JDfn Daily Digest - August 18, 2008
Fannie Mae (FNE) and Freddie Mac (FRE) fell in trading after Barron's said government officials don't expect the mortgage-finance companies to be able to raise the equity capital they need, potentially forcing a bailout by the U.S. Treasury. The companies have been battered by record delinquencies and rising losses amid the worst housing slump since the Great Depression.
The National Association of Home Builders said U.S. home builders were as gloomy in August as they've ever been about the housing market, but saw some reason to hope that the recent housing relief bill could help. The housing market index remained at a record-low 16 in August. At 16, the sentiment index shows that barely one-in-six builders have a good feeling about the market.
Some analysts believe Lehman Brothers (LEH) could face a fiscal third-quarter loss of $1.8 billion, which would take its losses since the start of March to at least $4.5 billion. If the losses do continue to mount, Lehman could need to raise further capital beyond the $6 billion it received in June.
Qwest Communications International Inc. (Q) has reached a tentative agreement with its largest union about a day after a labor contract had expired. Qwest came to terms on a three-year deal with the Communications Workers of America, which represents about 20,000 of its employees.
Mitsubishi UFJ Financial Group (JP) said it has sweetened a bid to acquire the 34.6% stake it doesn't hold in UnionBanCal Corp (UB) to $3.5 billion from $3 billion earlier. The lender has reportedly accepted the offer. Mitsubishi UFJ said the board of its subsidiary has revised the offer to $73.50 for each share of UnionBanCal from $63 a share earlier.
Brinker International Inc. (EAT) said it would sell a majority stake in its Romano's Macaroni Grill chain to a private equity firm. Under the agreement, Brinker will get $131.5 million in cash. Of that amount, $6 million will be contributed to Mac Acquisition LLC.
General Electric's (GE) chairman Jeff Immelt says the company expects its business in China to double by 2010 to $10 billion a year. He also expects China's efforts to improve energy efficiency and clean up its environment to drive 15% to 20% annual sales growth for GE's clean-energy technology.
Tropical Storm Fay, that killed at least 57 people in the Caribbean over the weekend, is now taking aim at Florida after moving across Cuba - causing little damage. Even though Fay is expected to hit western Florida, far from U.S. oil and gas production in the Gulf of Mexico, Shell Oil (RDS) pulled 400 workers from offshore platforms over the weekend and Marathon Oil (MRO) said it would take an unspecified number of workers off its offshore facilities.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (week of August 16), Producer Price Index (July), Housing Starts (July)
In Earnings News
Lowe's Cos. Inc. (LOW) reported a 7.9 percent decline in second-quarter profit on Monday, but still topped Wall Street expectations. Lowe's earned $938 million, or 64 cents per share, in the quarter. Analysts expected a smaller profit of 56 cents per share.
BHP Billiton (BHP) said it earned more than $15 billion in the year to June 30th and dismissed the impact of weakness from developed markets on commodities demand as "minimal." Revenue rose 25% to $59.47 billion. BHP lifted its dividend 52% to 70 pence a share.
Trina Solar (TSL) second-quarter net income more than doubled to $17.1 million or 68 cents a U.S. share. Analysts expected earnings of 78 cents a share.
Scheduled Earnings Reports (Tuesday)
Target, Home Depot, Analog Devices, Saks, Mesa Air Group, Hewlett Packard, La-Z-Boy, Novatel Wireless
Stocks in the News
Dyax Inc (DYAX) announced plans to apply for U.S. regulatory approval of its drug candidate DX-88 during the first part of the fourth quarter.
Activision Blizzard Inc (ATVI) said it will split its stock on Aug. 25th. The two-for-one split will give Activision Blizzard about 1.3 billion outstanding shares.
Republic Services (RSG) said it has secured an additional $1.75 billion in financing to help pay for a proposed merger with Allied Waste Industries Inc.
Hershey Company (HSY) lowered its 2008 earnings outlook to the lower end of its previously estimated range of $1.85 to $1.90 a share from ongoing operations.
