corp. (ORCL:19.63, +0.12, +0.6%) and Google Inc. (GOOG:444.29, +4.45, +1.0%) , while decliners included Apple Inc. (AAPL:126.20, -1.15, -0.9%) , Hewlett-Packard Co. (HPQ:47.54, -0.38, -0.8%) and IBM Corp. (IBM:116.41, -0.08, -0.1%) . Take-Two Interactive Software Inc. (TTWO: 25.00, +0.35, +1.4%) shares rose 31 cents to $24.99 after the video game publisher on Tuesday raised its quarterly outlook due to strong advance orders of "Grand Theft Auto IV." The tech-heavy Nasdaq Composite rose 7 points to 2,262.
Thursday, February 14, 2008
Oil Falls
Oil prices dropped Friday after rising more than $2 a barrel in the previous session as new U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole -- an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke's suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at $95.46 a barrel Thursday, an increase of $2.19 on the New York Mercantile Exchange.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
On Friday, the March contract lost 36 cents to $95.10 a barrel in Asian electronic trading by midafternoon in Singapore.
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Energy investors were also buying after a federal judge's decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela's nationalization of an oil project. A British court's earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Weighing on oil prices were forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
Heating oil futures dropped 1.08 cents to $2.6558 a gallon while gasoline prices declined 0.83 cent to $2.4678 a gallon.
Natural gas futures lost 0.7 cents to $8.765 per 1,000 cubic feet.
Brent crude futures fell 38 cents to $94.78 a barrel on the ICE Futures exchange in London.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole -- an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke's suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at $95.46 a barrel Thursday, an increase of $2.19 on the New York Mercantile Exchange.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
On Friday, the March contract lost 36 cents to $95.10 a barrel in Asian electronic trading by midafternoon in Singapore.
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Energy investors were also buying after a federal judge's decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela's nationalization of an oil project. A British court's earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Weighing on oil prices were forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
Heating oil futures dropped 1.08 cents to $2.6558 a gallon while gasoline prices declined 0.83 cent to $2.4678 a gallon.
Natural gas futures lost 0.7 cents to $8.765 per 1,000 cubic feet.
Brent crude futures fell 38 cents to $94.78 a barrel on the ICE Futures exchange in London.
Friday, February 8, 2008
Friday Market slips at open
Stocks opened lower on Friday after a Federal Reserve official said a recession might not be avoidable and fresh concerns arose about the outlook for bond insurers.
The Dow Jones industrial average (DJI:^DJI - News) was down 39.10 points, or 0.32 percent, at 12,207.90. The Standard & Poor's 500 Index (^SPX - News) was down 5.16 points, or 0.39 percent, at 1,331.75. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 3.29 points, or 0.14 percent, at 2,289.74.
This Is a Report By Tarek El Hewehi.
The Dow Jones industrial average (DJI:^DJI - News) was down 39.10 points, or 0.32 percent, at 12,207.90. The Standard & Poor's 500 Index (^SPX - News) was down 5.16 points, or 0.39 percent, at 1,331.75. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 3.29 points, or 0.14 percent, at 2,289.74.
This Is a Report By Tarek El Hewehi.
Thursday, February 7, 2008
YRC Worldwide to Close Service Centers
YRC Worldwide Inc., the nation's largest less-than-truckload carrier, said two of its subsidiaries will close a combined 27 service centers and take $10 million in charges related to the move, according to a Securities and Exchange Commission filing Thursday.
YRC's USF Holland unit will close six service centers located in Albany, Ga., Jackson, Miss., Lumberton, N.C., Little Rock, Ark., Mobile, Ala., and Metter, Ga.
The company's USF Reddaway division will close 21 service centers located in Louisiana, New Mexico, Oklahoma and Texas. Both divisions are units of USF Corp., which YRC purchased in May 2005. But last month it took a $782 million write-down on the value of the two companies, citing various operating issues and overall slumping demand
Service will still be available to these areas through other branches of its North American Transportation division.
The Feb. 22 closures are a "significant component" of a previously announced $50 million profit improvement plan for the regional transportation unit, YRC said.
YRC expects to take a $5 million charge for lease terminations and another $5 million charge for employee severance. The majority of these charges are expected be taken in the first quarter of 2008.
The Holland closings will affect 300 workers and the Reddaway closings will affect an additional 800, said Michael Smid, president and chief executive of YRC North American Transportation, which oversees the two subsidiaries.
Smid said the centers were among the least efficient of the two companies
"We feel both of those carriers are better off a little smaller, but much more capable," Smid told The Associated Press.
Smid said the company would work with customers who use the centers to either ship their freight through other YRC-owned carriers in their area or use other YRC network points if they want to stay with Holland or Reddaway.
Stifel, Nicolaus & Co. Inc. analyst David G. Ross applauded the move
We believe this is a step in the right direction for the regional companies that were once solid operators in their respective legacy territories but were stretched too thin (after being acquired by YRC Worldwide) when trying to expand into other regions and/or integrate another lesser carrier into their network," Ross said.
"When these two carriers expanded coverage, pricing became more difficult, less disciplined, and yields and margins suffered, as a result."
The company may close other centers as it continues to examine its regional business, he added.
"These shutdowns should be good for the less-than-truckload industry, as it removes a poor pricer from some Southern and Southwestern regional markets," Ross said
He maintained his "Hold" rating on the stock, saying he sees "evidence that the recovery plan is working."
Less-than-truckload, or LTL carriers, usually fill their trucks with freight from a variety of sources and might re-sort and redistribute it at a company terminal along their route.
Shares of YRC retreated from a surge after the announcement to close up 11 cents to $17.57 Thursday.
YRC's USF Holland unit will close six service centers located in Albany, Ga., Jackson, Miss., Lumberton, N.C., Little Rock, Ark., Mobile, Ala., and Metter, Ga.
The company's USF Reddaway division will close 21 service centers located in Louisiana, New Mexico, Oklahoma and Texas. Both divisions are units of USF Corp., which YRC purchased in May 2005. But last month it took a $782 million write-down on the value of the two companies, citing various operating issues and overall slumping demand
Service will still be available to these areas through other branches of its North American Transportation division.
The Feb. 22 closures are a "significant component" of a previously announced $50 million profit improvement plan for the regional transportation unit, YRC said.
YRC expects to take a $5 million charge for lease terminations and another $5 million charge for employee severance. The majority of these charges are expected be taken in the first quarter of 2008.
The Holland closings will affect 300 workers and the Reddaway closings will affect an additional 800, said Michael Smid, president and chief executive of YRC North American Transportation, which oversees the two subsidiaries.
Smid said the centers were among the least efficient of the two companies
"We feel both of those carriers are better off a little smaller, but much more capable," Smid told The Associated Press.
Smid said the company would work with customers who use the centers to either ship their freight through other YRC-owned carriers in their area or use other YRC network points if they want to stay with Holland or Reddaway.
Stifel, Nicolaus & Co. Inc. analyst David G. Ross applauded the move
We believe this is a step in the right direction for the regional companies that were once solid operators in their respective legacy territories but were stretched too thin (after being acquired by YRC Worldwide) when trying to expand into other regions and/or integrate another lesser carrier into their network," Ross said.
"When these two carriers expanded coverage, pricing became more difficult, less disciplined, and yields and margins suffered, as a result."
The company may close other centers as it continues to examine its regional business, he added.
"These shutdowns should be good for the less-than-truckload industry, as it removes a poor pricer from some Southern and Southwestern regional markets," Ross said
He maintained his "Hold" rating on the stock, saying he sees "evidence that the recovery plan is working."
Less-than-truckload, or LTL carriers, usually fill their trucks with freight from a variety of sources and might re-sort and redistribute it at a company terminal along their route.
Shares of YRC retreated from a surge after the announcement to close up 11 cents to $17.57 Thursday.
Tuesday, February 5, 2008
Microsoft-Yahoo Deal Likely To Go Through
Yahoo Inc.'s (YHOO) stock was coasting just below Microsoft Corp.'s (MSFT) $31-a-share offer price Tuesday morning as more analysts said they believe the marriage will likely be consummated - even as they cautioned investors to be ready for surprises.
Yahoo has yet to respond to Microsoft's $44.6 billion bear-hug bid to acquire the Internet giant, a move which has prompted rival Google Inc. (GOOG) to publicly voice its opposition to the proposed merger.
On Tuesday, Yahoo was downgraded from buy to neutral by Banc of America Securities. It was the third such downgrade since Microsoft announced its offer on Friday, following similar moves by Susquehanna Financial Group and Soleil Securities Group.
The downgrades came after Yahoo's stock zoomed up more than 50% following the bid - which put the stock in range of several analysts' price targets.
In their reports, many analysts predict that the deal will likely happen and that, for now, investors would be wise to stick close to Microsoft's offer price, which they describe as generous.
"Given the significant premium above the Jan. 31, 2008, stock price, we believe shareholders would be apt to take advantage of this offer," analyst Brian Pitz of Banc of America Securities wrote in a note to clients.
Crawford Del Prete of International Data Corp. said he thinks the deal will eventually happen.
"But I think, given that it's hostile, it will take some time for Yahoo to sort through its options," he said in an email. "However, in the end I expect that they will conclude that this is the best option for shareholders, given the price that was offered and the absence of other suitors."
Still, there could be surprises.
Pitz pointed to reported negotiations between Yahoo and Google on a possible deal to outsource Yahoo's search ads to its rival as a way of blocking the Microsoft bid.
Microsoft's bid could also go higher and, contrary to the view of some observers, another potential buyer could emerge, he said.
"While it's difficult to raise debt in the current market environment, we believe a rival bid from a private-equity consortium is also possible," Pitz said.
Analyst Mark Mahaney of Citigroup, who raised his target price for Yahoo to $31 a share from $22, cited the two scenarios in a research note, but didn't give them as much as weight as other potential outcomes.
He said the $45 billion price tag and "the strategic value of Yahoo to Microsoft make the likelihood of a successful competing bidder very low."
An outsourcing deal with Google would be more likely and could be a viable strategy that could appease Yahoo's shareholders, he said.
But Mahaney gave more credence to another possibility: That Yahoo will reject Microsoft's offer, prompting the Redmond, Wash.-giant to bid higher, with the two giants eventually coming to an agreement.
"The deal makes significant strategic sense for Microsoft," he said. "Our review of bid histories in the software space makes us think this is the most likely outcome."
Mahaney cited another software giant, Oracle Corp. (ORCL), which has been on a buying spree over the past several years. In two prominent unsolicited bids - for PeopleSoft Corp. and, more recently, BEA Systems Inc. (BEAS) - the company ended up raising its offer price.
Many analysts still believe the proposed merger between Microsoft and Yahoo would meet stiff regulatory challenges in the U.S. and Europe.
But given Google's dominant position in online advertising, some of them believe Microsoft would clear this hurdle.
"We estimate that Microsoft and Yahoo today account for, at most, 30% of total U.S. online advertising, with their combined market share less in Europe," Mahaney said. "Thus, while we would expect substantial regulatory review, we assign this outcome only a 10% probability
Yahoo has yet to respond to Microsoft's $44.6 billion bear-hug bid to acquire the Internet giant, a move which has prompted rival Google Inc. (GOOG) to publicly voice its opposition to the proposed merger.
On Tuesday, Yahoo was downgraded from buy to neutral by Banc of America Securities. It was the third such downgrade since Microsoft announced its offer on Friday, following similar moves by Susquehanna Financial Group and Soleil Securities Group.
The downgrades came after Yahoo's stock zoomed up more than 50% following the bid - which put the stock in range of several analysts' price targets.
In their reports, many analysts predict that the deal will likely happen and that, for now, investors would be wise to stick close to Microsoft's offer price, which they describe as generous.
"Given the significant premium above the Jan. 31, 2008, stock price, we believe shareholders would be apt to take advantage of this offer," analyst Brian Pitz of Banc of America Securities wrote in a note to clients.
Crawford Del Prete of International Data Corp. said he thinks the deal will eventually happen.
"But I think, given that it's hostile, it will take some time for Yahoo to sort through its options," he said in an email. "However, in the end I expect that they will conclude that this is the best option for shareholders, given the price that was offered and the absence of other suitors."
Still, there could be surprises.
Pitz pointed to reported negotiations between Yahoo and Google on a possible deal to outsource Yahoo's search ads to its rival as a way of blocking the Microsoft bid.
Microsoft's bid could also go higher and, contrary to the view of some observers, another potential buyer could emerge, he said.
"While it's difficult to raise debt in the current market environment, we believe a rival bid from a private-equity consortium is also possible," Pitz said.
Analyst Mark Mahaney of Citigroup, who raised his target price for Yahoo to $31 a share from $22, cited the two scenarios in a research note, but didn't give them as much as weight as other potential outcomes.
He said the $45 billion price tag and "the strategic value of Yahoo to Microsoft make the likelihood of a successful competing bidder very low."
An outsourcing deal with Google would be more likely and could be a viable strategy that could appease Yahoo's shareholders, he said.
But Mahaney gave more credence to another possibility: That Yahoo will reject Microsoft's offer, prompting the Redmond, Wash.-giant to bid higher, with the two giants eventually coming to an agreement.
"The deal makes significant strategic sense for Microsoft," he said. "Our review of bid histories in the software space makes us think this is the most likely outcome."
Mahaney cited another software giant, Oracle Corp. (ORCL), which has been on a buying spree over the past several years. In two prominent unsolicited bids - for PeopleSoft Corp. and, more recently, BEA Systems Inc. (BEAS) - the company ended up raising its offer price.
Many analysts still believe the proposed merger between Microsoft and Yahoo would meet stiff regulatory challenges in the U.S. and Europe.
But given Google's dominant position in online advertising, some of them believe Microsoft would clear this hurdle.
"We estimate that Microsoft and Yahoo today account for, at most, 30% of total U.S. online advertising, with their combined market share less in Europe," Mahaney said. "Thus, while we would expect substantial regulatory review, we assign this outcome only a 10% probability
Microsoft vs.Google
EVEN AS GOOGLE (GOOG: 506.80, +11.37, +2.29%) publicly lambastes Microsoft's (MSFT: 29.07, -1.12, -3.70%) proposed acquisition of Yahoo (YHOO: 28.98, -0.35, -1.19%), the search leader's stock is cratering, closing below $500 for the first time since August. But given the arduous challenge of making any giant acquisition work, especially one as fraught with potential delays and pitfalls as this one, Google's managers may be secretly licking their chops. Assuming the deal gets done — and that's a big if — Google's two largest competitors will be hindered by years of complicated integration. If anyone should be up in arms, it's probably shareholders in Microsoft.
"Google has to put up a stink just because that's their role in this situation," says Roger Kay, president of Endpoint Technologies Associates, a market intelligence firm. "But if I were in the boardroom at Google I would say something like, 'Let's act really upset about this deal but then let it slip through our fingers and have it go through.'"
Kay points out that the average for large integrations is two years, and this one is more complicated than most. Yahoo is based in Silicon Valley; Microsoft (already hardly beloved by the Yahoos) sits up in Redmond, Wash. The cultures are different. The engineering and marketing teams need to be sorted and assimilated. Yahoo operates on a lot of open source software. Microsoft, of course, runs on Windows. Just making the back ends of the two operations work together will be a tough technical challenge in and of itself.
"This is going to take project management on a scale that the Microsoft guys have never done before, and that is a formidable obstacle," Kay says. "And even if they're successful it's going to take a lot of energy and they will be somewhat distracted. That could give Google an opening."
Citigroup analyst Mark Mahaney pointed to that Friday after the proposed merger was announced. "This deal would be a material negative for Google if it were to change user behavior, which would then lead to a shift in ad spending," the analyst wrote. "But we don't think a Microsoft/Yahoo! combination would change user behavior at all. And we could see a scenario by which Google would actually gain more market share due to industry uncertainty over the integration of the deal."
Then there's the unknown of when this shotgun marriage will be consummated. Canaccord Adams analyst Peter Misek wrote Monday that if the deal gets done, competitive gains vs. Google aren't likely to start to emerge until 2009 at the earliest. Throw in the probability of antitrust reviews here and in Europe, and a closing could be pushed out even further. Bank of America Securities downgraded Yahoo to Neutral (Hold, essentially) from Buy Tuesday, saying that "the acquisition could face significant regulatory hurdles in the U.S. and particularly in the E.U., which could delay the acquisition from closing for quite some time."
Microsoft's big problem is that it needs to convert its piles of cash into capital for sustainable businesses that are going to make huge bucks a decade from now. But it's hard to see how throwing billions of dollars at Yahoo serves that end. Microsoft is a sprawling company with five businesses, and all of them are subservient to the company's lifeblood: Windows and Office. The online division isn't just an also-ran to Google and Yahoo; it's the only part of the company that loses money.
