JDfn Daily Digest - September 23, 2008
President Bush has reassured foreign leaders that the plan to rescue U.S. financial institutions will pass Congress. Speaking to reporters in New York, where he is attending meetings of the United Nations, Bush said the debate in Congress on the package is part of the normal give-and-take. He said, "I am confident....that there will be a bipartisan bill.”
Federal Reserve Chairman Ben Bernanke said that Congress must act swiftly to approve Treasury Secretary Henry Paulson's plan to take toxic mortgage debt off of bank balance sheet to stabilize the situation in financial markets "and avert what otherwise could be very serious consequences for our financial markets and for our economy."
Treasury Secretary Henry Paulson said that his mortgage rescue plan must be designed to hit the ground running, a clear signal that he will oppose any changes that he believes would slow down implementation.
According to the survey released by motorist group AAA, gas prices fell back, yet again, marking the sixth straight decline. The average price of unleaded regular gasoline dropped 1.3 cents to almost $3.73 a gallon, from $3.74 a gallon.
According to a forecast from the National Retail Federation, holiday sales are expected to grow at the slowest pace in six years as shoppers worry about jobs, the housing and stock markets and high gas and food prices. Merchants have also scaled back holiday inventories and seasonal sales staff from a year ago.
The Office of Thrift Supervision is pushing Washington Mutual (WM) to find a buyer and is considering brokering a deal to break it up between several banks. If no outright buyer emerges in the coming days, the regulator could split WaMu's attractive deposit base and retail branch network and also share its troubled mortgage portfolio.
Bristol-Myers Squibb Co. (BMY) is trying to entice the shareholders of biotech company ImClone Systems Inc. (IMCL) with a sweetened $62-per-share tender offer. Bristol-Myers said it was boosting its previous $60-per-share offer for the portion of ImClone that the drug maker doesn't already own. It valued the new offer at $4.7 billion.
Longs Drugs Stores Corp. (LDG) repeated its refusal to enter buyout talks with Walgreen Co. (WAG), or share information with its larger rival. Longs said Walgreen has not presented a clear roadmap to completion of a deal and is not willing to assume any risk that the deal is rejected or delayed by antitrust regulators.
The chief executive at Circuit City Stores Inc. (CC) has stepped down and was replaced by a board member appointed to defuse a fierce proxy battle as the struggling electronics retailer steps up its turnaround effort.
Scheduled U.S. Economic Reports (Wednesday)
Existing Home Sales (Aug)
In Earnings News
Lennar Corp. (LEN) reported its third-quarter loss narrowed as it cut costs, but revenue fell by more than half amid a prolonged housing slump. The company's loss for the quarter ended Aug. 31st was $89 million, or 56 cents per share. Analysts predicted a loss of 52 cents per share on revenue of $1.07 billion.
3Com Corp (COMS) reported a first-quarter net income of $79.8 million, or 20 cents a share, from a net loss of $18.7 million, or 5 cents a share, in the year-earlier period. On an adjusted basis, the company earned 11 cents a share. Analysts expected to report earnings of 6 cents a share.
Air Products & Chemicals Inc. (APD) lowered its fiscal fourth-quarter profit forecast, citing a variety of factors including a fire at a production facility and the effects of hurricane season. The company now expects a profit of $1.24 to $1.26 per share from continuing operations, down from an earlier range of $1.37 to $1.42 per share. Analysts are looking for earnings of $1.40 a share.
Scheduled Earnings Reports (Wednesday)
Bed, Bath & Beyond, Financial Federal, CoPart, Nike, Rocky Mountain Chocolate Factory, Paychex, Neiman Marcus, Red Hat, and Shoe Pavilion - Third quarter earnings season begins on October 7th when Alcoa releases its quarterly numbers.
Stocks in the News
General Electric (GE) was downgraded to neutral from buy and its price target slashed to $28 from $37.50 by Merrill Lynch.
Chesapeake Energy Corp (CHK) said it is reducing its drilling capital expenditure budget for the rest of 2008 until the end of 2010 by $3.2 billion, or 17%.
Gap Inc (GPS) said it will buy Athleta Inc., a woman’s sports and active apparel company, for about $150 million in cash.
ArvinMeritor (ARM) raised its forecast for full-year earnings from continuing operations to a range of $1.55 to $1.65 a share.
Teva Pharmaceuticals (TEVA), the world's No. 1 generic-drug maker, will set up a development and sales joint venture with Kowa Co. as part of an effort to break into the Japanese market.
Netflix (NFLX) signed accords under which popular shows from the CBS and Disney-ABC TV networks would be streamed at Netflix.
Hewlett-Packard (HPQ) announced an $8B share buyback to offset dilution in the value of its shares caused by employee stock plans.
