Wall Street Breakfast: Must-Know News

• Bank bonus bonanza. The bonuses paid out to executives at nine banks that received government bailouts exceeded the net income of some of the banks, according to New York Attorney General Andrew Cuomo, substantially so at Goldman Sachs (GS), Morgan Stanley (MS) and JPMorgan Chase (JPM). Cuomo said employee pay "has become unmoored from the banks' financial performance," and that there is "no clear rhyme or reason to the way banks compensate and reward their employees." Even during what was arguably one of Wall Street's worst years in memory, nearly 5,000 bankers and traders received a bonus above $1M. (Read Cuomo's report (.pdf))
• Uncertain future for bank pay bill. Following the release of Cuomo's damning bonus report (see above), the House of Representatives will likely approve a bill requiring regulators to ban compensation practices that encourage 'inappropriate risks.' The Senate, however, and the White House are less enthusiastic about the measure, concerned it may give regulators too great a say on incentive pay.
• Cash for clunkers grinds to a halt. The government has suspended its 'cash for clunkers' program just six days after it started. Meant to encourage new car purchases, the $1B program turned out to be far more popular than expected and has already run through its entire budget, blowing away lawmakers' estimates that the funds would last until November. Lawmakers are pushing for additional funding to help meet the program's larger-than-expected demand.
• Ford stalls Volvo bidding. Ford has reportedly slowed down the bidding process for Volvo in an attempt to secure a better price for the unit. Ford apparently plans to wait until the sale of General Motors' Opel unit is complete, and will then invite the losing bidder to make a bid for Volvo, so nothing is likely to happen for another three to four weeks.
• Troubled banks protest. Regulators have escalated the number of banks put on probation with so-called memorandums of understanding. At least 285 banks have received memorandums so far this year, compared to 399 for all of last year. Some of the targeted banks are complaining that the regulators are being too harsh, since the memorandums of understanding can force banks to increase their capital, overhaul management or take other major steps, but regulators say a tougher stance now could prevent failure later on.
• Southwest wants to reach new frontiers. Southwest Airlines (LUV) unexpectedly bid $113.6M in a bankruptcy-court auction for smaller carrier Frontier Airline Holdings, potentially setting the stage for a bidding war with Republic Airways Holdings, a holding company for three regional airlines which bid $108.75M. If Southwest is successful, it will boost its presence in the highly-competitive Denver market and give the airline its first international destinations, but will also raise questions about Southwest's ability to stick to its low-cost business model.
• Pre, iPhone probe to focus on skipped markets. A probe into wireless phone contracts will focus on markets where Apple's (AAPL) iPhone and Palm's (PALM) Pre are unavailable, with Julius Genachowski, the chairman of the Federal Communications Commission, asking whether such lack of availability is "consistent with broad consumer interests." The FCC will also investigate whether competition is hindered by exclusive agreements between phone makers and service providers.
• No magic for Disney. Disney (DIS) failed to impress when it reported quarterly earnings yesterday (see details below), missing revenue expectations and narrowly beating earnings expectations on heavy cost-cutting. CEO Bob Iger told analysts that the company sees "signs of economic stabilization, but the pace and strength of the recovery remain uncertain." (Read Disney's earnings call transcript)
• Delphi set to exit Ch. 11. Delphi won court approval to sell its assets to lenders and General Motors. The auto-parts supplier is now set to exit bankruptcy protection after nearly four years.
• Jobless claims rise. Initial Jobless Claims came in at 584K, up 25K from a week ago (revised), and worse than the 575K consensus. Continuing claims fell 54K to 6.197M.