Meanwhile, Yahoo's been flailing about for years, losing share to Google and missing out on Web 2.0 innovations like social networking. True, it's the world's biggest destination on the Internet, but still...it's a portal. How 1990s. How quaint. No company is better than Microsoft at spinning a strategic vision, even if the quality of its software and hardware products too often falls short of its rhetoric. But to hear Chief Executive Steve Ballmer extol the opportunities and virtues of the deal, it's clear he's been drinking his own Kool-Aid.
"Google has to put up a stink just because that's their role in this situation," says Roger Kay, president of Endpoint Technologies Associates, a market intelligence firm. "But if I were in the boardroom at Google I would say something like, 'Let's act really upset about this deal but then let it slip through our fingers and have it go through.'"
Kay points out that the average for large integrations is two years, and this one is more complicated than most. Yahoo is based in Silicon Valley; Microsoft (already hardly beloved by the Yahoos) sits up in Redmond, Wash. The cultures are different. The engineering and marketing teams need to be sorted and assimilated. Yahoo operates on a lot of open source software. Microsoft, of course, runs on Windows. Just making the back ends of the two operations work together will be a tough technical challenge in and of itself.
"This is going to take project management on a scale that the Microsoft guys have never done before, and that is a formidable obstacle," Kay says. "And even if they're successful it's going to take a lot of energy and they will be somewhat distracted. That could give Google an opening."
Citigroup analyst Mark Mahaney pointed to that Friday after the proposed merger was announced. "This deal would be a material negative for Google if it were to change user behavior, which would then lead to a shift in ad spending," the analyst wrote. "But we don't think a Microsoft/Yahoo! combination would change user behavior at all. And we could see a scenario by which Google would actually gain more market share due to industry uncertainty over the integration of the deal."
Then there's the unknown of when this shotgun marriage will be consummated. Canaccord Adams analyst Peter Misek wrote Monday that if the deal gets done, competitive gains vs. Google aren't likely to start to emerge until 2009 at the earliest. Throw in the probability of antitrust reviews here and in Europe, and a closing could be pushed out even further. Bank of America Securities downgraded Yahoo to Neutral (Hold, essentially) from Buy Tuesday, saying that "the acquisition could face significant regulatory hurdles in the U.S. and particularly in the E.U., which could delay the acquisition from closing for quite some time."
Microsoft's big problem is that it needs to convert its piles of cash into capital for sustainable businesses that are going to make huge bucks a decade from now. But it's hard to see how throwing billions of dollars at Yahoo serves that end. Microsoft is a sprawling company with five businesses, and all of them are subservient to the company's lifeblood: Windows and Office. The online division isn't just an also-ran to Google and Yahoo; it's the only part of the company that loses money.
Meanwhile, Yahoo's been flailing about for years, losing share to Google and missing out on Web 2.0 innovations like social networking. True, it's the world's biggest destination on the Internet, but still...it's a portal. How 1990s. How quaint. No company is better than Microsoft at spinning a strategic vision, even if the quality of its software and hardware products too often falls short of its rhetoric. But to hear Chief Executive Steve Ballmer extol the opportunities and virtues of the deal, it's clear he's been drinking his own Kool-Aid.
NEWS AT A GLANCE
Toyota profits rise, growth slows
Toyota, locked in a race to overtake GM as the world's top automaker by sales, reported a 7.5 percent rise in quarterly profits, to $4.3 billion, but warned of slowing growth. The quarter's profit was Toyota's largest ever for a third quarter, but the percentage gain was the smallest in a year. Looking ahead, Toyota said that increased sales from China, Russia, and other emerging markets would only partly make up for slowing U.S. demand and the strengthening yen. "Cars sold in India and China are cheap and have smaller profit margins," said Yuuki Sakurai at Fukoku Mutual Life Insurance in Tokyo.
BP misses target, raises dividend
Oil giant BP, Europe's second largest company, reported a 53 percent rise in fourth-quarter profits, to $4.4 billion, which fell short of analysts' expectations. Refining outages and rising costs dragged BP's full-year profit down 5.5 percent, but oil output rose for the first time since 2005, as new fields in Angola, Trinidad, and the Gulf of Mexico came online, and the firm raised its dividend by 31 percent. BP shares rose in London early today. "The numbers are disappointing," said analyst Peter Hitchens at Seymour Pierce, "but I think that is more than made up for by the fact that we have got a step change in the dividend."
United adds bag-check fee
United Airlines said it is adding a $25 fee to check a second piece of luggage on domestic flights, becoming the first large carrier to charge for the service. United Milage Plus frequent fliers with at least "premium" status won't be charged, nor will passengers on most international flights. The fee, attributed to rising fuel costs, applies on flights leaving May 5 and beyond. Analysts say other airlines will likely follow suit. (Bloomberg) "Everybody is chiseling away at everything that you thought you deserve," said Bestfares-dot-com CEO Tom Parsons. "But people shouldn't be upset because we still want to fly coast to coast for $199."
Green habits, not greenbacks
A growing number of consumers are looking to cut back on their "carbon footprint," and that means buying less. But by trying to reduce their greenhouse gas emissions -- and lower their expenses as they weather the hangover at the end of the cheap-credit binge -- green consumers might also be hampering efforts to fend off an economic slowdown. The new frugality could render ineffective the stimulus package wending its way through Congress, for example, which relies on free spending. "You know there's a shift, when drinking tap water is cooler than drinking Pellegrino or Evian," says trend forecaster Faith Popcorn.
The subprime drawing board
Plans to fix our mortgage mess "are like belly buttons," says David Weidner in "Everybody's got one, and they're all pretty much useless." But some recent plans have emerged that could "have positive effects for everyone." The Center for American Progress, apparently "hell-bent on appeasing everyone," wants the government to extend interest-only loans to troubled homeowners and buy and sell existing subprime debt. More promising, Punk Zeigel analyst Richard Bove would offer 1 percent subsidized loans to many subprime borrowers, at a "reasonable" taxpayer cost of $150 billion. Either way, "it won't be pretty," but doing nothing would be uglier still.
Paradise isn't easy
Retiring overseas may sound attractive, says Jeff Opdyke in but it "can have its logistical headaches." Because most countries have lower costs of living, retiring baby boomers assume they can move abroad to "stretch their nest egg." Before pulling up anchor, though, make sure you figure out banking, health care, and housing. The Internet makes banking easier, and Social Security checks will be sent almost anywhere. But dealing with local banks and real estate laws can be tricky. And while some countries will "lure" you with retiree tax incentives, remember, the IRS taxes your income "no matter where it's earned in the world."
GOOD DAY FOR: Trees, after the White House scaled back the number of printed copies of its four volume, 2,000-page-plus 2009 budget, saving an estimated 20 tons of paper, 480 trees, and $1 million over five years. The reduced paper count stems from a decision to charge the public, congressional offices, and the media for copies of the budget.
BAD DAY FOR: Looking into the future, after Singapore-based securites-broker-turned-astrologer Tony Tan is predicting that the Chinese Year of the Rat will be characterized by losses. Tan successfully predicted that the Year of the Pig last year would see "peak performances" in Asian stocks. "Just like a rat, investors will have to be nimble" this lunar year, which begins Feb. 7, Tan says.
NOTED: Last Sunday's Giants-Patriots matchup was the most-viewed Super Bowl ever, and the second-largest TV event in U.S. history. According to Neilsen Media Research, an average of 97.5 million viewers watched the game, second only to the "MASH" series finale, which drew 106 million. Fox, which aired the game, charged $2.7 million for 30-second commercial spots. TiVO said more people watched the commercials than the game.
Toyota, locked in a race to overtake GM as the world's top automaker by sales, reported a 7.5 percent rise in quarterly profits, to $4.3 billion, but warned of slowing growth. The quarter's profit was Toyota's largest ever for a third quarter, but the percentage gain was the smallest in a year. Looking ahead, Toyota said that increased sales from China, Russia, and other emerging markets would only partly make up for slowing U.S. demand and the strengthening yen. "Cars sold in India and China are cheap and have smaller profit margins," said Yuuki Sakurai at Fukoku Mutual Life Insurance in Tokyo.
BP misses target, raises dividend
Oil giant BP, Europe's second largest company, reported a 53 percent rise in fourth-quarter profits, to $4.4 billion, which fell short of analysts' expectations. Refining outages and rising costs dragged BP's full-year profit down 5.5 percent, but oil output rose for the first time since 2005, as new fields in Angola, Trinidad, and the Gulf of Mexico came online, and the firm raised its dividend by 31 percent. BP shares rose in London early today. "The numbers are disappointing," said analyst Peter Hitchens at Seymour Pierce, "but I think that is more than made up for by the fact that we have got a step change in the dividend."
United adds bag-check fee
United Airlines said it is adding a $25 fee to check a second piece of luggage on domestic flights, becoming the first large carrier to charge for the service. United Milage Plus frequent fliers with at least "premium" status won't be charged, nor will passengers on most international flights. The fee, attributed to rising fuel costs, applies on flights leaving May 5 and beyond. Analysts say other airlines will likely follow suit. (Bloomberg) "Everybody is chiseling away at everything that you thought you deserve," said Bestfares-dot-com CEO Tom Parsons. "But people shouldn't be upset because we still want to fly coast to coast for $199."
Green habits, not greenbacks
A growing number of consumers are looking to cut back on their "carbon footprint," and that means buying less. But by trying to reduce their greenhouse gas emissions -- and lower their expenses as they weather the hangover at the end of the cheap-credit binge -- green consumers might also be hampering efforts to fend off an economic slowdown. The new frugality could render ineffective the stimulus package wending its way through Congress, for example, which relies on free spending. "You know there's a shift, when drinking tap water is cooler than drinking Pellegrino or Evian," says trend forecaster Faith Popcorn.
The subprime drawing board
Plans to fix our mortgage mess "are like belly buttons," says David Weidner in "Everybody's got one, and they're all pretty much useless." But some recent plans have emerged that could "have positive effects for everyone." The Center for American Progress, apparently "hell-bent on appeasing everyone," wants the government to extend interest-only loans to troubled homeowners and buy and sell existing subprime debt. More promising, Punk Zeigel analyst Richard Bove would offer 1 percent subsidized loans to many subprime borrowers, at a "reasonable" taxpayer cost of $150 billion. Either way, "it won't be pretty," but doing nothing would be uglier still.
Paradise isn't easy
Retiring overseas may sound attractive, says Jeff Opdyke in but it "can have its logistical headaches." Because most countries have lower costs of living, retiring baby boomers assume they can move abroad to "stretch their nest egg." Before pulling up anchor, though, make sure you figure out banking, health care, and housing. The Internet makes banking easier, and Social Security checks will be sent almost anywhere. But dealing with local banks and real estate laws can be tricky. And while some countries will "lure" you with retiree tax incentives, remember, the IRS taxes your income "no matter where it's earned in the world."
GOOD DAY FOR: Trees, after the White House scaled back the number of printed copies of its four volume, 2,000-page-plus 2009 budget, saving an estimated 20 tons of paper, 480 trees, and $1 million over five years. The reduced paper count stems from a decision to charge the public, congressional offices, and the media for copies of the budget.
BAD DAY FOR: Looking into the future, after Singapore-based securites-broker-turned-astrologer Tony Tan is predicting that the Chinese Year of the Rat will be characterized by losses. Tan successfully predicted that the Year of the Pig last year would see "peak performances" in Asian stocks. "Just like a rat, investors will have to be nimble" this lunar year, which begins Feb. 7, Tan says.
NOTED: Last Sunday's Giants-Patriots matchup was the most-viewed Super Bowl ever, and the second-largest TV event in U.S. history. According to Neilsen Media Research, an average of 97.5 million viewers watched the game, second only to the "MASH" series finale, which drew 106 million. Fox, which aired the game, charged $2.7 million for 30-second commercial spots. TiVO said more people watched the commercials than the game.
Monday, February 4, 2008
United to charge $25 for second checked bag
Starting next spring, United Airlines will begin charging certain domestic passengers for more than one piece of checked-in luggage to help offset the soaring cost of jet fuel, the No. 2 U.S. carrier said Monday.
The move by the operating subsidiary of UAL Corp. (UAUA:38.66, -2.48, -6.0%) is the first taken among the so-called legacy carriers including Northwest Airlines (NWA:17.85, -2.14, -10.7%) , Delta Air Lines (DAL:17.60, -0.93, -5.0%) and Continental Airlines (CAL:27.85, -1.40, -4.8%) , but it's bound to be imitated as a way to defray expenses without alienating fare-conscious travelers.
"They are the first, but they certainly won't be the last," said airline consultant Terry Trippler of Trippler Associates. For the airlines, each bag is additional weight and thus represents fuel expense.
"The airlines are looking for every possible revenue source they can find and still cut fares without cutting wages, because right now they can't go any lower," Trippler said.
Airlines across the industry have struggled to deal with soaring jet fuel prices while remaining competitive. Chicago-based United said the new policy is expected to generate $100 million in annual cost savings and new revenue.
In the quarter ended Dec. 31, UAL Corp. said fuel costs increased $359 million, or 25%, from a year earlier.
For domestic passengers who do not have status in a Mileage Plus or Star Alliance, a second piece of checked luggage will cost them $25, effective May 5. There will be no charge for their first bag.
United will now also charge a flat rate for all customers checking in up to four additional bags at $100 each. Previously, the airline charged in a range of $85 to $125 a bag.
Some smaller airlines already have been charging passengers for checking in more than one piece of luggage, while at least one low-cost carrier, Spirit Airlines, charges $10 each for the first two bags.
United said that, based on research into passengers' habits, it determined that only one in four check in more than one bag. By charging the 25% of people who check in more than one bag, the airline said it can bring down the weight of the airplane and help keep fares in check.
UAL's shares slipped 4.9% at last check to $39.15, in line with weakness
The move by the operating subsidiary of UAL Corp. (UAUA:38.66, -2.48, -6.0%) is the first taken among the so-called legacy carriers including Northwest Airlines (NWA:17.85, -2.14, -10.7%) , Delta Air Lines (DAL:17.60, -0.93, -5.0%) and Continental Airlines (CAL:27.85, -1.40, -4.8%) , but it's bound to be imitated as a way to defray expenses without alienating fare-conscious travelers.
"They are the first, but they certainly won't be the last," said airline consultant Terry Trippler of Trippler Associates. For the airlines, each bag is additional weight and thus represents fuel expense.
"The airlines are looking for every possible revenue source they can find and still cut fares without cutting wages, because right now they can't go any lower," Trippler said.
Airlines across the industry have struggled to deal with soaring jet fuel prices while remaining competitive. Chicago-based United said the new policy is expected to generate $100 million in annual cost savings and new revenue.
In the quarter ended Dec. 31, UAL Corp. said fuel costs increased $359 million, or 25%, from a year earlier.
For domestic passengers who do not have status in a Mileage Plus or Star Alliance, a second piece of checked luggage will cost them $25, effective May 5. There will be no charge for their first bag.
United will now also charge a flat rate for all customers checking in up to four additional bags at $100 each. Previously, the airline charged in a range of $85 to $125 a bag.
Some smaller airlines already have been charging passengers for checking in more than one piece of luggage, while at least one low-cost carrier, Spirit Airlines, charges $10 each for the first two bags.
United said that, based on research into passengers' habits, it determined that only one in four check in more than one bag. By charging the 25% of people who check in more than one bag, the airline said it can bring down the weight of the airplane and help keep fares in check.
UAL's shares slipped 4.9% at last check to $39.15, in line with weakness
The Microsoft-Yahoo deal's bad numbers
Most of the analysis of Microsoft's $45 billion hostile offer for Yahoo has focused on technology and the role Yahoo could play in the Microsoft-Google wars. Today, though, let's look at what almost everyone has overlooked: the numbers. More specifically, we'll look at the way that one of Wall Street's biggest hitters, Joe Rosenberg, looks at the proposed deal.
Rosenberg, chief investment strategist at Loews Corp. (LTR), the giant conglomerate, is one of the most influential voices on Wall Street. In fact, his criticism of Microsoft in a Barron's interview two years ago, in which he criticized the firm's use of capital and suggested a $50 billion stock buyback, was a big factor in sparking the $40 billion buyback program that Microsoft (MSFT) launched in the fall of 2006.
So Rosenberg's opinion matters. And he thinks Microsoft's offer for Yahoo (YHOO) is nuts. "This is like a person who's completely lost his mind," Rosenberg told me in an interview. "It's absurd. They're not going to earn anything like a reasonable rate of return on their investment in Yahoo. It just doesn't make sense."