AMBAC Inc (ABK) said a downgrade by ratings company Moody's Investors Service would leave its guaranteed investment contract business short of collateral to meet liabilities.
Federal Reserve Chairman Ben Bernanke said that Congress must act swiftly to approve Treasury Secretary Henry Paulson's plan to take toxic mortgage debt off of bank balance sheet to stabilize the situation in financial markets "and avert what otherwise could be very serious consequences for our financial markets and for our economy."
Treasury Secretary Henry Paulson said that his mortgage rescue plan must be designed to hit the ground running, a clear signal that he will oppose any changes that he believes would slow down implementation.
According to the survey released by motorist group AAA, gas prices fell back, yet again, marking the sixth straight decline. The average price of unleaded regular gasoline dropped 1.3 cents to almost $3.73 a gallon, from $3.74 a gallon.
According to a forecast from the National Retail Federation, holiday sales are expected to grow at the slowest pace in six years as shoppers worry about jobs, the housing and stock markets and high gas and food prices. Merchants have also scaled back holiday inventories and seasonal sales staff from a year ago.
The Office of Thrift Supervision is pushing Washington Mutual (WM) to find a buyer and is considering brokering a deal to break it up between several banks. If no outright buyer emerges in the coming days, the regulator could split WaMu's attractive deposit base and retail branch network and also share its troubled mortgage portfolio.
Bristol-Myers Squibb Co. (BMY) is trying to entice the shareholders of biotech company ImClone Systems Inc. (IMCL) with a sweetened $62-per-share tender offer. Bristol-Myers said it was boosting its previous $60-per-share offer for the portion of ImClone that the drug maker doesn't already own. It valued the new offer at $4.7 billion.
Longs Drugs Stores Corp. (LDG) repeated its refusal to enter buyout talks with Walgreen Co. (WAG), or share information with its larger rival. Longs said Walgreen has not presented a clear roadmap to completion of a deal and is not willing to assume any risk that the deal is rejected or delayed by antitrust regulators.
The chief executive at Circuit City Stores Inc. (CC) has stepped down and was replaced by a board member appointed to defuse a fierce proxy battle as the struggling electronics retailer steps up its turnaround effort.
Scheduled U.S. Economic Reports (Wednesday)
Existing Home Sales (Aug)
In Earnings News
Lennar Corp. (LEN) reported its third-quarter loss narrowed as it cut costs, but revenue fell by more than half amid a prolonged housing slump. The company's loss for the quarter ended Aug. 31st was $89 million, or 56 cents per share. Analysts predicted a loss of 52 cents per share on revenue of $1.07 billion.
3Com Corp (COMS) reported a first-quarter net income of $79.8 million, or 20 cents a share, from a net loss of $18.7 million, or 5 cents a share, in the year-earlier period. On an adjusted basis, the company earned 11 cents a share. Analysts expected to report earnings of 6 cents a share.
Air Products & Chemicals Inc. (APD) lowered its fiscal fourth-quarter profit forecast, citing a variety of factors including a fire at a production facility and the effects of hurricane season. The company now expects a profit of $1.24 to $1.26 per share from continuing operations, down from an earlier range of $1.37 to $1.42 per share. Analysts are looking for earnings of $1.40 a share.
Scheduled Earnings Reports (Wednesday)
Bed, Bath & Beyond, Financial Federal, CoPart, Nike, Rocky Mountain Chocolate Factory, Paychex, Neiman Marcus, Red Hat, and Shoe Pavilion - Third quarter earnings season begins on October 7th when Alcoa releases its quarterly numbers.
Stocks in the News
General Electric (GE) was downgraded to neutral from buy and its price target slashed to $28 from $37.50 by Merrill Lynch.
Chesapeake Energy Corp (CHK) said it is reducing its drilling capital expenditure budget for the rest of 2008 until the end of 2010 by $3.2 billion, or 17%.
Gap Inc (GPS) said it will buy Athleta Inc., a woman’s sports and active apparel company, for about $150 million in cash.
ArvinMeritor (ARM) raised its forecast for full-year earnings from continuing operations to a range of $1.55 to $1.65 a share.
Teva Pharmaceuticals (TEVA), the world's No. 1 generic-drug maker, will set up a development and sales joint venture with Kowa Co. as part of an effort to break into the Japanese market.
Netflix (NFLX) signed accords under which popular shows from the CBS and Disney-ABC TV networks would be streamed at Netflix.
Hewlett-Packard (HPQ) announced an $8B share buyback to offset dilution in the value of its shares caused by employee stock plans.
AMBAC Inc (ABK) said a downgrade by ratings company Moody's Investors Service would leave its guaranteed investment contract business short of collateral to meet liabilities.
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