Take-Two (TTWO) shares fell on news that Electronic Arts (ERTS) has accepted the company's offer to give a management presentation containing non-public information.
The National Association of Home Builders said U.S. home builders were as gloomy in August as they've ever been about the housing market, but saw some reason to hope that the recent housing relief bill could help. The housing market index remained at a record-low 16 in August. At 16, the sentiment index shows that barely one-in-six builders have a good feeling about the market.
Some analysts believe Lehman Brothers (LEH) could face a fiscal third-quarter loss of $1.8 billion, which would take its losses since the start of March to at least $4.5 billion. If the losses do continue to mount, Lehman could need to raise further capital beyond the $6 billion it received in June.
Qwest Communications International Inc. (Q) has reached a tentative agreement with its largest union about a day after a labor contract had expired. Qwest came to terms on a three-year deal with the Communications Workers of America, which represents about 20,000 of its employees.
Mitsubishi UFJ Financial Group (JP) said it has sweetened a bid to acquire the 34.6% stake it doesn't hold in UnionBanCal Corp (UB) to $3.5 billion from $3 billion earlier. The lender has reportedly accepted the offer. Mitsubishi UFJ said the board of its subsidiary has revised the offer to $73.50 for each share of UnionBanCal from $63 a share earlier.
Brinker International Inc. (EAT) said it would sell a majority stake in its Romano's Macaroni Grill chain to a private equity firm. Under the agreement, Brinker will get $131.5 million in cash. Of that amount, $6 million will be contributed to Mac Acquisition LLC.
General Electric's (GE) chairman Jeff Immelt says the company expects its business in China to double by 2010 to $10 billion a year. He also expects China's efforts to improve energy efficiency and clean up its environment to drive 15% to 20% annual sales growth for GE's clean-energy technology.
Tropical Storm Fay, that killed at least 57 people in the Caribbean over the weekend, is now taking aim at Florida after moving across Cuba - causing little damage. Even though Fay is expected to hit western Florida, far from U.S. oil and gas production in the Gulf of Mexico, Shell Oil (RDS) pulled 400 workers from offshore platforms over the weekend and Marathon Oil (MRO) said it would take an unspecified number of workers off its offshore facilities.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (week of August 16), Producer Price Index (July), Housing Starts (July)
In Earnings News
Lowe's Cos. Inc. (LOW) reported a 7.9 percent decline in second-quarter profit on Monday, but still topped Wall Street expectations. Lowe's earned $938 million, or 64 cents per share, in the quarter. Analysts expected a smaller profit of 56 cents per share.
BHP Billiton (BHP) said it earned more than $15 billion in the year to June 30th and dismissed the impact of weakness from developed markets on commodities demand as "minimal." Revenue rose 25% to $59.47 billion. BHP lifted its dividend 52% to 70 pence a share.
Trina Solar (TSL) second-quarter net income more than doubled to $17.1 million or 68 cents a U.S. share. Analysts expected earnings of 78 cents a share.
Scheduled Earnings Reports (Tuesday)
Target, Home Depot, Analog Devices, Saks, Mesa Air Group, Hewlett Packard, La-Z-Boy, Novatel Wireless
Stocks in the News
Dyax Inc (DYAX) announced plans to apply for U.S. regulatory approval of its drug candidate DX-88 during the first part of the fourth quarter.
Activision Blizzard Inc (ATVI) said it will split its stock on Aug. 25th. The two-for-one split will give Activision Blizzard about 1.3 billion outstanding shares.
Republic Services (RSG) said it has secured an additional $1.75 billion in financing to help pay for a proposed merger with Allied Waste Industries Inc.
Hershey Company (HSY) lowered its 2008 earnings outlook to the lower end of its previously estimated range of $1.85 to $1.90 a share from ongoing operations.
Take-Two (TTWO) shares fell on news that Electronic Arts (ERTS) has accepted the company's offer to give a management presentation containing non-public information.
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