"This deal would do more harm to Microsoft shareholders than any of its competitors can do to it," Rosenberg said. "The company has lost sight of its principal focus, which is to produce value for shareholders."
“This deal would do more harm to Microsoft shareholders than any of its competitors can do to it.” Joe Rosenberg
Before we proceed, two disclosures. First, Rosenberg told me that Loews owns Microsoft stock. Second, Loews is one of my biggest individual holdings, which means I have money riding on Rosenberg's investment acumen.
Back to the main event. Until the Yahoo bid surfaced, Rosenberg was predicting that Microsoft would earn almost $2 a share in its current fiscal year, rising steadily to more than $4 a share in four years. (A major element in his thinking: Microsoft's sales to "developing markets" such as China, India and Eastern Europe will soar.) So at $32 - its price before news of the Yahoo offer drove its stock down sharply Friday - Microsoft looked cheap to Rosenberg. Now, he fears, Microsoft may be making the same mistake as other companies that did large, failed high-tech takeovers.
No, he's not talking about the 2000 deal that combined America Online with my employer Time Warner (TWX), which many people have cited as a cautionary tale for Microsoft-Yahoo.
Wrongly, in Rosenberg's opinion (and mine). How so? Because America Online's purchase of Time Warner turned out great for AOL shareholders, whose stock fell far less than other Internet issues when the bubble popped. The deal was disastrous for the sellers - the old Time Warner's stockholders - because the value of their shares was eviscerated.
The real parallels to Microsoft-Yahoo, says Rosenberg, citing his 47 years on Wall Street, are two largely-forgotten disasters: Xerox' $1 billion purchase of Scientific Data Systems in 1969 and AT&T's (T) $7.5 billion purchase of NCR in 1991. In both cases, the acquiring company paid top dollar for firms whose products and technology rapidly became obsolete.
Rosenberg doesn't pretend to be a tech maven, but he says it's clear that the market - which sent Yahoo's stock down 45% from October through last Thursday - is saying something negative about Yahoo's businesses and prospects. Microsoft, Rosenberg says, would be well-advised to listen.
Should Microsoft buy Yahoo, Rosenberg says, he, like other folks looking at this deal, expects Microsoft and Google to engage in price wars in the search and advertising businesses. But Rosenberg carries that thought one level further. Such a price war would hurt Yahoo's already-anemic profit margins, Rosenberg says, making a Microsoft purchase even more problematic.
Microsoft's future free cash flow per share would be substantially higher if it buys back its own shares, he said, rather than buying Yahoo by issuing about $23 billion of new stock and spending a net $15 billion or so in cash. (That cash number takes into account the approximately $8 billion of cash and marketable securities that Yahoo owns.)
Rosenberg says he's not trying to hurt Microsoft, he's trying to help. "They don't realize that by criticizing this deal, I'm trying to do them a favor," he says. And, of course, to do Loews a favor, too
Rosenberg, chief investment strategist at Loews Corp. (LTR), the giant conglomerate, is one of the most influential voices on Wall Street. In fact, his criticism of Microsoft in a Barron's interview two years ago, in which he criticized the firm's use of capital and suggested a $50 billion stock buyback, was a big factor in sparking the $40 billion buyback program that Microsoft (MSFT) launched in the fall of 2006.
So Rosenberg's opinion matters. And he thinks Microsoft's offer for Yahoo (YHOO) is nuts. "This is like a person who's completely lost his mind," Rosenberg told me in an interview. "It's absurd. They're not going to earn anything like a reasonable rate of return on their investment in Yahoo. It just doesn't make sense."
"This deal would do more harm to Microsoft shareholders than any of its competitors can do to it," Rosenberg said. "The company has lost sight of its principal focus, which is to produce value for shareholders."
“This deal would do more harm to Microsoft shareholders than any of its competitors can do to it.” Joe Rosenberg
Before we proceed, two disclosures. First, Rosenberg told me that Loews owns Microsoft stock. Second, Loews is one of my biggest individual holdings, which means I have money riding on Rosenberg's investment acumen.
Back to the main event. Until the Yahoo bid surfaced, Rosenberg was predicting that Microsoft would earn almost $2 a share in its current fiscal year, rising steadily to more than $4 a share in four years. (A major element in his thinking: Microsoft's sales to "developing markets" such as China, India and Eastern Europe will soar.) So at $32 - its price before news of the Yahoo offer drove its stock down sharply Friday - Microsoft looked cheap to Rosenberg. Now, he fears, Microsoft may be making the same mistake as other companies that did large, failed high-tech takeovers.
No, he's not talking about the 2000 deal that combined America Online with my employer Time Warner (TWX), which many people have cited as a cautionary tale for Microsoft-Yahoo.
Wrongly, in Rosenberg's opinion (and mine). How so? Because America Online's purchase of Time Warner turned out great for AOL shareholders, whose stock fell far less than other Internet issues when the bubble popped. The deal was disastrous for the sellers - the old Time Warner's stockholders - because the value of their shares was eviscerated.
The real parallels to Microsoft-Yahoo, says Rosenberg, citing his 47 years on Wall Street, are two largely-forgotten disasters: Xerox' $1 billion purchase of Scientific Data Systems in 1969 and AT&T's (T) $7.5 billion purchase of NCR in 1991. In both cases, the acquiring company paid top dollar for firms whose products and technology rapidly became obsolete.
Rosenberg doesn't pretend to be a tech maven, but he says it's clear that the market - which sent Yahoo's stock down 45% from October through last Thursday - is saying something negative about Yahoo's businesses and prospects. Microsoft, Rosenberg says, would be well-advised to listen.
Should Microsoft buy Yahoo, Rosenberg says, he, like other folks looking at this deal, expects Microsoft and Google to engage in price wars in the search and advertising businesses. But Rosenberg carries that thought one level further. Such a price war would hurt Yahoo's already-anemic profit margins, Rosenberg says, making a Microsoft purchase even more problematic.
Microsoft's future free cash flow per share would be substantially higher if it buys back its own shares, he said, rather than buying Yahoo by issuing about $23 billion of new stock and spending a net $15 billion or so in cash. (That cash number takes into account the approximately $8 billion of cash and marketable securities that Yahoo owns.)
Rosenberg says he's not trying to hurt Microsoft, he's trying to help. "They don't realize that by criticizing this deal, I'm trying to do them a favor," he says. And, of course, to do Loews a favor, too
Sunday, February 3, 2008
Wall St. awaits another rally
This week, Wall Street hopes economic, earnings data keeps rally going
The stock market has been on the upswing, but few investors are relaxing just yet. This week's data on housing, retailers and labor costs will give Wall Street an idea of whether the economy is weakening or inflation is accelerating - or both.
Wall Street had a case of the winter blues in January, and understandably. With banks reporting huge losses, uncertainty brewing about whether the economy is in recession, and Americans struggling to keep up with their debt payments, there was nowhere to go but down. The Standard & Poor's 500 index recorded its worst January since 1990.
But the stock market has bounced back - last week, the Dow Jones industrial average jumped 4.39 percent, the Standard & Poor's 500 index added 3.75 percent, and the Nasdaq composite index rose 4.87 percent.
The Dow remains 10 percent below the record close of 14,164.53 it reached on Oct. 9, but has recovered nearly 10 percent from the 15-month lows it hit in January.
There were many factors that helped buoy the market last week. The Federal Reserve met the market's hopes for another big rate cut by slashing key rates a half-point. Banks and regulators indicated they are working to help out the distressed companies that insure mortgage-backed bonds. And Microsoft Corp.'s (MSFT, Fortune 500) bid for the struggling Internet provider Yahoo Inc. (YHOO, Fortune 500) reassured Wall Street that although the credit markets are tight, deals are being pitched.
Recent government reports have not painted a rosy picture of the economy, but they haven't indicated the nation is in the midst of a deep recession, either.
The Labor Department's employment report last week showed a net job loss in January for the first time in four years, but a report from the Institute for Supply Management said the manufacturing sector expanded. The Commerce Department said personal spending is growing at the weakest pace in more than a year, but it also reported a solid gain in orders of big-ticket, durable goods.
The markets are angling for more rate cuts to stoke the economy, but what could tie the Fed's hands is inflation. High food, energy and healthcare costs are a reason consumers - particularly homeowners with tough-to-pay mortgages - are cutting back on discretionary spending. Those high prices may also be the only reason readings on personal spending are in positive territory.
The Commerce Department's index last week for personal consumption expenditures, a gauge of inflation, rose 0.2 percent in December from November levels. This week, the Labor Department reports on productivity and labor costs; the market is expecting labor costs to decline, and could be disappointed if they end up being higher.
"The worst of all possible worlds is stagflation," said Janna Sampson, director of portfolio management at Oakbrook Investments. Stagflation happens when the economy weakens at the same time prices are rising. It's a problem that can't be solved with rate moves; rate cuts spur inflation but boost growth, while hikes control inflation but also dampen growth.
This week, economists surveyed by Thomson/IFR are preparing for more signs that the economy is still growing, but very slowly because of a weak consumer.
They expect the Commerce Department's December factory orders index on Monday to tick up and the Institute for Supply Management's Tuesday report on January service sector growth to show a slight slowdown. They also expect the weekly ICSC-UBS chain store sales index on Tuesday to post a decline.
Meanwhile, the National Association of Realtors will release on Thursday its index on pending sales of existing homes, and economists predict a modest increase. And that same day, retailers are releasing their sales results for January.
Investors will also be paying close attention to speeches from Fed officials for insight into their thoughts on the economy and inflation, and whether the central bank is leaning toward lowering rates again when it meets March 18. Atlanta Fed President Dennis Lockhart, Richmond Fed President Jeffrey Lacker, Fed Governor Randall Kroszner, Philadelphia Fed President Charles Plosser and San Francisco Fed President Janet Yellen are all making public appearances this week.
The bulk of the earnings season is over, but there are some big names left to release their quarterly results. Companies reporting this week include media names such as News Corp. (NWS, Fortune 500), Walt Disney (DIS, Fortune 500) and Time Warner Inc. (TWX, Fortune 500); food sellers like Wendy's International Inc. (WEN) and Yum Brands Inc. (YUM, Fortune 500); and the homebuilder D.R. Horton (DHI, Fortune 500).
The stock market has been on the upswing, but few investors are relaxing just yet. This week's data on housing, retailers and labor costs will give Wall Street an idea of whether the economy is weakening or inflation is accelerating - or both.
Wall Street had a case of the winter blues in January, and understandably. With banks reporting huge losses, uncertainty brewing about whether the economy is in recession, and Americans struggling to keep up with their debt payments, there was nowhere to go but down. The Standard & Poor's 500 index recorded its worst January since 1990.
But the stock market has bounced back - last week, the Dow Jones industrial average jumped 4.39 percent, the Standard & Poor's 500 index added 3.75 percent, and the Nasdaq composite index rose 4.87 percent.
The Dow remains 10 percent below the record close of 14,164.53 it reached on Oct. 9, but has recovered nearly 10 percent from the 15-month lows it hit in January.
There were many factors that helped buoy the market last week. The Federal Reserve met the market's hopes for another big rate cut by slashing key rates a half-point. Banks and regulators indicated they are working to help out the distressed companies that insure mortgage-backed bonds. And Microsoft Corp.'s (MSFT, Fortune 500) bid for the struggling Internet provider Yahoo Inc. (YHOO, Fortune 500) reassured Wall Street that although the credit markets are tight, deals are being pitched.
Recent government reports have not painted a rosy picture of the economy, but they haven't indicated the nation is in the midst of a deep recession, either.
The Labor Department's employment report last week showed a net job loss in January for the first time in four years, but a report from the Institute for Supply Management said the manufacturing sector expanded. The Commerce Department said personal spending is growing at the weakest pace in more than a year, but it also reported a solid gain in orders of big-ticket, durable goods.
The markets are angling for more rate cuts to stoke the economy, but what could tie the Fed's hands is inflation. High food, energy and healthcare costs are a reason consumers - particularly homeowners with tough-to-pay mortgages - are cutting back on discretionary spending. Those high prices may also be the only reason readings on personal spending are in positive territory.
The Commerce Department's index last week for personal consumption expenditures, a gauge of inflation, rose 0.2 percent in December from November levels. This week, the Labor Department reports on productivity and labor costs; the market is expecting labor costs to decline, and could be disappointed if they end up being higher.
"The worst of all possible worlds is stagflation," said Janna Sampson, director of portfolio management at Oakbrook Investments. Stagflation happens when the economy weakens at the same time prices are rising. It's a problem that can't be solved with rate moves; rate cuts spur inflation but boost growth, while hikes control inflation but also dampen growth.
This week, economists surveyed by Thomson/IFR are preparing for more signs that the economy is still growing, but very slowly because of a weak consumer.
They expect the Commerce Department's December factory orders index on Monday to tick up and the Institute for Supply Management's Tuesday report on January service sector growth to show a slight slowdown. They also expect the weekly ICSC-UBS chain store sales index on Tuesday to post a decline.
Meanwhile, the National Association of Realtors will release on Thursday its index on pending sales of existing homes, and economists predict a modest increase. And that same day, retailers are releasing their sales results for January.
Investors will also be paying close attention to speeches from Fed officials for insight into their thoughts on the economy and inflation, and whether the central bank is leaning toward lowering rates again when it meets March 18. Atlanta Fed President Dennis Lockhart, Richmond Fed President Jeffrey Lacker, Fed Governor Randall Kroszner, Philadelphia Fed President Charles Plosser and San Francisco Fed President Janet Yellen are all making public appearances this week.
The bulk of the earnings season is over, but there are some big names left to release their quarterly results. Companies reporting this week include media names such as News Corp. (NWS, Fortune 500), Walt Disney (DIS, Fortune 500) and Time Warner Inc. (TWX, Fortune 500); food sellers like Wendy's International Inc. (WEN) and Yum Brands Inc. (YUM, Fortune 500); and the homebuilder D.R. Horton (DHI, Fortune 500).
Saturday, February 2, 2008
YahooSoft Bid Shakes The Start-Ups
Among the scenarios that have filled the daydreams of Silicon Valley's Internet start-ups are two happy endings: being acquired by Microsoft or being acquired by Yahoo!. So when those giants threaten to merge, as Microsoft proposed Friday with its $44.6 billion bid for Yahoo!, do the hopes of innovative young firms looking for buyouts get squashed in the melee?
The dreams may, at least, be put on hold. According to Microsoft's (nasdaq: MSFT - news - people ) most recent quarterly Securities and Exchange Commission filing, the company had about $21 billion in liquid assets--down from a peak of $60.6 billion in 2004. The layout for Yahoo! (nasdaq: YHOO - news - people )--which is a half cash-half equity deal--won't leave the $51 billion (annual revenue) software maker broke, but it may sate its appetite for acquisitions for a while.
A more likely reason that a YahooSoft deal could slow down further acquisitions is the red tape involved in a complex integration of bureaucracies. (See "A Messy Marriage.") If the deal closes, it could be months before Yahoo! and Microsoft sort out each other's businesses and are ready to begin integrating new ones, says Aaron Patzer, founder of online accounting start-up Mint.com.
"Right now, everything is going to be in flux," he says. Patzer says he had hoped to foster a partnership with Yahoo! Finance to distribute his free online accounting service. Since winning $50,000 in the TechCrunch 40 start-up, Patzer's Mint.com has also been an attractive buyout target, despite Patzer's claims that he intends to keep the business independent. Regardless, those kinds of deals may be on hold, he says.
"If you're a start-up, you need your own good revenue model now," he says. "If you were depending on getting acquired, combined with a looming recession, you could be in serious trouble in a year."
Patzer worries that even once the dust settles, a YahooSoft conglomerate won't be very friendly to start-ups. "Overall, I don't think it's great for the culture of the Valley. Yahoo! needs young, talented innovators, and the prospect of becoming part of a really large company like Microsoft is not very appealing to start-ups," he says. "They might want to be acquired, but they won't want to join an organization approaching 100,000 people." (Microsoft's head count is approximately 78,500 worldwide, while Yahoo! before the recently announced layoffs had 14,300.)
In recent months, both tech giants have been busy snapping up smaller companies. Microsoft paid $1.2 billion for enterprise search firm Fast Search & Transfer last month. It also bought a London-based Web geolocation company called Webmap in December and invested $250 million for a 2.5% stake in Facebook in October. Jerry Yang's takeover as Yahoo!'s chief executive had some startups predicting a new round of acquisitions. (See "Yahoo's Geek-Speaking CEO.") In September, Yahoo! bought up news aggregator Buzztracker, online ad network BlueLithium and e-mail client Zimbra.
