JDfn Daily Digest - December 9, 2008
The National Association of Realtors reported that further weakening may be in store for the U.S. housing market. An index of sales contracts on previously owned U.S. homes fell 0.7% in October from the prior month. The index, which is considered a leading indicator of existing home sales, was down 1% from the prior year.
Canada's central bank cut its benchmark interest rate more than expected, reducing the overnight rate by 75 basis points to 1.50% because of the "weakening outlook for growth and inflation."
The Federal Reserve’s interest-rate target is getting close to zero, and so is the power of the Fed’s regional bank presidents. Fed Chairman Bernanke must now try to bring the Federal Open Market Committee, which includes district presidents and Fed governors, along as he turns to more radical strategies, such as buying Treasuries to drive down long-term rates.
House Speaker Nancy Pelosi suggested former Federal Reserve Chairman Paul Volcker as someone qualified to become a federal czar to oversee a financial bailout for automakers. The United Auto Workers President expressed fresh assurance that an agreement will be reached on a $15 billion bailout bill.
Ford Motor (F) is in talks to sell its Volvo car business to its China partner Changan Automobile Group. Industry sources say U.S. auto companies have approached a range of Chinese companies about possible asset sales.
Chrysler LLC and China's biggest domestic automaker said they have called off talks on cooperation due to the global financial crisis. The proposed partnership with Chery Automobile Co., first announced in July 2007, was meant to produce a low-cost model in China to be sold under Chrysler's Dodge brand in the United States and Europe.
Lawmakers are ready to trade accusations about who deserves most of the blame for the collapse and government takeover of mortgage finance titans Fannie Mae (FNM) and Freddie Mac (FRE). The two companies, which were seized by federal regulators in September, have become highly charged political targets in the debate over what caused the U.S. housing crisis and the resulting financial fallout.
Delta Air Lines (DAL) said it would receive a $2 billion boost to its liquidity through 2010 by extending a co-brand credit card agreement with American Express Co (AXP).
In other news, according to the Air Line Pilots Association, pilots from Delta and recently acquired Northwest have received an arbitration decision on how to merge their seniority lists.
Wal-Mart Stores Inc. (WMT) will pay up to $54.25 million to settle a class-action lawsuit that alleged the discount giant cut workers' break time and allowed employees to work off the clock in Minnesota.
Sony Corp. (SNE) is cutting 8,000 jobs, or 4 percent of its global work force, aiming to cut costs by $1.1 billion a year as an economic downturn and a stronger yen batter profits at the Japanese electronics maker. The company said that it will complete the job cuts -- all in the electronics sector -- by the end of March 2010.
Wyndham Worldwide Corp. (WYN), a major hospitality company that franchises Ramada, Days Inn and other hotels, said it would restructure its time-share business and eliminate 4,000 jobs. The job cuts represent about 12 percent of the company's overall work force.
Scheduled U.S. Economic Reports (Wednesday)
Wholesale Inventories (Oct), Federal Budget (Nov)
In Earnings News
Novellus Systems (NVLS) expects to report a fourth-quarter loss of at least 15 cents a share before items, with revenue, bookings and shipments also expected to come in below the guidance ranges provided during the company's Nov. 20th mid-quarter update.
Broadcom Corp. (BRCM) offered a more downbeat fourth-quarter outlook, saying many of its customers have canceled or delayed orders amid the economic downturn. The company, which makes cell phone chips, now expects between $1.05 billion and $1.1 billion in fourth-quarter sales.
AutoZone Inc (AZO) earned $131.4 million, down less than a percent from $132.5 million in the same quarter last year. Analysts expected a profit of $2.18 per share on $1.49 billion in sales.
Kroger Company (KR) said third-quarter net income fell to $237.7 million or 36 cents a share. Analysts expected earnings of 38 cents a share on revenue of $17.5 billion.
The Pep Boys -- Manny, Moe & Jack (PBY) reported its fiscal third-quarter loss narrowed, as cost cutting efforts offset lower consumer spending. Loss for the quarter narrowed to $7.3 million, or 14 cents per share, from $28 million, or 54 cents per share last year.
