Monday's Closing Update

4:09 PM, May 11, 2009 --


NYSE down 151.1 (2.5%) to 5,848.29

DJIA down 155.8 (1.8%) to 8,418.85

S&P 500 down 19.9 (2.2%) to 909.28

Nasdaq down 7.8 (0.5%) to 1,731.24

GLOBAL SENTIMENT

Nikkei +0.2%

Hang Seng -1.7%

FTSE -0.6%

UPSIDE MOVERS

(+) PCLN profit rises 82%, boosted by strong bookings

(+) CNO swings to a profit in the first quarter.

(+) ABK says Q1 loss narrows vs year-ago levels.

(+) NEXM reports Q1 income, will not be delisted.

(+) HBAN raises stock offering to $120 mln.

(+) AZN heart drug reportedly beats competitor in trial.

(+) T selling certain Centennial Communications assets to Verizon.

(+) CF gets raised buyout offer.

(+) MSFT announces first-ever bond issue to raise $1 billion.

DOWNSIDE MOVERS

(-) GM CEO says tasks are large to avoid bankruptcy.

(-) GS settles investigation over subprime mortgages.

(-) KEY selling $750 mln in stock.

(-) COF also among banks slumping after detailing issuance.

(-) CPSL reports Q3 results sharply below year-ago levels.

MARKET DIRECTION

Broad stock indexes traded mixed Monday before settling in the negative column by the time the closing bell rang. Wall Street cashed in part of what has been a two-month rally for stocks. Banking shares, led by Citi (C) and Bank of America (BAC), were largely under pressure as investors take profits on the hefty gains seen in the battered sector leading up to government stress test results.

Financial stocks were also lower after U.S. Bancorp (USB), Capital One Financial Corp. (COF) and BB&T Corp. (BBT) said Monday they planned to issue common stock to help repay loans they received last fall as part of the government's Troubled Asset Relief Program.

The government has said that those banks had enough capital to handle a deeper recession, helping to fuel a banking shares rally last week.

Elsewhere, General Motors (GM) fell after CEO Fritz Henderson said that bankruptcy protection is becoming more probable with a deadline just over two weeks away. Henderson said he is still holding out hope that the company can restructure without court protection, but that the tasks to complete before a June 1 government-imposed deadline are large.

The tech-concentrated Nasdaq Composite bobbed between positive and negative territory. Friday closed out the Nasdaq's ninth street weekly gain, the longest such streak since 1999.

A mid-day rebound erased much of an earlier sell-off for PC makers and software shares. Germany's SAP (SAP) gained some 1.6% in its U.S.-listed shares after its chief executive said he sees improved economic growth for the second half of the year. Rival Oracle (ORCL) was also up about 3%. Microsoft (MSFT) is trading just in positive territory after earlier announcing plans to raise $3.75 billion with its first ever corporate bond offering, proceeds from which may go to stock buybacks.

Dish Network (DISH) rallied and helped the Nasdaq outperform the broader market. The nation's second-largest satellite TV provider reported a 21% increase in Q1 profits, topping the Street, but is facing erosion in its subscriber base.

Energy stocks (COP) (USO) (XOM) closed lower. Crude for June delivery ended down 13 cents, or 0.2%, to $58.50 a barrel, taking back some ground after faling more than 3% to $56.78 earlier. The contract ended at $58.63 on Friday, the highest closing price for a front-month contract since Nov. 11, 2008. Crude rallied more than 10% last week despite government data that showed U.S. inventories at their highest level since September 1990.

Comments

[fatcat:]

good report,thanks...

As someone who has used SAP,lots of potential,but not user friendly...

May 11 05:00 PM

[roger.wan:]

GM 6 top management officers just sold about 20,000 shares at 1.45-1.60,1 hours ago.

Friends, the ship owner is jumping into the angry sea....

Wish they be fine when they need to face so many Mama and Papa investors.

May 11 06:39 PM

[David Hasson:]

20,000 shares isn't a terrible amount to be concerned about, even at $40...



On May 11 06:39 PM roger.wan wrote:

> GM 6 top management officers just sold about 20,000 shares at 1.45-1.60,1
> hours ago.
>
> Friends, the ship owner is jumping into the angry sea....
>
> Wish they be fine when they need to face so many Mama and Papa investors.

May 11 08:10 PM

[DavyJ:]

The insanity continues. Microsoft has $25 billion in cash and until they raised $2 billion last year they had 0 debt. Now they want to raise $3.75 in a bond offering?

If they aren't making more in interest or dividends on the cash than the interest they will pay on the bonds, someone enlighten me as to how this makes sense.

May 11 09:00 PM

[tiffanylinks:]

what about the list?

May 11 10:17 PM

[DavyJ:]

Well, I don't know who gave me the thumbs down for my previous post and I guess it doesn't matter, but I really do want to know why this makes financial sense.

Rather than concentrating on their core business which appears to be quite profitable, Microsoft now seems as if managing the huge stockpile of cash is coming to the forefront in some obscure way.

And rather than increasing their dividend to shareholders currently at 2.7%, they will be paying interest to bondholders which I think most likely will be greater than 2.7%

Intelligent replies appreciated.

May 11 10:43 PM

[ZeroCred:]

I gave you two thumbs up DavyJ for asking an astute question. I however do not know the answer offhand but will ask around.

May 11 11:44 PM

[Sellputs:]

Bring on the bears, Most of these names closed on lows. Signaling persistant bear pressure throughout the day. Tomorrow looks like another day of downward pressure, the real selloff begins when people are not quite keen on it happening.

May 12 01:10 AM

[XRTrader:]

DavyJ, i think your question is great; it would not make sense if they planned to issued debt at interest rate x, and then sit it in their bank account on top of a pile of cash making less then x in return.

the simple answer must be that they have a plan for a substantial portion of this money (for which they think return will be good)...if not now then soon.

I would bet on M&A activity. Perhaps a peripheral hardware player for netbooks or a group of internet companies (thats my bet) with yahoo at the core.

May 12 02:32 AM

[arthurofchi...:]

Inflation DavyJ is the answer.
Arguably, its not a bad hedge move if you expect a high inflation rate. It allows great flexibility and is a reasonable defensive play.
If Microsoft can lock in a modest rate now, let’s say 6% and they are expecting 8% inflation, well 2% earned on 3.75 billion is a nice number, even for Microsoft. Assume double-digit inflation and they look really smart.

May 12 03:16 AM

[DavyJ:]

Thanks guys, I'm following this now at:
seekingalpha.com/artic...

The same questions raised and discussed.

May 12 07:33 PM