But the merger and acquisition teams at Microsoft and Yahoo! might be "looking inward rather than outward" for the next months, says Jeff Clavier, founder of venture capital firm SoftTech VC, who has sold two Internet start-ups to AOL and one to Yahoo! in the last two years. "Figuring out an integration plan, who stays and who goes, what's important and what's redundant--it takes a long time," says Clavier. "They'll be stretched, and I have a hard time seeing how they could be looking at new talent and ideas."
Longer-term, Clavier says that integrating Yahoo! could make Microsoft a more appealing destination for young firms, partly due to the simple facts of geography. Owning Yahoo! would offer Microsoft better integration with Silicon Valley, and give start-ups an alternative to moving to Washington, he says. "The idea of buying a company, moving it to Redmond, making it part of 'the Borg' is no longer the model," he says, referring to Microsoft's unflattering corporate nickname.
In the meantime, the integration of the two companies may offer a competitive boost to start-ups living in the shadow of Microsoft and Yahoo!. Clavier points out that consolidation means layoffs, and layoffs mean talent that can be snapped up by start-ups. Scott Rafer, the former chief executive of MyBlogLog, a start-up acquired by Yahoo!, says that the YahooSoft deal means the two companies will be bogged down for months while his new firm, called Lookery, continues to innovate.
"We love this kind of stuff," he says. "The people who could actually do us some damage are going from slow to slower."
Lookery, an advertising network for ads that run on Facebook applications, is likely to find itself in direct competition with YahooSoft soon; Facebook struck a deal in August 2006 to place Microsoft ads on the site. Microsoft's latest deal, says Rafer, offers him a much-needed head start.
"We need to get big enough so that they can't just squash us like a bug," says Rafer. "The more time they spend worrying about which division gets merged with which division, the more time we have to grow."
The dreams may, at least, be put on hold. According to Microsoft's (nasdaq: MSFT - news - people ) most recent quarterly Securities and Exchange Commission filing, the company had about $21 billion in liquid assets--down from a peak of $60.6 billion in 2004. The layout for Yahoo! (nasdaq: YHOO - news - people )--which is a half cash-half equity deal--won't leave the $51 billion (annual revenue) software maker broke, but it may sate its appetite for acquisitions for a while.
A more likely reason that a YahooSoft deal could slow down further acquisitions is the red tape involved in a complex integration of bureaucracies. (See "A Messy Marriage.") If the deal closes, it could be months before Yahoo! and Microsoft sort out each other's businesses and are ready to begin integrating new ones, says Aaron Patzer, founder of online accounting start-up Mint.com.
"Right now, everything is going to be in flux," he says. Patzer says he had hoped to foster a partnership with Yahoo! Finance to distribute his free online accounting service. Since winning $50,000 in the TechCrunch 40 start-up, Patzer's Mint.com has also been an attractive buyout target, despite Patzer's claims that he intends to keep the business independent. Regardless, those kinds of deals may be on hold, he says.
"If you're a start-up, you need your own good revenue model now," he says. "If you were depending on getting acquired, combined with a looming recession, you could be in serious trouble in a year."
Patzer worries that even once the dust settles, a YahooSoft conglomerate won't be very friendly to start-ups. "Overall, I don't think it's great for the culture of the Valley. Yahoo! needs young, talented innovators, and the prospect of becoming part of a really large company like Microsoft is not very appealing to start-ups," he says. "They might want to be acquired, but they won't want to join an organization approaching 100,000 people." (Microsoft's head count is approximately 78,500 worldwide, while Yahoo! before the recently announced layoffs had 14,300.)
In recent months, both tech giants have been busy snapping up smaller companies. Microsoft paid $1.2 billion for enterprise search firm Fast Search & Transfer last month. It also bought a London-based Web geolocation company called Webmap in December and invested $250 million for a 2.5% stake in Facebook in October. Jerry Yang's takeover as Yahoo!'s chief executive had some startups predicting a new round of acquisitions. (See "Yahoo's Geek-Speaking CEO.") In September, Yahoo! bought up news aggregator Buzztracker, online ad network BlueLithium and e-mail client Zimbra.
But the merger and acquisition teams at Microsoft and Yahoo! might be "looking inward rather than outward" for the next months, says Jeff Clavier, founder of venture capital firm SoftTech VC, who has sold two Internet start-ups to AOL and one to Yahoo! in the last two years. "Figuring out an integration plan, who stays and who goes, what's important and what's redundant--it takes a long time," says Clavier. "They'll be stretched, and I have a hard time seeing how they could be looking at new talent and ideas."
Longer-term, Clavier says that integrating Yahoo! could make Microsoft a more appealing destination for young firms, partly due to the simple facts of geography. Owning Yahoo! would offer Microsoft better integration with Silicon Valley, and give start-ups an alternative to moving to Washington, he says. "The idea of buying a company, moving it to Redmond, making it part of 'the Borg' is no longer the model," he says, referring to Microsoft's unflattering corporate nickname.
In the meantime, the integration of the two companies may offer a competitive boost to start-ups living in the shadow of Microsoft and Yahoo!. Clavier points out that consolidation means layoffs, and layoffs mean talent that can be snapped up by start-ups. Scott Rafer, the former chief executive of MyBlogLog, a start-up acquired by Yahoo!, says that the YahooSoft deal means the two companies will be bogged down for months while his new firm, called Lookery, continues to innovate.
"We love this kind of stuff," he says. "The people who could actually do us some damage are going from slow to slower."
Lookery, an advertising network for ads that run on Facebook applications, is likely to find itself in direct competition with YahooSoft soon; Facebook struck a deal in August 2006 to place Microsoft ads on the site. Microsoft's latest deal, says Rafer, offers him a much-needed head start.
"We need to get big enough so that they can't just squash us like a bug," says Rafer. "The more time they spend worrying about which division gets merged with which division, the more time we have to grow."
Microsoft Eyes Yahoo to Topple Google
Unable to topple Google Inc. on its own, Microsoft Corp. is trying to force crippled rival Yahoo Inc. into a shotgun marriage, with a wager worth nearly $42 billion that the two companies together will have a better chance of tackling the Internet search leader
Microsoft's audacious attempt to buy Yahoo, spelled out in an unsolicited offer announced Friday, shows just how much Google threatens the world's largest software maker's grip on how people interact with computers.
For Yahoo, the bid represents another painful reminder of how missed opportunities and mismanagement combined to open the door for Google to supplant it as the Internet's main gateway, decimating its stock price in the process.
Redmond, Wash.-based Microsoft is trying to avoid a similar fate at Google's hands as more people access services and computer programs online instead of relying on packaged software applications.
Although Microsoft remains the world's most valuable technology company, its position will become more precarious unless it can cultivate a more loyal Internet audience and generate more online ad revenue to subsidize the free services taken for granted on the Internet.
Microsoft is acutely aware of the upheaval that can be caused by a pivotal shift in technology, having been the biggest beneficiary during the 1980s and 1990s of a transition from mainframe computers to personal computers that knocked IBM Corp. off its pedestal.
"Microsoft has to do this deal. It's a battle that Microsoft needs to win," said AMR Research analyst Jonathan Yarmis.
But there's no guarantee that Yahoo will be willing to sell to Microsoft -- or that the deal will win the necessary approvals from antitrust regulators in the United States and Europe if Yahoo capitulates.
Sunnyvale-based Yahoo had little to say Friday beyond a terse statement assuring its shareholders that its board will "carefully and promptly" study the bid.
In a conference call Friday, Microsoft Chief Executive Steve Ballmer indicated he won't take no for an answer after Yahoo rebuffed takeover overtures a year ago.
"This is a decision we have -- and I have -- thought long and hard about," Ballmer said. "We are confident it's the right path for Microsoft and Yahoo."
Yahoo will likely face intense pressure to accept, given its steadily sliding profits and a murky 2008 outlook that caused its stock price to drop to a four-year low earlier this week.
Microsoft's $31-per-share offer -- originally valued at $44.6 billion -- represented a 62 percent premium to Yahoo's closing price late Thursday, although it's below Yahoo's 52-week high of $34.08 reached less than four months ago. On Friday, the total value of the cash-and-stock deal fell to $41.7 billion, or $28.95 per share, because Microsoft's shares declined on the news.
Yahoo shares soared to a split-adjusted high of $118.75 in 2000 before the dot-com bust. That peak coincidentally also was just before Yahoo gave Google its first big break by hiring it to run its search engine.
Search engines are crucial tools because they have become a central hub in hugely profitable ad networks.
Advertisers around the world are expected to double their spending on the Internet during the next three years as more people get their news and entertainment on the Web instead of television, radio, newspapers and magazines. The trend is expected to create an $80 billion online ad market in 2010, up from an estimated $40 billion last year.
After realizing how much money Google was making from search, Yahoo introduced its own technology in 2004, but by then it was too little, too late.
Forrester Research analyst Charlene Li expects Yahoo to resist, predicting the company "will do everything possible to stay independent," even if it means swallowing its pride and rehiring Google to run its search engine and sell ads on its site.
Other analysts still think Yahoo might try to line up a white knight rather than fall into Microsoft's clutches. Analysts mentioned several other potential suitors, including News Corp. and InterActiveCorp.
Dinosaur Securities analyst David Garrity even thinks it's possible that China's search leader, Baidu.com Inc., or Chinese e-commerce conglomerate Alibaba.com Inc. might bid for Yahoo. Alibaba.com is 40 percent owned by Yahoo.
In what most analysts regard as a long shot, there was even some chatter that longtime Microsoft rival Apple Inc. and its CEO, Steve Jobs, might come to Yahoo's rescue.
If push comes to shove, most analysts believe Microsoft will raise its cash-and-stock bid.
Investors appear confident an agreement eventually will be reached. Yahoo shares climbed $9.20, or nearly 48 percent, to $28.38 while Microsoft shares fell $2.15, or 6.6 percent, to $30.45 -- a sign that Wall Street is skeptical about whether the acquisition makes sense.
"It's a classic case of a buyer overbidding to blow any potential competitors out of the water," said James Owers, a Georgia State University professor of corporate finance.
Shortly after Microsoft disclosed its intentions, the U.S. Justice Department said it is "interested" in reviewing antitrust issues. European Union officials declined to comment, but analysts said Microsoft probably will face more challenges getting a Yahoo acquisition approved in Europe than the United States.
Microsoft made its offer a few hours after Yahoo's chairman, Terry Semel, stepped down, removing a potential stumbling block. Semel had rejected Microsoft's takeover overtures a year ago while he was still Yahoo's chief executive, according to a letter released Friday.
Yahoo co-founder Jerry Yang replaced Semel as CEO nearly eight months ago while another Yahoo director, Roy Bostock, is now chairman.
Yang, a billionaire who is one of Yahoo's largest shareholders, isn't believed to have warm and fuzzy feelings about Microsoft. He has openly expressed his admiration for Jobs and last year even invited the Apple CEO to Yahoo's headquarters for a pep talk with employees.
Microsoft believes its technological expertise will be a good fit with Yahoo's knack for providing content and services that keep people coming back to its site. Combined, the two companies would reach a U.S. online audience of 142 million compared with 124 million for Google, according to Nielsen Online.
But Yahoo and Microsoft are so far behind Google in the lucrative search market that they still will have a lot of ground to make up even if they joined forces.
Google already controls 62 percent of the worldwide search market, and has been widening its lead, according to the latest data from comScore Media Metrix. By combining, Microsoft and Yahoo would have a 16 percent share of the worldwide search market, the Web traffic tracking company said.
Google shares fell $48.40, or 8.6 percent, to close at $515.90 Friday, but the downturn appeared to be driven more by a disappointing fourth-quarter earnings report than by Microsoft's bid for Yahoo.
Besides helping to boost its online ad revenue, Microsoft believes it could mine more profit from Yahoo by jettisoning workers and eliminating overlapping operations.
Microsoft said it sees at least $1 billion in cost savings if it buys Yahoo. Microsoft executives deflected questions about how many jobs might be lost, but the company emphasized retention packages will be offered to Yahoo engineers and other key employees, including some executives.
The fate of Yahoo's brand also is unclear if Microsoft takes over. Both Ballmer and Kevin Johnson, president of Microsoft's platforms and services division, hailed Yahoo's strong brand value but did not commit to keeping the name alive.
Microsoft's audacious attempt to buy Yahoo, spelled out in an unsolicited offer announced Friday, shows just how much Google threatens the world's largest software maker's grip on how people interact with computers.
For Yahoo, the bid represents another painful reminder of how missed opportunities and mismanagement combined to open the door for Google to supplant it as the Internet's main gateway, decimating its stock price in the process.
Redmond, Wash.-based Microsoft is trying to avoid a similar fate at Google's hands as more people access services and computer programs online instead of relying on packaged software applications.
Although Microsoft remains the world's most valuable technology company, its position will become more precarious unless it can cultivate a more loyal Internet audience and generate more online ad revenue to subsidize the free services taken for granted on the Internet.
Microsoft is acutely aware of the upheaval that can be caused by a pivotal shift in technology, having been the biggest beneficiary during the 1980s and 1990s of a transition from mainframe computers to personal computers that knocked IBM Corp. off its pedestal.
"Microsoft has to do this deal. It's a battle that Microsoft needs to win," said AMR Research analyst Jonathan Yarmis.
But there's no guarantee that Yahoo will be willing to sell to Microsoft -- or that the deal will win the necessary approvals from antitrust regulators in the United States and Europe if Yahoo capitulates.
Sunnyvale-based Yahoo had little to say Friday beyond a terse statement assuring its shareholders that its board will "carefully and promptly" study the bid.
In a conference call Friday, Microsoft Chief Executive Steve Ballmer indicated he won't take no for an answer after Yahoo rebuffed takeover overtures a year ago.
"This is a decision we have -- and I have -- thought long and hard about," Ballmer said. "We are confident it's the right path for Microsoft and Yahoo."
Yahoo will likely face intense pressure to accept, given its steadily sliding profits and a murky 2008 outlook that caused its stock price to drop to a four-year low earlier this week.
Microsoft's $31-per-share offer -- originally valued at $44.6 billion -- represented a 62 percent premium to Yahoo's closing price late Thursday, although it's below Yahoo's 52-week high of $34.08 reached less than four months ago. On Friday, the total value of the cash-and-stock deal fell to $41.7 billion, or $28.95 per share, because Microsoft's shares declined on the news.
Yahoo shares soared to a split-adjusted high of $118.75 in 2000 before the dot-com bust. That peak coincidentally also was just before Yahoo gave Google its first big break by hiring it to run its search engine.
Search engines are crucial tools because they have become a central hub in hugely profitable ad networks.
Advertisers around the world are expected to double their spending on the Internet during the next three years as more people get their news and entertainment on the Web instead of television, radio, newspapers and magazines. The trend is expected to create an $80 billion online ad market in 2010, up from an estimated $40 billion last year.
After realizing how much money Google was making from search, Yahoo introduced its own technology in 2004, but by then it was too little, too late.
Forrester Research analyst Charlene Li expects Yahoo to resist, predicting the company "will do everything possible to stay independent," even if it means swallowing its pride and rehiring Google to run its search engine and sell ads on its site.
Other analysts still think Yahoo might try to line up a white knight rather than fall into Microsoft's clutches. Analysts mentioned several other potential suitors, including News Corp. and InterActiveCorp.
Dinosaur Securities analyst David Garrity even thinks it's possible that China's search leader, Baidu.com Inc., or Chinese e-commerce conglomerate Alibaba.com Inc. might bid for Yahoo. Alibaba.com is 40 percent owned by Yahoo.
In what most analysts regard as a long shot, there was even some chatter that longtime Microsoft rival Apple Inc. and its CEO, Steve Jobs, might come to Yahoo's rescue.
If push comes to shove, most analysts believe Microsoft will raise its cash-and-stock bid.
Investors appear confident an agreement eventually will be reached. Yahoo shares climbed $9.20, or nearly 48 percent, to $28.38 while Microsoft shares fell $2.15, or 6.6 percent, to $30.45 -- a sign that Wall Street is skeptical about whether the acquisition makes sense.
"It's a classic case of a buyer overbidding to blow any potential competitors out of the water," said James Owers, a Georgia State University professor of corporate finance.
Shortly after Microsoft disclosed its intentions, the U.S. Justice Department said it is "interested" in reviewing antitrust issues. European Union officials declined to comment, but analysts said Microsoft probably will face more challenges getting a Yahoo acquisition approved in Europe than the United States.
Microsoft made its offer a few hours after Yahoo's chairman, Terry Semel, stepped down, removing a potential stumbling block. Semel had rejected Microsoft's takeover overtures a year ago while he was still Yahoo's chief executive, according to a letter released Friday.
Yahoo co-founder Jerry Yang replaced Semel as CEO nearly eight months ago while another Yahoo director, Roy Bostock, is now chairman.