H&R Block Inc. (HRB) said its fiscal second-quarter loss shrank as improvement in its off-season tax service was offset by losses in its banking division. The nation's largest tax preparer reported losing $135.9 million, or 41 cents per share. Analysts surveyed by Thomson Reuters had expected a loss of 40 cents.
Molex Inc. (MOLX) lowered its fiscal second-quarter outlook and said it would cut jobs and undertake other cost-reduction actions. Molex, citing reduced demand, forecast revenue between $650 million and $670 million for the quarter ending Dec. 31st.
Jarden Corp. (JAH) predicted fiscal fourth-quarter revenue below analyst expectations. The appliance and consumer products company expects fiscal fourth-quarter revenue of $1.3 billion. Analysts expect $1.46 billion in revenue.
Nucor Corp (NUE) estimated it would be "marginally" profitable in the fourth quarter as end users order less steel and reduce their inventories. Total steel shipments for the quarter should drop some 40% from the third quarter, and Nucor should use on average only a bit more than half its capacity in the fourth period.
Scheduled Earnings Reports (Wednesday)
CKE Restaurants, Hooker Furniture, Greif Inc, Korn Ferry International, Peregrine Pharmaceuticals, Alpine Group
Stocks in the News
General Electric’s (GE) NBC Universal secured Jay Leno's place at the network by giving the host the 10 p.m. (Eastern Time) weekday time slot.
FedEx Corp (FDX) cut its full-year profit outlook to $3.50 to $4.75 a share as demand for its package-delivery services has weakened.
Merrill Lynch’s (MER) Chief Executive John Thain will sacrifice his 2008 $10 million bonus.
Nokia (NOK) traded higher after Goldman Sachs upgraded the handset producer to neutral from sell, saying emerging-market risks are now better understood.
Alliant TechSystems (ATK) received an $86 million contract to supply rounds of various non-standard ammunition types to the Afghanistan national army and police.
Con-Way Inc (CNW) cut its 2008 earnings outlook to a range of $2.20 to $2.35 a share as demand for its transport services has been hit hard.
Forest City Enterprises (FCEA) posted a wider third-quarter net loss - 18 cents a share against the year-earlier 11 cents.
Legg Mason Inc’s (LM) board named President and Chief Executive Mark Fetting to the post of chairman.
Canada's central bank cut its benchmark interest rate more than expected, reducing the overnight rate by 75 basis points to 1.50% because of the "weakening outlook for growth and inflation."
The Federal Reserve’s interest-rate target is getting close to zero, and so is the power of the Fed’s regional bank presidents. Fed Chairman Bernanke must now try to bring the Federal Open Market Committee, which includes district presidents and Fed governors, along as he turns to more radical strategies, such as buying Treasuries to drive down long-term rates.
House Speaker Nancy Pelosi suggested former Federal Reserve Chairman Paul Volcker as someone qualified to become a federal czar to oversee a financial bailout for automakers. The United Auto Workers President expressed fresh assurance that an agreement will be reached on a $15 billion bailout bill.
Ford Motor (F) is in talks to sell its Volvo car business to its China partner Changan Automobile Group. Industry sources say U.S. auto companies have approached a range of Chinese companies about possible asset sales.
Chrysler LLC and China's biggest domestic automaker said they have called off talks on cooperation due to the global financial crisis. The proposed partnership with Chery Automobile Co., first announced in July 2007, was meant to produce a low-cost model in China to be sold under Chrysler's Dodge brand in the United States and Europe.
Lawmakers are ready to trade accusations about who deserves most of the blame for the collapse and government takeover of mortgage finance titans Fannie Mae (FNM) and Freddie Mac (FRE). The two companies, which were seized by federal regulators in September, have become highly charged political targets in the debate over what caused the U.S. housing crisis and the resulting financial fallout.
Delta Air Lines (DAL) said it would receive a $2 billion boost to its liquidity through 2010 by extending a co-brand credit card agreement with American Express Co (AXP).
In other news, according to the Air Line Pilots Association, pilots from Delta and recently acquired Northwest have received an arbitration decision on how to merge their seniority lists.
Wal-Mart Stores Inc. (WMT) will pay up to $54.25 million to settle a class-action lawsuit that alleged the discount giant cut workers' break time and allowed employees to work off the clock in Minnesota.