Yang, a billionaire who is one of Yahoo's largest shareholders, isn't believed to have warm and fuzzy feelings about Microsoft. He has openly expressed his admiration for Jobs and last year even invited the Apple CEO to Yahoo's headquarters for a pep talk with employees.
Microsoft believes its technological expertise will be a good fit with Yahoo's knack for providing content and services that keep people coming back to its site. Combined, the two companies would reach a U.S. online audience of 142 million compared with 124 million for Google, according to Nielsen Online.
But Yahoo and Microsoft are so far behind Google in the lucrative search market that they still will have a lot of ground to make up even if they joined forces.
Google already controls 62 percent of the worldwide search market, and has been widening its lead, according to the latest data from comScore Media Metrix. By combining, Microsoft and Yahoo would have a 16 percent share of the worldwide search market, the Web traffic tracking company said.
Google shares fell $48.40, or 8.6 percent, to close at $515.90 Friday, but the downturn appeared to be driven more by a disappointing fourth-quarter earnings report than by Microsoft's bid for Yahoo.
Besides helping to boost its online ad revenue, Microsoft believes it could mine more profit from Yahoo by jettisoning workers and eliminating overlapping operations.
Microsoft said it sees at least $1 billion in cost savings if it buys Yahoo. Microsoft executives deflected questions about how many jobs might be lost, but the company emphasized retention packages will be offered to Yahoo engineers and other key employees, including some executives.
The fate of Yahoo's brand also is unclear if Microsoft takes over. Both Ballmer and Kevin Johnson, president of Microsoft's platforms and services division, hailed Yahoo's strong brand value but did not commit to keeping the name alive.
Thursday, January 31, 2008
STOCKS TO WATCH
Among the companies whose shares are expected to see active trade in Thursday's session are Google, MBIA, AstraZeneca, Proctor & Gamble, and Electronic Arts.
Google Inc. (GOOG:548.27, -2.25, -0.4%) is forecast to report fourth-quarter earnings of $4.44 a share, according to analysts polled by Thomson Financial.
MBIA Inc. (MBI) is projected to post a loss of $2.97 a share in the fourth quarter.
AstraZeneca Plc (AZN) is expected to report fourth-quarter earnings of 95 cents an ADR.
Procter & Gamble Co. (PG) is estimated to report fiscal second-quarter earnings of 97 cents a share.
Electronic Arts Inc. (ERTS) is likely to post earnings of 90 cents a share in the fiscal third quarter.
Mattel Inc. (MAT) is forecast to post fourth-quarter earnings of 73 cents a share.
Goodrich Corp. (GR) is estimated to post earnings of 91 cents a share in the fourth quarter.
Bristol-Myers Squibb Co. (BMY) is projected to report earnings of 34 cents a share in the fourth quarter.
MasterCard Inc. (MA) is expected to report fourth-quarter earnings of 72 cents a share.
Burger King (BKC) is likely to post fiscal second-quarter earnings of 32 cents a share.
Colgate-Palmolive (CL) is expected to report earnings of 89 cents a share in the fourth quarter.
Monster Worldwide Inc. (MNST) is estimated to post earnings of 38 cents a share in the fourth quarter.
CVS Caremark Corp. (CVS) is forecast to post earnings of 55 cents in the fourth quarter.
Raytheon Co. (RTN) is estimated to post earnings of 92 cents a share in the fourth quarter.
NewYork Times Co. (NYT:16.65, +0.59, +3.7%) is projected to report fourth-quarter earnings of 48 cents a share.
Wyeth (WYE: 39.70, -1.34, -3.3%) is likely to report fourth-quarter earnings of 79 cents a share.
Aflac Inc. (AFL: 60.82, -1.41, -2.3%) is forecast to post earnings of 80 cents a share in the fourth quarter.
Anheuser-Busch Co. (BUD:47.26, -0.03, -0.1%) is expected to post fourth-quarter earnings of 32 cents a share.
Nasdaq Stock Market Inc. (NDAQ:44.65, -0.84, -1.8%) is projected to post earnings of 47 cents a share in the fourth quarter.
McKesson Corp. (MCK:63.26, +1.01, +1.6%) is forecast to post fiscal third-quarter earnings of 80 cents a share.
Lear Corp. (LEA:27.05, -0.28, -1.0%) is likely to report earnings of 66 cents a share in the fourth quarter.
L-3 Communications Holdings (LLL:107.85, -0.39, -0.4%) is expected to report fourth-quarter earnings of $1.61 a share.
Elizabeth Arden Inc. (RDEN) is projected to report fiscal second-quarter earnings of $1.15 a share.
Harsco Corp. (HSC) is expected to post fourth-quarter profits of 70 cents a share.
Newell Rubbermaid Inc. (NWL) is likely to post earnings of 45 cents a share in the fourth quarter.
Hologic Inc. (HOLX) is projected to post fiscal first-quarter earnings of 48 cents a share.
Celgene Corp. (CELG) is estimated to post earnings of 31 cents a share in the fourth quarter.
Nova Chemicals Corp. (NCX) is expected to report fourth-quarter earnings of $1.01 a share.
E.W. Scripps Co. (SSP) is projected to post earnings of 70 cents a share in the fourth quarter.
RF Micro Devices Inc. (RFMD) is likely to report earnings of 7 cents a share in the fiscal third quarter.
Safeco Corp. (SAF) is estimated to post earnings of $1.44 a share in the fourth quarter.
VeriSign Inc. (VRSN) is expected to post fourth-quarter earnings of 29 cents a share.
Callaway Golf Co. (ELY) is forecast to report a loss of 19 cents a share in the fourth quarter.
Western Union Co. (WU) is likely to post earnings of 31 cents a share in the fourth quarter.
C.R. Bard Inc. (BCR:95.60, +2.75, +3.0%) is expected to report earnings of $1 a share in the fourth quarter.
Hanesbrands Inc. (HBI:24.76, -0.05, -0.2%) is forecast to report fourth-quarter earnings of 39 cents a share.
Marathon Oil Corp. (MRO:50.91, -1.22, -2.3%) is estimated to post earnings of 86 cents a share in the fourth quarter.
Sealy Corp. (ZZ:9.53, -0.13, -1.3%) is likely to report fourth-quarter earnings of 14 cents a share.
IMS Health Inc. (RX:21.13, -0.20, -0.9%) is forecast to post earnings of 42 cents a share in the fourth quarter.
ImClone Systems Inc. (IMCL:41.97, -1.79, -4.1%) is expected to post earnings of 27 cents a share in the fourth quarter.
Affymetrix Inc. (AFFX:20.77, -0.42, -2.0%) is estimated to report fourth-quarter earnings of 16 cents a share.
PPL Corp. (PPL:47.97, +0.27, +0.6%) is likely to report earnings of 54 cents a share in the fourth quarter.
Affiliated Computer Services (ACS:45.90, +0.15, +0.3%) is forecast to post fiscal second-quarter earnings of 83 cents a share.
Starwood Hotels & Resorts (HOT:42.90, -0.94, -2.1%) is expected to report fourth-quarter earnings of 67 cents a share.
Brinks Co. (BCO:54.50, +0.17, +0.3%) is likely to report earnings of 74 cents a share in the fourth quarter.
After Wednesday's closing bell, Starbucks (SBUX:19.22, -0.75, -3.8%) reported fiscal first-quarter net income of $208.1 million, or 28 cents a share, compared with net income of $205 million, or 26 cents a share, a year ago. Sales rose 17% to $2.8 billion. Starbucks also said it will close 100 underperforming U.S stores and expects "low double-digit" earnings-per-share growth in 2008. This month, founder Howard Schultz returned as CEO, pledging to slow the pace of U.S. store openings, close underperforming stores, and accelerate global expansion.
Watch list
Aflac Inc.'s (AFL:60.82, -1.41, -2.3%) fourth-quarter earnings rose to $382 million, or 78 cents a share, from $332 million, or 67 cents a share, as revenue benefited from the strengthening of the yen, the company said. Revenue increased to $4.02 billion from $3.69 billion a year earlier. Analysts had expected earnings of 80 cents a share on revenue of $3.96 billion. The insurance provider said it expects 2008 operating earnings, excluding the impact of the yen, of $3.70 to $3.76 a share on a sales increase of 8% to 12%. Wall Street, on average, expects 2008 earnings of $3.83 a share. Analyst estimates typically exclude items.
Alliance Data Systems Corp.'s (ADS:42.70, -0.30, -0.7%) fourth-quarter net income fell to $33.9 million, or 42 cents a share, from $39.6 million, or 48 cents a share, a year earlier. The transaction processor said revenue grew to $602.7 million from $524.5 million. Analysts had expected cash earnings of 93 cents a share on revenue of $601 million. The company expects double-digit organic growth in 2008.
Earlier Wednesday, Alliance Data sued Blackstone Group LP (BX:18.65, -0.34, -1.8%) to force the private-equity firm to go through with its $6.4 billion acquisition of the company.
Amazon.com (AMZN:74.21, +0.26, +0.4%) report fourth-quarter earnings of $207 million, or 48 cents a share, compared to earnings of $98 million, or 23 cents a share, for the same period the previous year. Revenue grew 42% to $5.67 billion. Analysts were expecting earnings of 48 cents a share on revenue of $5.37 billion. For the first quarter, the company said it expects revenue to come in between $3.95 billion and $4.15 billion - ahead of the $3.92 billion predicted by analysts.
Ann Taylor Stores Corp. (ANN:22.83, +0.23, +1.0%) will close 117 underperforming stores between 2008 and 2010 and reduce staff as part of a restructuring program to "enhance profitability and improve overall effectiveness." Ann Taylor expects the program to result in ongoing annual pretax savings of about $50 million by fiscal 2010, with savings of about $20 million to $25 million in 2008. The company expects to incur a charge of 29 cents a share in fiscal 2007. Excluding expenses, the company backed its previous fiscal 2007 earnings outlook of $1.80 to $1.85 a share.
CACI International Inc.'s (CAI:42.05, -0.92, -2.1%) fiscal second-quarter earnings fell to $19.2 million, or 63 cents a share, from $20.5 million, or 65 cents a share, a year earlier. The information technology company said revenue increased to $577.8 million from $476.9 million a year ago. Analysts had predicted earnings of 63 cents a share on revenue of $559.1 million for the quarter. The company raised the lower end of its 2008 outlook to $2.60 to $2.80 a share from its previous view of $2.50 a share to $2.80 a share.
Covance Inc.'s (CVD:88.10, -0.95, -1.1%) fourth-quarter earnings rose to $50.9 million, or 78 cents a share, from $38.3 million, or 59 cents a share, as the company booked more than $500 million in net orders. The biopharmaceutical company said revenue increased to $411 million from $343 million. Analysts had expected earnings of 72 cents a share on revenue of $402 million. Covance said it expects 2008 earnings of $3.18 per share on "low- to mid-teens revenue growth." Wall Street, on average, anticipates 2008 earnings of $3.19 a share.
Crown Holdings Inc.'s (CCK:24.00, +0.06, +0.3%) fourth-quarter net income increased to $343 million, or $2.11 a share, from $162 million, or 97 cents a share, a year earlier. Revenue rose to $1.87 billion from $1.68 billion a year ago. Analysts had predicted fourth-quarter revenue of $1.78 billion.
Cytec Industries Inc.'s (CYT:52.69, +0.21, +0.4%) fourth-quarter net income fell to $47.6 million, or 97 cents a share, from $83.4 million, or $1.70 a share, a year earlier. The chemical company said net sales rose to $901.2 million from $793.6 million a year ago. Analysts had predicted fourth-quarter earnings of 83 cents a share and revenue of $852.5 million. Cytec said it expects year earnings in the range of $4.15 to $4.35 a share, up from 2007 adjusted earnings $3.90 a share.
Duke Realty Corp.'s (DRE:24.34, -1.09, -4.3%) fourth-quarter net income rose to $62 million, or 40 cents a share, from $55 million, or 37 cents a share, a year earlier. Funds from operations for the period rose to $123.5 million, or 80 cents a share, from $112.7 million, or 76 cents a share, a year earlier. The real estate investment trust said revenue from continuing operations increased slightly to $261.4 million from $256.4 million a year ago. Duke lowered its 2008 funds from operation guidance to a range of $2.60 to $2.90 a share from a range of $2.80 to $3 a share.
Dun & Bradstreet Corp. (DNB:87.75, -1.55, -1.7%) reported its fourth-quarter net income rose to $101.7 million, or $1.74 a share, from $91.2 million, or $1.46 a share, a year earlier. Revenue rose to $464.7 million from $424.2 million, the business information, data and services company said. Analysts had forecast earnings of $1.67 a share. Dun & Bradstreet also said it expects earnings in 2008 to range from $5.19 to $5.29 a share before non-core gains and charges.
DynCorp International Inc.'s (DCP:21.02, -0.31, -1.4%) fiscal third-quarter earnings increased to $12 million, or 21 cents a share, from $11.6 million, or 20 cents a share, a year earlier. The mission-critical technical services provider's revenue rose to $523.1 million from $517.5 million a year ago. Analysts had expected third-quarter earnings of 28 cents a share, on revenue of $602 million. DynCorp now expects fiscal 2008 earnings of $1 to $1.05 a share, on revenue of $2.13 billion to $2.18 billion. Previously, the company had expected full-year earnings of $1 to $1.10 a share, on revenue of $2.3 billion to $2.4 billion. Wall Street is looking for fiscal 2008 earnings of $1.08 a share, on revenue of $2.29 billion.
Eagle Materials Inc.'s (EXP:34.53, -0.47, -1.3%) fiscal third-quarter net earnings declined to $22.4 million, or 50 cents a share, from $40.9 million, or 83 cents a share, a year ago. The cement manufacturer reported weakness in wallboard sales volumes and prices, as revenue fell to $173 million, from $191.8 million a year ago. Analysts had expected per-share earnings of 47 cents a share on revenue of $174 million.
Drug maker Eli Lilly & Co. (LLY:51.35, -0.96, -1.8%) is in talks to settle civil and criminal probes into how the company marketed its antipsychotic drug Zyprexa, The New York Times reported on its Web site, citing several sources close to the matter. The settlement could reach up to more than $1 billion paid to federal and state governments, the paper reported.
Everest Re Group (RE:97.21, -0.05, 0.0%) said fourth-quarter net income came in at $12.2 million, or 19 cents a share, down from $206.4 million, or $3.15 a share, a year ago. Everest Re was expected to make $1.19 a share, according to analysts.
Fannie Mae (FNM:31.13, -1.78, -5.4%) cut President and Chief Executive Daniel H. Mudd's 2007 bonus to about $2.22 million. Mudd received a 2006 bonus of $3.5 million. The financial services company also said Mudd will receive a 2007 long-term incentive award of $9 million. Fannie Mae disclosed in January 2007 that Mudd would receive a 2007 and 2008 base salary of $990,000.
Fidelity National Financial (FNF:17.86, -0.75, -4.0%) reported a fourth-quarter loss of $44.9 million, or 21 cents a share, compared with net income of $71.2 million, or 34 cents a share, a year earlier. Analysts expected the company to earn 18 cents a share.
Harris Corp.'s (HRS:49.25, -0.12, -0.2%) fiscal second-quarter net income increased to $114.3 million, or 83 cents a share, from $94 million, or 67 cents a share, a year earlier. The communication products company's revenue rose to $1.32 billion from $1.02 billion in the year-ago period. Analysts had expected per-share earnings of 81 cents on revenue of $1.25 billion. Harris increased its forecast for fiscal 2008, saying it expects per-share earnings of $3.35 to $3.45.
Hologic Inc.'s (HOLX:61.80, -1.80, -2.8%) board approved a 2-for-1 stock split that, pending shareholder authorization, will be effected in the form of a dividend. The premium diagnostic, medical imaging system and surgical product supplier is currently awaiting approval to increase the number of common shares it can issue to 750 million from 300 million.
Merrill Lynch & Co. (MER:56.09, -1.38, -2.4%) said it won't pay 2007 bonuses to executives at the investment bank, according to a regulatory filing. The brokerage firm will make stock option grants to some executives to encourage them to stay as it tackles tough market conditions this year. Gregory Fleming, chief operating officer, will get 1.19 million options and Vice Chairman Robert McCann is getting 971,346 options, Merrill said.
Novellus Systems Inc. (NVLS23.41, -0.82, -3.4%) reported fourth-quarter net income of $52.9 million, or 47 cents per share, compared with income of $42.6 million, or 34 cents per share for the year-earlier period. Revenue was $363.5 million, compared with $438.5 million in the year-earlier period. Analysts had expected the company to report earnings of 36 cents per share on revenue of $361.4 million.
Pulte Homes Inc.'s (PHM13.57, -1.28, -8.6%) fourth-quarter loss widened to $874.7 million, or $3.46 a share, from $8.41 million, or 3 cents a share, due to the continued weakening of existing home sales. The home builder said revenue fell to $2.9 billion from $4.39 billion last year. New home orders for the fourth quarter fell 29% to 4,562 from 6,446 last year, and Pulte Homes' backlog as of Dec. 31 of 7,890 homes was valued at $2.5 billion, down from $3.58 billion the previous year. Pulte Homes expects a first-quarter per-share loss from continuing operations of 15 cent to 30 cents.
Snap-on Inc.'s (SNA 43.84, +0.62, +1.4%) fourth-quarter net income rose to $57.3 million, or 98 cents a share, from $38 million, or 64 cents a share, a year earlier. Analysts had predicted fourth-quarter earnings of 82 cents a share. Net sales increased to $742.9 million from $651.4 million a year ago, the company said. Snap-on expects to record $15 million to $20 million in 2008 restructuring expenses, down from $26 million in 2007. The company predicts sales and operating earnings for the year will exceed its 2007 results due to the cost reduction.
Google Inc. (GOOG:548.27, -2.25, -0.4%) is forecast to report fourth-quarter earnings of $4.44 a share, according to analysts polled by Thomson Financial.
MBIA Inc. (MBI) is projected to post a loss of $2.97 a share in the fourth quarter.
AstraZeneca Plc (AZN) is expected to report fourth-quarter earnings of 95 cents an ADR.
Procter & Gamble Co. (PG) is estimated to report fiscal second-quarter earnings of 97 cents a share.
Electronic Arts Inc. (ERTS) is likely to post earnings of 90 cents a share in the fiscal third quarter.
Mattel Inc. (MAT) is forecast to post fourth-quarter earnings of 73 cents a share.
Goodrich Corp. (GR) is estimated to post earnings of 91 cents a share in the fourth quarter.
Bristol-Myers Squibb Co. (BMY) is projected to report earnings of 34 cents a share in the fourth quarter.
MasterCard Inc. (MA) is expected to report fourth-quarter earnings of 72 cents a share.
Burger King (BKC) is likely to post fiscal second-quarter earnings of 32 cents a share.
Colgate-Palmolive (CL) is expected to report earnings of 89 cents a share in the fourth quarter.
Monster Worldwide Inc. (MNST) is estimated to post earnings of 38 cents a share in the fourth quarter.
CVS Caremark Corp. (CVS) is forecast to post earnings of 55 cents in the fourth quarter.
Raytheon Co. (RTN) is estimated to post earnings of 92 cents a share in the fourth quarter.
NewYork Times Co. (NYT:16.65, +0.59, +3.7%) is projected to report fourth-quarter earnings of 48 cents a share.
Wyeth (WYE: 39.70, -1.34, -3.3%) is likely to report fourth-quarter earnings of 79 cents a share.
Aflac Inc. (AFL: 60.82, -1.41, -2.3%) is forecast to post earnings of 80 cents a share in the fourth quarter.
Anheuser-Busch Co. (BUD:47.26, -0.03, -0.1%) is expected to post fourth-quarter earnings of 32 cents a share.
Nasdaq Stock Market Inc. (NDAQ:44.65, -0.84, -1.8%) is projected to post earnings of 47 cents a share in the fourth quarter.
McKesson Corp. (MCK:63.26, +1.01, +1.6%) is forecast to post fiscal third-quarter earnings of 80 cents a share.
Lear Corp. (LEA:27.05, -0.28, -1.0%) is likely to report earnings of 66 cents a share in the fourth quarter.
L-3 Communications Holdings (LLL:107.85, -0.39, -0.4%) is expected to report fourth-quarter earnings of $1.61 a share.
Elizabeth Arden Inc. (RDEN) is projected to report fiscal second-quarter earnings of $1.15 a share.
Harsco Corp. (HSC) is expected to post fourth-quarter profits of 70 cents a share.
Newell Rubbermaid Inc. (NWL) is likely to post earnings of 45 cents a share in the fourth quarter.
Hologic Inc. (HOLX) is projected to post fiscal first-quarter earnings of 48 cents a share.
Celgene Corp. (CELG) is estimated to post earnings of 31 cents a share in the fourth quarter.
Nova Chemicals Corp. (NCX) is expected to report fourth-quarter earnings of $1.01 a share.
E.W. Scripps Co. (SSP) is projected to post earnings of 70 cents a share in the fourth quarter.
RF Micro Devices Inc. (RFMD) is likely to report earnings of 7 cents a share in the fiscal third quarter.
Safeco Corp. (SAF) is estimated to post earnings of $1.44 a share in the fourth quarter.
VeriSign Inc. (VRSN) is expected to post fourth-quarter earnings of 29 cents a share.
Callaway Golf Co. (ELY) is forecast to report a loss of 19 cents a share in the fourth quarter.
Western Union Co. (WU) is likely to post earnings of 31 cents a share in the fourth quarter.
C.R. Bard Inc. (BCR:95.60, +2.75, +3.0%) is expected to report earnings of $1 a share in the fourth quarter.
Hanesbrands Inc. (HBI:24.76, -0.05, -0.2%) is forecast to report fourth-quarter earnings of 39 cents a share.
Marathon Oil Corp. (MRO:50.91, -1.22, -2.3%) is estimated to post earnings of 86 cents a share in the fourth quarter.
Sealy Corp. (ZZ:9.53, -0.13, -1.3%) is likely to report fourth-quarter earnings of 14 cents a share.
IMS Health Inc. (RX:21.13, -0.20, -0.9%) is forecast to post earnings of 42 cents a share in the fourth quarter.
ImClone Systems Inc. (IMCL:41.97, -1.79, -4.1%) is expected to post earnings of 27 cents a share in the fourth quarter.
Affymetrix Inc. (AFFX:20.77, -0.42, -2.0%) is estimated to report fourth-quarter earnings of 16 cents a share.
PPL Corp. (PPL:47.97, +0.27, +0.6%) is likely to report earnings of 54 cents a share in the fourth quarter.
Affiliated Computer Services (ACS:45.90, +0.15, +0.3%) is forecast to post fiscal second-quarter earnings of 83 cents a share.
Starwood Hotels & Resorts (HOT:42.90, -0.94, -2.1%) is expected to report fourth-quarter earnings of 67 cents a share.
Brinks Co. (BCO:54.50, +0.17, +0.3%) is likely to report earnings of 74 cents a share in the fourth quarter.
After Wednesday's closing bell, Starbucks (SBUX:19.22, -0.75, -3.8%) reported fiscal first-quarter net income of $208.1 million, or 28 cents a share, compared with net income of $205 million, or 26 cents a share, a year ago. Sales rose 17% to $2.8 billion. Starbucks also said it will close 100 underperforming U.S stores and expects "low double-digit" earnings-per-share growth in 2008. This month, founder Howard Schultz returned as CEO, pledging to slow the pace of U.S. store openings, close underperforming stores, and accelerate global expansion.
Watch list
Aflac Inc.'s (AFL:60.82, -1.41, -2.3%) fourth-quarter earnings rose to $382 million, or 78 cents a share, from $332 million, or 67 cents a share, as revenue benefited from the strengthening of the yen, the company said. Revenue increased to $4.02 billion from $3.69 billion a year earlier. Analysts had expected earnings of 80 cents a share on revenue of $3.96 billion. The insurance provider said it expects 2008 operating earnings, excluding the impact of the yen, of $3.70 to $3.76 a share on a sales increase of 8% to 12%. Wall Street, on average, expects 2008 earnings of $3.83 a share. Analyst estimates typically exclude items.
Alliance Data Systems Corp.'s (ADS:42.70, -0.30, -0.7%) fourth-quarter net income fell to $33.9 million, or 42 cents a share, from $39.6 million, or 48 cents a share, a year earlier. The transaction processor said revenue grew to $602.7 million from $524.5 million. Analysts had expected cash earnings of 93 cents a share on revenue of $601 million. The company expects double-digit organic growth in 2008.
Earlier Wednesday, Alliance Data sued Blackstone Group LP (BX:18.65, -0.34, -1.8%) to force the private-equity firm to go through with its $6.4 billion acquisition of the company.
Amazon.com (AMZN:74.21, +0.26, +0.4%) report fourth-quarter earnings of $207 million, or 48 cents a share, compared to earnings of $98 million, or 23 cents a share, for the same period the previous year. Revenue grew 42% to $5.67 billion. Analysts were expecting earnings of 48 cents a share on revenue of $5.37 billion. For the first quarter, the company said it expects revenue to come in between $3.95 billion and $4.15 billion - ahead of the $3.92 billion predicted by analysts.
Ann Taylor Stores Corp. (ANN:22.83, +0.23, +1.0%) will close 117 underperforming stores between 2008 and 2010 and reduce staff as part of a restructuring program to "enhance profitability and improve overall effectiveness." Ann Taylor expects the program to result in ongoing annual pretax savings of about $50 million by fiscal 2010, with savings of about $20 million to $25 million in 2008. The company expects to incur a charge of 29 cents a share in fiscal 2007. Excluding expenses, the company backed its previous fiscal 2007 earnings outlook of $1.80 to $1.85 a share.
CACI International Inc.'s (CAI:42.05, -0.92, -2.1%) fiscal second-quarter earnings fell to $19.2 million, or 63 cents a share, from $20.5 million, or 65 cents a share, a year earlier. The information technology company said revenue increased to $577.8 million from $476.9 million a year ago. Analysts had predicted earnings of 63 cents a share on revenue of $559.1 million for the quarter. The company raised the lower end of its 2008 outlook to $2.60 to $2.80 a share from its previous view of $2.50 a share to $2.80 a share.
Covance Inc.'s (CVD:88.10, -0.95, -1.1%) fourth-quarter earnings rose to $50.9 million, or 78 cents a share, from $38.3 million, or 59 cents a share, as the company booked more than $500 million in net orders. The biopharmaceutical company said revenue increased to $411 million from $343 million. Analysts had expected earnings of 72 cents a share on revenue of $402 million. Covance said it expects 2008 earnings of $3.18 per share on "low- to mid-teens revenue growth." Wall Street, on average, anticipates 2008 earnings of $3.19 a share.
Crown Holdings Inc.'s (CCK:24.00, +0.06, +0.3%) fourth-quarter net income increased to $343 million, or $2.11 a share, from $162 million, or 97 cents a share, a year earlier. Revenue rose to $1.87 billion from $1.68 billion a year ago. Analysts had predicted fourth-quarter revenue of $1.78 billion.
Cytec Industries Inc.'s (CYT:52.69, +0.21, +0.4%) fourth-quarter net income fell to $47.6 million, or 97 cents a share, from $83.4 million, or $1.70 a share, a year earlier. The chemical company said net sales rose to $901.2 million from $793.6 million a year ago. Analysts had predicted fourth-quarter earnings of 83 cents a share and revenue of $852.5 million. Cytec said it expects year earnings in the range of $4.15 to $4.35 a share, up from 2007 adjusted earnings $3.90 a share.
Duke Realty Corp.'s (DRE:24.34, -1.09, -4.3%) fourth-quarter net income rose to $62 million, or 40 cents a share, from $55 million, or 37 cents a share, a year earlier. Funds from operations for the period rose to $123.5 million, or 80 cents a share, from $112.7 million, or 76 cents a share, a year earlier. The real estate investment trust said revenue from continuing operations increased slightly to $261.4 million from $256.4 million a year ago. Duke lowered its 2008 funds from operation guidance to a range of $2.60 to $2.90 a share from a range of $2.80 to $3 a share.
Dun & Bradstreet Corp. (DNB:87.75, -1.55, -1.7%) reported its fourth-quarter net income rose to $101.7 million, or $1.74 a share, from $91.2 million, or $1.46 a share, a year earlier. Revenue rose to $464.7 million from $424.2 million, the business information, data and services company said. Analysts had forecast earnings of $1.67 a share. Dun & Bradstreet also said it expects earnings in 2008 to range from $5.19 to $5.29 a share before non-core gains and charges.
DynCorp International Inc.'s (DCP:21.02, -0.31, -1.4%) fiscal third-quarter earnings increased to $12 million, or 21 cents a share, from $11.6 million, or 20 cents a share, a year earlier. The mission-critical technical services provider's revenue rose to $523.1 million from $517.5 million a year ago. Analysts had expected third-quarter earnings of 28 cents a share, on revenue of $602 million. DynCorp now expects fiscal 2008 earnings of $1 to $1.05 a share, on revenue of $2.13 billion to $2.18 billion. Previously, the company had expected full-year earnings of $1 to $1.10 a share, on revenue of $2.3 billion to $2.4 billion. Wall Street is looking for fiscal 2008 earnings of $1.08 a share, on revenue of $2.29 billion.
Eagle Materials Inc.'s (EXP:34.53, -0.47, -1.3%) fiscal third-quarter net earnings declined to $22.4 million, or 50 cents a share, from $40.9 million, or 83 cents a share, a year ago. The cement manufacturer reported weakness in wallboard sales volumes and prices, as revenue fell to $173 million, from $191.8 million a year ago. Analysts had expected per-share earnings of 47 cents a share on revenue of $174 million.
Drug maker Eli Lilly & Co. (LLY:51.35, -0.96, -1.8%) is in talks to settle civil and criminal probes into how the company marketed its antipsychotic drug Zyprexa, The New York Times reported on its Web site, citing several sources close to the matter. The settlement could reach up to more than $1 billion paid to federal and state governments, the paper reported.
Everest Re Group (RE:97.21, -0.05, 0.0%) said fourth-quarter net income came in at $12.2 million, or 19 cents a share, down from $206.4 million, or $3.15 a share, a year ago. Everest Re was expected to make $1.19 a share, according to analysts.
Fannie Mae (FNM:31.13, -1.78, -5.4%) cut President and Chief Executive Daniel H. Mudd's 2007 bonus to about $2.22 million. Mudd received a 2006 bonus of $3.5 million. The financial services company also said Mudd will receive a 2007 long-term incentive award of $9 million. Fannie Mae disclosed in January 2007 that Mudd would receive a 2007 and 2008 base salary of $990,000.
Fidelity National Financial (FNF:17.86, -0.75, -4.0%) reported a fourth-quarter loss of $44.9 million, or 21 cents a share, compared with net income of $71.2 million, or 34 cents a share, a year earlier. Analysts expected the company to earn 18 cents a share.
Harris Corp.'s (HRS:49.25, -0.12, -0.2%) fiscal second-quarter net income increased to $114.3 million, or 83 cents a share, from $94 million, or 67 cents a share, a year earlier. The communication products company's revenue rose to $1.32 billion from $1.02 billion in the year-ago period. Analysts had expected per-share earnings of 81 cents on revenue of $1.25 billion. Harris increased its forecast for fiscal 2008, saying it expects per-share earnings of $3.35 to $3.45.
Hologic Inc.'s (HOLX:61.80, -1.80, -2.8%) board approved a 2-for-1 stock split that, pending shareholder authorization, will be effected in the form of a dividend. The premium diagnostic, medical imaging system and surgical product supplier is currently awaiting approval to increase the number of common shares it can issue to 750 million from 300 million.
Merrill Lynch & Co. (MER:56.09, -1.38, -2.4%) said it won't pay 2007 bonuses to executives at the investment bank, according to a regulatory filing. The brokerage firm will make stock option grants to some executives to encourage them to stay as it tackles tough market conditions this year. Gregory Fleming, chief operating officer, will get 1.19 million options and Vice Chairman Robert McCann is getting 971,346 options, Merrill said.
Novellus Systems Inc. (NVLS23.41, -0.82, -3.4%) reported fourth-quarter net income of $52.9 million, or 47 cents per share, compared with income of $42.6 million, or 34 cents per share for the year-earlier period. Revenue was $363.5 million, compared with $438.5 million in the year-earlier period. Analysts had expected the company to report earnings of 36 cents per share on revenue of $361.4 million.
Pulte Homes Inc.'s (PHM13.57, -1.28, -8.6%) fourth-quarter loss widened to $874.7 million, or $3.46 a share, from $8.41 million, or 3 cents a share, due to the continued weakening of existing home sales. The home builder said revenue fell to $2.9 billion from $4.39 billion last year. New home orders for the fourth quarter fell 29% to 4,562 from 6,446 last year, and Pulte Homes' backlog as of Dec. 31 of 7,890 homes was valued at $2.5 billion, down from $3.58 billion the previous year. Pulte Homes expects a first-quarter per-share loss from continuing operations of 15 cent to 30 cents.