Sony Corp. (SNE) is cutting 8,000 jobs, or 4 percent of its global work force, aiming to cut costs by $1.1 billion a year as an economic downturn and a stronger yen batter profits at the Japanese electronics maker. The company said that it will complete the job cuts -- all in the electronics sector -- by the end of March 2010.
Wyndham Worldwide Corp. (WYN), a major hospitality company that franchises Ramada, Days Inn and other hotels, said it would restructure its time-share business and eliminate 4,000 jobs. The job cuts represent about 12 percent of the company's overall work force.
Scheduled U.S. Economic Reports (Wednesday)
Wholesale Inventories (Oct), Federal Budget (Nov)
In Earnings News
Novellus Systems (NVLS) expects to report a fourth-quarter loss of at least 15 cents a share before items, with revenue, bookings and shipments also expected to come in below the guidance ranges provided during the company's Nov. 20th mid-quarter update.
Broadcom Corp. (BRCM) offered a more downbeat fourth-quarter outlook, saying many of its customers have canceled or delayed orders amid the economic downturn. The company, which makes cell phone chips, now expects between $1.05 billion and $1.1 billion in fourth-quarter sales.
AutoZone Inc (AZO) earned $131.4 million, down less than a percent from $132.5 million in the same quarter last year. Analysts expected a profit of $2.18 per share on $1.49 billion in sales.
Kroger Company (KR) said third-quarter net income fell to $237.7 million or 36 cents a share. Analysts expected earnings of 38 cents a share on revenue of $17.5 billion.
The Pep Boys -- Manny, Moe & Jack (PBY) reported its fiscal third-quarter loss narrowed, as cost cutting efforts offset lower consumer spending. Loss for the quarter narrowed to $7.3 million, or 14 cents per share, from $28 million, or 54 cents per share last year.
H&R Block Inc. (HRB) said its fiscal second-quarter loss shrank as improvement in its off-season tax service was offset by losses in its banking division. The nation's largest tax preparer reported losing $135.9 million, or 41 cents per share. Analysts surveyed by Thomson Reuters had expected a loss of 40 cents.
Molex Inc. (MOLX) lowered its fiscal second-quarter outlook and said it would cut jobs and undertake other cost-reduction actions. Molex, citing reduced demand, forecast revenue between $650 million and $670 million for the quarter ending Dec. 31st.
Jarden Corp. (JAH) predicted fiscal fourth-quarter revenue below analyst expectations. The appliance and consumer products company expects fiscal fourth-quarter revenue of $1.3 billion. Analysts expect $1.46 billion in revenue.
Nucor Corp (NUE) estimated it would be "marginally" profitable in the fourth quarter as end users order less steel and reduce their inventories. Total steel shipments for the quarter should drop some 40% from the third quarter, and Nucor should use on average only a bit more than half its capacity in the fourth period.
Scheduled Earnings Reports (Wednesday)
CKE Restaurants, Hooker Furniture, Greif Inc, Korn Ferry International, Peregrine Pharmaceuticals, Alpine Group
Stocks in the News
General Electric’s (GE) NBC Universal secured Jay Leno's place at the network by giving the host the 10 p.m. (Eastern Time) weekday time slot.
FedEx Corp (FDX) cut its full-year profit outlook to $3.50 to $4.75 a share as demand for its package-delivery services has weakened.
Merrill Lynch’s (MER) Chief Executive John Thain will sacrifice his 2008 $10 million bonus.
Nokia (NOK) traded higher after Goldman Sachs upgraded the handset producer to neutral from sell, saying emerging-market risks are now better understood.
Alliant TechSystems (ATK) received an $86 million contract to supply rounds of various non-standard ammunition types to the Afghanistan national army and police.
Con-Way Inc (CNW) cut its 2008 earnings outlook to a range of $2.20 to $2.35 a share as demand for its transport services has been hit hard.
Forest City Enterprises (FCEA) posted a wider third-quarter net loss - 18 cents a share against the year-earlier 11 cents.
Legg Mason Inc’s (LM) board named President and Chief Executive Mark Fetting to the post of chairman.
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