Snap-on Inc.'s (SNA 43.84, +0.62, +1.4%) fourth-quarter net income rose to $57.3 million, or 98 cents a share, from $38 million, or 64 cents a share, a year earlier. Analysts had predicted fourth-quarter earnings of 82 cents a share. Net sales increased to $742.9 million from $651.4 million a year ago, the company said. Snap-on expects to record $15 million to $20 million in 2008 restructuring expenses, down from $26 million in 2007. The company predicts sales and operating earnings for the year will exceed its 2007 results due to the cost reduction.
Two Stocks with Hefty Expected Returns Tuesday January 29, 6:00 pm ET
Following is a sampling of stocks that recently jumped to 5 stars. By way of background, we award a stock 5 stars when it trades at a suitably large discount--i.e., a margin of safety--to our fair value estimate. Thus, when a stock hits 5-star territory, we consider it an especially compelling value.
To get a complete tally of stocks that have recently jumped to 5 stars--as well as our full list of 5-star stocks--including our consider buying and selling prices, risk ratings, and moat ratings--simply take Morningstar Premium Membership for a test spin. Click here to sign up for a free trial.
Anheuser-Busch CompaniesMoat: Wide
Risk: Below Average
Price/Fair Value Ratio*: 0.83
Three-Year Expected Annual Return*: 15.5%
What It Does: Anheuser-Busch (NYSE:BUD - News) is the largest American brewer. Its domestic beer brands, which include Budweiser, Michelob, Busch, and Natural Light, are produced at 12 breweries in the United States. The company owns 50% of Grupo Modelo and has made substantial investments in Chinese breweries. It also owns a brewery in the United Kingdom and licenses its brands to various brewers worldwide. The company owns packaging companies and nine theme parks, including Sea World and Busch Gardens.
What Gives It an Edge: Morningstar analyst Ann Gilpin thinks Anheuser-Busch has a wide economic moat. The firm dominates the domestic beer market with nearly 50% share, and this scale advantage has allowed it to demand exclusivity from about 60% of its distributors, compared with 10% of its peers' volume that is distributed under exclusive arrangements. Anheuser-Busch's infrastructure for the distribution of alcoholic beverages in the U.S. is unparalleled, and the firm should be able to further leverage this system to generate improved growth by branching into faster-growth categories.
What the Risks Are: Because brewers have high fixed costs, weak volume trends significantly deteriorate profits. Wine and spirits have grown in popularity domestically at the expense of beer during the last few years, making each of the oligopolistic U.S. brewers more willing to discount to maintain volume. As a consequence, the domestic beer pricing environment, which was strong for a number of years, has become increasingly competitive.
What the Market Is Missing: Gilpin believes the market is preoccupied with near-term commodity (hops and barley) cost issues affecting all brewers, and it is discounting Anheuser-Busch's brands, unmatched scale, and its history of generating strong cash flows. Gilpin anticipates a more rational domestic pricing environment as the industry consolidates, on the heels of the recent joint venture agreement between SABMiller and Molson Coors (NYSE:TAP - News). Although Gilpin concedes that commodity costs may take a bite out of margins in 2008, she believes Anheuser-Busch will weather the storm and provide its investors with ample returns.
General MillsMoat: Narrow
Risk: Below Average
Price/Fair Value Ratio*: 0.81
Three-Year Expected Annual Return*: 17.3%
What It Does: General Mills (NYSE:GIS - News) is one of the largest packaged food companies in the United States. It produces ready-to-eat breakfast cereals, refrigerated dough and other baking items, snack and convenience foods, frozen vegetables, yogurt, and beverages. Well-known brands include Cheerios, Lucky Charms, Wheaties, Chex, Betty Crocker, Pillsbury, Gold Medal, Green Giant, Hamburger Helper, Old El Paso, Pop Secret, Colombo, and Yoplait. U.S. sales account for 85% of the firm's annual revenues.
What Gives It an Edge: With its well-known brands, General Mills has significant presence in the grocery aisles. More importantly, the company holds either the number-one or number-two market position in 12 product categories. Such strong brands allow General Mills to acquire favorable shelf space at retail and charge premium prices for its products, producing industry-leading margins and superior returns on invested capital. As a result, Morningstar analyst Greggory Warren has assigned General Mills a narrow moat.
What the Risks Are: General Mills is heavily influenced by the commodity-driven nature of its business. Input cost volatility, as well as the commodification of several of its categories, such as ready-to-eat cereals, has had an impact on profitability. General Mills faces stiff competition from branded and private-label food manufacturers in many of its product lines. Increased volatility in its foodservice segment has also been detrimental to the firm's sales and earnings growth during the last few years.
What the Market Is Missing: Warren thinks most of the packaged food firms have traded down over the past month on growing concerns over commodity cost inflation. However, he counters that the food and beverage manufacturers have in the past been able to pass much of the increase along to customers, either through straight price increases or ingenious alternatives. Although Warren believes the price hikes could negatively impact volume, the effect will differ depending on the product category involved. With below-average private-label penetration in categories such as ready-to-eat cereals (15%) and yogurt, which combined make up more than one third of the company's annual sales, Warren does not see much potential for disruption in General Mills' business. Soup sales are also not likely to be troubled, as the firm's chief competitor, Campbell Soup (NYSE:CPB - News), needs to be rational with its pricing for a category that makes up about half of its sales and profitability.
To get a complete tally of stocks that have recently jumped to 5 stars--as well as our full list of 5-star stocks--including our consider buying and selling prices, risk ratings, and moat ratings--simply take Morningstar Premium Membership for a test spin. Click here to sign up for a free trial.
Anheuser-Busch CompaniesMoat: Wide
Risk: Below Average
Price/Fair Value Ratio*: 0.83
Three-Year Expected Annual Return*: 15.5%
What It Does: Anheuser-Busch (NYSE:BUD - News) is the largest American brewer. Its domestic beer brands, which include Budweiser, Michelob, Busch, and Natural Light, are produced at 12 breweries in the United States. The company owns 50% of Grupo Modelo and has made substantial investments in Chinese breweries. It also owns a brewery in the United Kingdom and licenses its brands to various brewers worldwide. The company owns packaging companies and nine theme parks, including Sea World and Busch Gardens.
What Gives It an Edge: Morningstar analyst Ann Gilpin thinks Anheuser-Busch has a wide economic moat. The firm dominates the domestic beer market with nearly 50% share, and this scale advantage has allowed it to demand exclusivity from about 60% of its distributors, compared with 10% of its peers' volume that is distributed under exclusive arrangements. Anheuser-Busch's infrastructure for the distribution of alcoholic beverages in the U.S. is unparalleled, and the firm should be able to further leverage this system to generate improved growth by branching into faster-growth categories.
What the Risks Are: Because brewers have high fixed costs, weak volume trends significantly deteriorate profits. Wine and spirits have grown in popularity domestically at the expense of beer during the last few years, making each of the oligopolistic U.S. brewers more willing to discount to maintain volume. As a consequence, the domestic beer pricing environment, which was strong for a number of years, has become increasingly competitive.
What the Market Is Missing: Gilpin believes the market is preoccupied with near-term commodity (hops and barley) cost issues affecting all brewers, and it is discounting Anheuser-Busch's brands, unmatched scale, and its history of generating strong cash flows. Gilpin anticipates a more rational domestic pricing environment as the industry consolidates, on the heels of the recent joint venture agreement between SABMiller and Molson Coors (NYSE:TAP - News). Although Gilpin concedes that commodity costs may take a bite out of margins in 2008, she believes Anheuser-Busch will weather the storm and provide its investors with ample returns.
General MillsMoat: Narrow
Risk: Below Average
Price/Fair Value Ratio*: 0.81
Three-Year Expected Annual Return*: 17.3%
What It Does: General Mills (NYSE:GIS - News) is one of the largest packaged food companies in the United States. It produces ready-to-eat breakfast cereals, refrigerated dough and other baking items, snack and convenience foods, frozen vegetables, yogurt, and beverages. Well-known brands include Cheerios, Lucky Charms, Wheaties, Chex, Betty Crocker, Pillsbury, Gold Medal, Green Giant, Hamburger Helper, Old El Paso, Pop Secret, Colombo, and Yoplait. U.S. sales account for 85% of the firm's annual revenues.
What Gives It an Edge: With its well-known brands, General Mills has significant presence in the grocery aisles. More importantly, the company holds either the number-one or number-two market position in 12 product categories. Such strong brands allow General Mills to acquire favorable shelf space at retail and charge premium prices for its products, producing industry-leading margins and superior returns on invested capital. As a result, Morningstar analyst Greggory Warren has assigned General Mills a narrow moat.
What the Risks Are: General Mills is heavily influenced by the commodity-driven nature of its business. Input cost volatility, as well as the commodification of several of its categories, such as ready-to-eat cereals, has had an impact on profitability. General Mills faces stiff competition from branded and private-label food manufacturers in many of its product lines. Increased volatility in its foodservice segment has also been detrimental to the firm's sales and earnings growth during the last few years.
What the Market Is Missing: Warren thinks most of the packaged food firms have traded down over the past month on growing concerns over commodity cost inflation. However, he counters that the food and beverage manufacturers have in the past been able to pass much of the increase along to customers, either through straight price increases or ingenious alternatives. Although Warren believes the price hikes could negatively impact volume, the effect will differ depending on the product category involved. With below-average private-label penetration in categories such as ready-to-eat cereals (15%) and yogurt, which combined make up more than one third of the company's annual sales, Warren does not see much potential for disruption in General Mills' business. Soup sales are also not likely to be troubled, as the firm's chief competitor, Campbell Soup (NYSE:CPB - News), needs to be rational with its pricing for a category that makes up about half of its sales and profitability.
Tuesday, January 29, 2008
Latest Updates
11:30 am : In the past half-hour, the Dow climbs to fresh session highs and the S&P trades near its intraday high. The Nasdaq is well off its lows, but has been unable to reach its opening highs as it trades slightly above the unchanged mark.
The International Monetary Fund (IMF) cut its forecast for world growth this year, citing continued stress in global credit markets, according to Reuters. The IMF also warned that economic activity could slow further. It now expects the global economy to grow 4.1%, compared to its earlier forecast of 4.4%.DJ30 +77.72 NASDAQ +3.56 SP500 +7.37 NASDAQ Dec/Adv/Vol 1337/1422/725 mln NYSE Dec/Adv/Vol 1115/1870/477 mln
11:00 am : The major indices are trading in mixed fashion. The Dow and S&P
are holding slight gains, while the Nasdaq is trading with a slight loss. Seven of the ten sectors are higher, led by a 2.6% surge in telecom. Consumer discretionary is the main laggard (-0.7%) as retailers shed 1%.
The market rumor that JPMorgan Chase (JPM 45.95, +0.83) was facing a big derivative loss is not true, according to Reuters, citing sources. JPMorgan has been relatively unscathed by the subprime turmoil that has mired other Wall Street banks.DJ30 +47.13 NASDAQ -3.88 SP500 +4.71 NASDAQ Dec/Adv/Vol 1363/1332/579 mln NYSE Dec/Adv/Vol 1167/1759/366 mln
10:30 am : The stock market is back in the green as it rises in conjunction with financials (+0.7%). JPMorgan (JPM 45.88, +0.31) declined sharply during the recent retreat on a headline that stated there is a rumor the company may be facing a large trading loss. A CNBC commentator has said the rumor is most likely not true, as the stock recovers.
After a rough start, 3M (MMM 77.84, +0.40) is modestly outperforming the broader market. The company reported fourth quarter earnings of $1.19 per share, topping estimates by two cents. The company also reiterated its 2008 guidance. The stock was lower at the start of trading, but has rebounded in the green after traders liked what the company said during its conference call. DJ30 +54.22 NASDAQ -1.21 SP500 +5.23 NASDAQ Dec/Adv/Vol 1397/1195/419 mln NYSE Dec/Adv/Vol 1329/1550/258 mln
10:05 am : Stocks give up their early gains, led by a dip in tech (-0.8%) and financials (-0.2%).
Just hitting the wires, the Conference Board said January consumer confidence was 87.9, down from December's revised reading of 90.6. Economists expected a reading of 87.0. The response immediately after the release was negative, sending the major indices to their session lows.
The weakness in tech is weighing on the Nasdaq, which is now trading with a modest loss. The S&P and Dow are trading with a slight loss.DJ30 -15.52 NASDAQ -16.08 SP500 -2.25 NASDAQ Dec/Adv/Vol 857/1509/134 mln
09:45 am : The stock market opens modestly higher, buoyed by a better than expected durable orders report.
December durable orders rose 5.2%, larger than the expected 1.6% rise. Excluding transportation, orders still rose a healthy 2.6%. This strong level of orders in December does not support the assertion that the economy is in a recession.
Earnings reports have been mostly better than expected, although some companies disappointed with their outlooks.
The consumer confidence reading will be released at the top of the hour.DJ30 +47.31 NASDAQ +7.90 SP500 +6.73
09:13 am : S&P futures vs fair value: +9.2. Nasdaq futures vs fair value: +11.8.
08:59 am : S&P futures vs fair value: +8.7. Nasdaq futures vs fair value: +12.0. Futures continue to point to a higher start. The FOMC begins its two day meeting today, and is set to issue its statement on Wednesday at 14:15 ET. Fed funds futures indicate a 76% chance of a 50 basis point cut, with the rest of the bets on a 25 basis point cut.
08:30 am : S&P futures vs fair value: +9.9. Nasdaq futures vs fair value: +9.5. Stock futures extended their gains, and then climb higher on a better than expected economic release. December Durable orders rose 5.2%, compared November’s revised reading of 0.5%. Economists expected a rise of 1.6%. Countrywide (CFC) reported a fourth quarter loss of $0.79 per share, $0.49 worse than the consensus estimate. The company issued a dividend of $0.15 on its common shares. It will not be holding a conference call to discuss its results due to its pending merger with Bank of America.
08:01 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: flat. Futures point to a flat to slightly higher open. Earnings reports have been mostly better than expected. 3M (MMM) topped estimates by two cents and reaffirmed its FY08 earnings guidance. Eli Lilly (LLY) and EMC (EMC) beat their estimates and provided reassuring FY08 guidance. American Express (AXP) met, but continues to be cautious in its 2008 outlook. VMware (VMW) beat expectations but is getting clipped in pre-market trading after guiding revenues slightly below the consensus estimate.
06:19 am : S&P futures vs fair value: +5.9. Nasdaq futures vs fair value: +3.3.
06:16 am : FTSE...5883.60...+94.70...+1.6%. DAX...6911.98...+93.13...+1.4%.
06:16 am : Nikkei...13478.86...+390.95...+3.0%. Hang Seng...24291.80...+238.19...+1.0%.
The International Monetary Fund (IMF) cut its forecast for world growth this year, citing continued stress in global credit markets, according to Reuters. The IMF also warned that economic activity could slow further. It now expects the global economy to grow 4.1%, compared to its earlier forecast of 4.4%.DJ30 +77.72 NASDAQ +3.56 SP500 +7.37 NASDAQ Dec/Adv/Vol 1337/1422/725 mln NYSE Dec/Adv/Vol 1115/1870/477 mln
11:00 am : The major indices are trading in mixed fashion. The Dow and S&P
are holding slight gains, while the Nasdaq is trading with a slight loss. Seven of the ten sectors are higher, led by a 2.6% surge in telecom. Consumer discretionary is the main laggard (-0.7%) as retailers shed 1%.
The market rumor that JPMorgan Chase (JPM 45.95, +0.83) was facing a big derivative loss is not true, according to Reuters, citing sources. JPMorgan has been relatively unscathed by the subprime turmoil that has mired other Wall Street banks.DJ30 +47.13 NASDAQ -3.88 SP500 +4.71 NASDAQ Dec/Adv/Vol 1363/1332/579 mln NYSE Dec/Adv/Vol 1167/1759/366 mln
10:30 am : The stock market is back in the green as it rises in conjunction with financials (+0.7%). JPMorgan (JPM 45.88, +0.31) declined sharply during the recent retreat on a headline that stated there is a rumor the company may be facing a large trading loss. A CNBC commentator has said the rumor is most likely not true, as the stock recovers.
After a rough start, 3M (MMM 77.84, +0.40) is modestly outperforming the broader market. The company reported fourth quarter earnings of $1.19 per share, topping estimates by two cents. The company also reiterated its 2008 guidance. The stock was lower at the start of trading, but has rebounded in the green after traders liked what the company said during its conference call. DJ30 +54.22 NASDAQ -1.21 SP500 +5.23 NASDAQ Dec/Adv/Vol 1397/1195/419 mln NYSE Dec/Adv/Vol 1329/1550/258 mln
10:05 am : Stocks give up their early gains, led by a dip in tech (-0.8%) and financials (-0.2%).
Just hitting the wires, the Conference Board said January consumer confidence was 87.9, down from December's revised reading of 90.6. Economists expected a reading of 87.0. The response immediately after the release was negative, sending the major indices to their session lows.
The weakness in tech is weighing on the Nasdaq, which is now trading with a modest loss. The S&P and Dow are trading with a slight loss.DJ30 -15.52 NASDAQ -16.08 SP500 -2.25 NASDAQ Dec/Adv/Vol 857/1509/134 mln
09:45 am : The stock market opens modestly higher, buoyed by a better than expected durable orders report.
December durable orders rose 5.2%, larger than the expected 1.6% rise. Excluding transportation, orders still rose a healthy 2.6%. This strong level of orders in December does not support the assertion that the economy is in a recession.
Earnings reports have been mostly better than expected, although some companies disappointed with their outlooks.
The consumer confidence reading will be released at the top of the hour.DJ30 +47.31 NASDAQ +7.90 SP500 +6.73
09:13 am : S&P futures vs fair value: +9.2. Nasdaq futures vs fair value: +11.8.
08:59 am : S&P futures vs fair value: +8.7. Nasdaq futures vs fair value: +12.0. Futures continue to point to a higher start. The FOMC begins its two day meeting today, and is set to issue its statement on Wednesday at 14:15 ET. Fed funds futures indicate a 76% chance of a 50 basis point cut, with the rest of the bets on a 25 basis point cut.
08:30 am : S&P futures vs fair value: +9.9. Nasdaq futures vs fair value: +9.5. Stock futures extended their gains, and then climb higher on a better than expected economic release. December Durable orders rose 5.2%, compared November’s revised reading of 0.5%. Economists expected a rise of 1.6%. Countrywide (CFC) reported a fourth quarter loss of $0.79 per share, $0.49 worse than the consensus estimate. The company issued a dividend of $0.15 on its common shares. It will not be holding a conference call to discuss its results due to its pending merger with Bank of America.
08:01 am : S&P futures vs fair value: +3.3. Nasdaq futures vs fair value: flat. Futures point to a flat to slightly higher open. Earnings reports have been mostly better than expected. 3M (MMM) topped estimates by two cents and reaffirmed its FY08 earnings guidance. Eli Lilly (LLY) and EMC (EMC) beat their estimates and provided reassuring FY08 guidance. American Express (AXP) met, but continues to be cautious in its 2008 outlook. VMware (VMW) beat expectations but is getting clipped in pre-market trading after guiding revenues slightly below the consensus estimate.
06:19 am : S&P futures vs fair value: +5.9. Nasdaq futures vs fair value: +3.3.
06:16 am : FTSE...5883.60...+94.70...+1.6%. DAX...6911.98...+93.13...+1.4%.
06:16 am : Nikkei...13478.86...+390.95...+3.0%. Hang Seng...24291.80...+238.19...+1.0%.
Wednesday, January 23, 2008
Toyota Falls Short of GM in Global Sales Thursday January 24, 1:26 am ET
Toyota Still No. 2 After Falling About 3,000 Vehicles Short of GM in Global Vehicle Sales
TOKYO -- General Motors, a symbol of American industrial might and the world's top seller of motor vehicles since Herbert Hoover was president, has been all-but-overtaken by a foreign rival.
Toyota said Thursday it sold 9.366 million vehicles last year globally, about 3,000 vehicles fewer than the tally from General Motors Corp., just barely allowing the U.S. automaker to retain its crown as the world's No. 1 automaker.
All year long, the two automakers raced neck-and-neck in global sales, highlighting Toyota's phenomenal growth and the struggles facing GM and other American automakers.
Toyota had said as late as Wednesday that its annual total was 9.37 million vehicles, up 6 percent from 2006. GM said Wednesday in Detroit its global sales had risen 3 percent to 9,369,524 vehicles, making for a race that appeared too close to call.
But Toyota Motor Corp. spokesman Paul Nolasco in Tokyo confirmed the extra digit in Toyota's sales Thursday, showing that GM's total was narrowly higher. GM has been the world's top seller for 77 years.
Toyota executives have repeatedly expressed worries about a possible backlash if they dethrone GM, an American icon. The Japanese automaker has been setting up more plants in North America and has tried to show it's a good U.S. corporate citizen.
Nolasco refused to comment on GM's retention of the No. 1 title. But he said Toyota sees sales growth as a reflection of how people recognize its products "We would like to become No. 1 in quality in product offerings and services, carefully making good products, and give true happiness to our customers," he said.
In Detroit, GM wasn't gloating. The company's global strategy hasn't changed, said company spokesman John McDonald. "We're not as concerned about who's winning," he said. "We're just really focused on what we need to do to have a growing business, getting our business right in North America."
Overall, GM's worldwide sales in 2007 were the second-best in its 100-year history
It's biggest sales growth has come outside the U.S. It set a sales record in China by selling more than a million vehicles, set a record in Brazil with nearly 500,000 and doubled sales in Russia.
Still, GM has struggled in recent years with job cuts, earning losses and plant closures.
Toyota has seized the lead in ecological hybrids with its hit Prius, which runs on a gas engine and electric motor, selling more hybrids than any other automaker. And that edge came at a good time when consumers were looking for good mileage amid soaring gas prices.
Earlier this month, Toyota deposed Ford Motor Co. as the No. 2 auto seller in the U.S. for 2007. Toyota sold 2.6 million vehicles in the U.S. for a 16 percent share of the market -- and more than double from what it sold in 1990.
GM, third on the Fortune 500 list of U.S. corporations, remains the auto sales leader in the U.S. But its market share has dropped dramatically from about 35 percent in 1990 to about 24 percent in 2007. GM sold 3.8 million vehicles in the United States last year.
Aaron Bragman, an analyst with the consulting firm Global Insight, said GM and Toyota have expanded almost evenly in most emerging global markets, but GM has been hurt by sales declines in North America. "A lot of that volume reduction has come here," Bragman said. "They did very well in every other market except North America."
He said much of GM's U.S. sales decline comes as the company has intentionally cut incentives and reduced low-profit sales to rental car companies. GM's U.S. sales last year were down 6 percent from 2006, due largely to a reduction in fleet sales -- those to large, bulk buyers.
"If they had kept that fleet volume up, it wouldn't even be a competition," Bragman said.
Still, it was in new markets such as China that GM still led Toyota, managing to come out ahead for the time being. And the competition in such markets is likely to determine the winner in the long run.
While more mature auto markets, such as the U.S. and Japan, are stagnating, China and India are booming. Toyota, which is aggressively expanding overseas production, is forecasting robust growth for this year at selling 9.85 million vehicles, up 5 percent from this year.
GM does not give comparable sales forecasts.
In a typical comment for a Toyota executive, Shoichiro Toyoda, a member of the founding family and former president, told The Associated Press earlier this month that gaining the top spot in the auto industry could be fleeting. "We are not No. 1," he said. "We need to just keep working harder."
General Motors Corp.: http://www.gm.com
Toyota Motor Corp. http://www.toyota.com
TOKYO -- General Motors, a symbol of American industrial might and the world's top seller of motor vehicles since Herbert Hoover was president, has been all-but-overtaken by a foreign rival.
Toyota said Thursday it sold 9.366 million vehicles last year globally, about 3,000 vehicles fewer than the tally from General Motors Corp., just barely allowing the U.S. automaker to retain its crown as the world's No. 1 automaker.
All year long, the two automakers raced neck-and-neck in global sales, highlighting Toyota's phenomenal growth and the struggles facing GM and other American automakers.
Toyota had said as late as Wednesday that its annual total was 9.37 million vehicles, up 6 percent from 2006. GM said Wednesday in Detroit its global sales had risen 3 percent to 9,369,524 vehicles, making for a race that appeared too close to call.
But Toyota Motor Corp. spokesman Paul Nolasco in Tokyo confirmed the extra digit in Toyota's sales Thursday, showing that GM's total was narrowly higher. GM has been the world's top seller for 77 years.
Toyota executives have repeatedly expressed worries about a possible backlash if they dethrone GM, an American icon. The Japanese automaker has been setting up more plants in North America and has tried to show it's a good U.S. corporate citizen.
Nolasco refused to comment on GM's retention of the No. 1 title. But he said Toyota sees sales growth as a reflection of how people recognize its products "We would like to become No. 1 in quality in product offerings and services, carefully making good products, and give true happiness to our customers," he said.
In Detroit, GM wasn't gloating. The company's global strategy hasn't changed, said company spokesman John McDonald. "We're not as concerned about who's winning," he said. "We're just really focused on what we need to do to have a growing business, getting our business right in North America."
Overall, GM's worldwide sales in 2007 were the second-best in its 100-year history
It's biggest sales growth has come outside the U.S. It set a sales record in China by selling more than a million vehicles, set a record in Brazil with nearly 500,000 and doubled sales in Russia.
Still, GM has struggled in recent years with job cuts, earning losses and plant closures.
Toyota has seized the lead in ecological hybrids with its hit Prius, which runs on a gas engine and electric motor, selling more hybrids than any other automaker. And that edge came at a good time when consumers were looking for good mileage amid soaring gas prices.
Earlier this month, Toyota deposed Ford Motor Co. as the No. 2 auto seller in the U.S. for 2007. Toyota sold 2.6 million vehicles in the U.S. for a 16 percent share of the market -- and more than double from what it sold in 1990.
GM, third on the Fortune 500 list of U.S. corporations, remains the auto sales leader in the U.S. But its market share has dropped dramatically from about 35 percent in 1990 to about 24 percent in 2007. GM sold 3.8 million vehicles in the United States last year.
Aaron Bragman, an analyst with the consulting firm Global Insight, said GM and Toyota have expanded almost evenly in most emerging global markets, but GM has been hurt by sales declines in North America. "A lot of that volume reduction has come here," Bragman said. "They did very well in every other market except North America."
He said much of GM's U.S. sales decline comes as the company has intentionally cut incentives and reduced low-profit sales to rental car companies. GM's U.S. sales last year were down 6 percent from 2006, due largely to a reduction in fleet sales -- those to large, bulk buyers.
"If they had kept that fleet volume up, it wouldn't even be a competition," Bragman said.
Still, it was in new markets such as China that GM still led Toyota, managing to come out ahead for the time being. And the competition in such markets is likely to determine the winner in the long run.
While more mature auto markets, such as the U.S. and Japan, are stagnating, China and India are booming. Toyota, which is aggressively expanding overseas production, is forecasting robust growth for this year at selling 9.85 million vehicles, up 5 percent from this year.
GM does not give comparable sales forecasts.
In a typical comment for a Toyota executive, Shoichiro Toyoda, a member of the founding family and former president, told The Associated Press earlier this month that gaining the top spot in the auto industry could be fleeting. "We are not No. 1," he said. "We need to just keep working harder."
General Motors Corp.: http://www.gm.com
Toyota Motor Corp. http://www.toyota.com
Tuesday, January 22, 2008
How to Sell a Stock Short Monday January 21, 11:29 am ET
The most basic way to trade the short side of the market is to sell stocks short. While selling stocks short is in some ways just the opposite of buying stocks, there are some important differences. In order to sell a stock short, there must be shares of the stock available to your broker for you to borrow. When traders sell stock short, they essentially borrow stock from their broker and sell the stock in the market. Because the trader has sold something he or she does not own, eventually the trader will need to buy back the stock he or she sold.
The short seller believes that when the time comes to buy back the stock, that stock will be at a much lower price than it was originally sold for. This enables the short seller to buy back the stock at a cheaper price, return it to his or her broker, and pocket the difference as a profit.
For example, a trader wants to short stock Research in Motion (NasdaqGS:RIMM - News).
The trader borrows 100 shares of the stock from his broker and then sells it for the going price of $120 a share. RIMM does move lower as the trader expected, say to $90 a share. The trader would then buy the same amount of RIMM that he or she originally borrowed--100 shares--on the open market, and then returns the stock to his or her broker.
The trader sold 100 shares for $120, gaining $12,000. The trader then bought back or "covered the short" by buying 100 shares at $90 ($9,000). The difference between the amount earned by selling the shares and the amount it cost the trader to buy the shares back after they moved lower is the profit of the short trade, in this case $3,000
If the stock does not move lower and, instead, moves higher, then the trader selling the stock short will still have to "cover" or buy back the stock he or she borrowed. But the trader will be doing so at a loss.
For example, if RIMM advanced by 10 points instead of falling by 30 in the example above, the trader would have had to buy or cover his or her short position at $130. Having made $12,000 from the initial sale and then spent $13,000 buying the stock back when ABC went the wrong way, the trader would realize a loss of $1,000.
In order to sell a stock short, the trader typically must have a margin account set up with his or her broker. Because of the risks involved in selling an asset that the trader does not own--and the possibility that the stock will be at a significantly higher price when the time comes to cover or buy the stock back--a margin account is required to ensure that the trader has sufficient capital in order to buyback a position went against him or her.
The margin amount, which is set by the broker, serves as a sort of collateral in the event that the trade goes badly. This collateral may be in the form of cash or securities such as stocks. If the losses from the short sale trade grow larger than the amount held in margin, then the trader will get a "margin call" from his or her broker, requiring the trader to either liquidate the position immediately or provide additional capital. Additionally, the trader will have to pay interest on the margin--at least, to the degree it is used. The margin is essentially money borrowed from the broker, the interest paid in this sense is no different that the interest a trader might pay on a loan from a bank.
For many years, selling stock short was complicated by what was called the "uptick rule". This rule meant that traders could only sell a stock short if and when it's last trade was higher than the previous trade price (creating an "uptick"). This rule had been in force for decades, but was recently eliminated by the Securities and Exchange Commission effective July 2007. This has made it much easier for traders to sell stocks short.
Another phenomenon that traders looking to sell stocks short should be aware of is called the "short squeeze." A "short squeeze" occurs when a large number of traders who are short a stock begin covering or buying back the stock at the same time. This rush to cover can have a dramatically bullish impact on a stock, particularly one that has been heavily sold short. Being caught with a short position in a stock when a "short squeeze" occurs is one of the risks in selling stocks short that trader need to be aware of.
The short seller believes that when the time comes to buy back the stock, that stock will be at a much lower price than it was originally sold for. This enables the short seller to buy back the stock at a cheaper price, return it to his or her broker, and pocket the difference as a profit.
For example, a trader wants to short stock Research in Motion (NasdaqGS:RIMM - News).
The trader borrows 100 shares of the stock from his broker and then sells it for the going price of $120 a share. RIMM does move lower as the trader expected, say to $90 a share. The trader would then buy the same amount of RIMM that he or she originally borrowed--100 shares--on the open market, and then returns the stock to his or her broker.
The trader sold 100 shares for $120, gaining $12,000. The trader then bought back or "covered the short" by buying 100 shares at $90 ($9,000). The difference between the amount earned by selling the shares and the amount it cost the trader to buy the shares back after they moved lower is the profit of the short trade, in this case $3,000
If the stock does not move lower and, instead, moves higher, then the trader selling the stock short will still have to "cover" or buy back the stock he or she borrowed. But the trader will be doing so at a loss.
For example, if RIMM advanced by 10 points instead of falling by 30 in the example above, the trader would have had to buy or cover his or her short position at $130. Having made $12,000 from the initial sale and then spent $13,000 buying the stock back when ABC went the wrong way, the trader would realize a loss of $1,000.
In order to sell a stock short, the trader typically must have a margin account set up with his or her broker. Because of the risks involved in selling an asset that the trader does not own--and the possibility that the stock will be at a significantly higher price when the time comes to cover or buy the stock back--a margin account is required to ensure that the trader has sufficient capital in order to buyback a position went against him or her.
The margin amount, which is set by the broker, serves as a sort of collateral in the event that the trade goes badly. This collateral may be in the form of cash or securities such as stocks. If the losses from the short sale trade grow larger than the amount held in margin, then the trader will get a "margin call" from his or her broker, requiring the trader to either liquidate the position immediately or provide additional capital. Additionally, the trader will have to pay interest on the margin--at least, to the degree it is used. The margin is essentially money borrowed from the broker, the interest paid in this sense is no different that the interest a trader might pay on a loan from a bank.
For many years, selling stock short was complicated by what was called the "uptick rule". This rule meant that traders could only sell a stock short if and when it's last trade was higher than the previous trade price (creating an "uptick"). This rule had been in force for decades, but was recently eliminated by the Securities and Exchange Commission effective July 2007. This has made it much easier for traders to sell stocks short.
Another phenomenon that traders looking to sell stocks short should be aware of is called the "short squeeze." A "short squeeze" occurs when a large number of traders who are short a stock begin covering or buying back the stock at the same time. This rush to cover can have a dramatically bullish impact on a stock, particularly one that has been heavily sold short. Being caught with a short position in a stock when a "short squeeze" occurs is one of the risks in selling stocks short that trader need to be aware of.
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