Earnings: Friday Before Open

• American Electric Power Company (AEP): Q2 EPS of $0.68 beats by $0.07. Revenue of $3.2B (-8.6%) vs. $3.63B. (PR)
• Anglo American (AAUK): H1 net profit of $2.97B (-30.6%), well outpacing consensus of $859M. Revenue of $11.13B vs. $17.92B a year ago. Says it "expects demand to remain soft in the near term until developed countries begin economic recovery." (DJ)
• AutoNation (AN): Q2 EPS of $0.29 beats by $0.05. Revenue of $2.61B (-28.8%) vs. $2.8B. "Having weathered the storm, AutoNation remains in an excellent position to capitalize on dealer consolidation and the gradual recovery in industry volumes." (PR)
• Calpine (CPN): Q2 EPS of -$0.16 vs. consensus of +$0.18. Revenue of $1.47B (-48%) vs. $1.72B. (PR)
• Constellation Energy Group (CEG): Q2 EPS of $1.08 beats by $0.32. Revenue of $3.86B (-18.8%) vs. $3.57B. Sees full-year EPS of $3.10-3.30 vs. $3.01 consensus. (PR)
• ITT Industries (ITT): Q2 EPS of $1.06 beats by $0.26. Revenue of $2.78B (-9.3%) in-line. Sees full-year EPS of $3.50-3.70 vs. $3.44 consensus. (PR)
• Snap-On (SNA): Q2 EPS of $0.65 beats by $0.07. Revenue of $590M (-23%) in-line. (PR)
• Total (TOT): Q2 net profit of €2.17B, less than half of €4.73B last year. Adjusted profit of €1.72B (-54%), in line with consensus. Sales of €31.43B (-35%). European refining margins narrowed 69% from a year ago. (DJ)

Earnings: Thursday After Close

• ARIAD Pharmaceuticals (ARIA): Q2 EPS of -$0.24 beats by $0.01. Licensing and collaboration revenue of $2.1M. (PR)
• Ariba (ARBA): FQ3 EPS of $0.17 beats by $0.01. Revenue of $84M (-1%) in-line. (PR)
• Arris Group (ARRS): Q2 EPS of $0.27 beats by $0.05. Revenue of $279M (-1%) vs. $281M. (PR)
• BioMarin Pharmaceutical (BMRN): Q2 EPS of $0.09 beats by $0.10. Revenue of $83M (+29%) vs. $78M. (PR)
• Camden Property Trust (CPT): Q2 FFO of $0.78 beats by $0.03. Revenue of $157M (+1%) vs. $141M. (PR)
• Community Health Systems (CYH): Q2 EPS of $0.66 beats by $0.06. Revenue of $3B (+13%) in-line. (PR)
• Disney (DIS): FQ3 EPS of $0.52 beats by $0.01. Revenue of $8.6B (-7%) vs. $8.8B. (PR)
• DryShips (DRYS): Q2 EPS of $0.25 beats by $0.04. Revenue of $210M (-30%) vs. $204M. (PR)
• DTE Energy Company (DTE): Q2 EPS of $0.56 beats by $0.41. Revenue of $1.7B (-25%) vs. $2B. (PR)
• Dun & Bradstreet (DNB): Q2 EPS of $1.21 in-line. Revenue of $417M (+1%) vs. $425M. Issues downside full-year EPS guidance, to up 1-5% from up 9-12%. Lowers full-year revenue guidance to -1% to +1%, from +2-5%. (PR)
• Evergreen Solar (ESLR): Q2 EPS of -$0.11 misses by $0.03. Revenue of $64M (+180%) vs. $63M. (PR)
• Exelixis (EXEL): Q2 EPS of -$0.42 misses by $0.01. Revenue of $27.4M (-10%) vs. $33.4M. (PR)
• First Solar (FSLR): Q2 EPS of $2.11 beats by $0.49. Revenue of $526M (+97%) vs. $459M. (PR)
• Genworth Financial (GNW): Q2 EPS of -$0.11 misses by $0.27. Revenue of $2.5B (+4%) vs. $2.6B. (PR)
• Geron (GERN): Q2 EPS of -$0.23 misses by $0.04. Revenue of $183,000 (-8%) vs. $800,000. (PR)
• Harmonic (HLIT): Q2 EPS of $0.03 in-line. Revenue of $81M (-9%) vs. $75M. (PR)
• HLTH Corp. (HLTH): Q2 EPS of $0.04 beats by $0.08. Revenue of $99M (+15%) in-line. (PR)
• Ingram Micro (IM): Q2 EPS of $0.15 misses by $0.05. Revenue of $6.6B (-25%) vs. $6.7B. (PR)
• Las Vegas Sands (LVS): Q2 EPS of $0.01 beats by $0.02. Revenue of $1.1B (-5%) in-line. (PR)
• McAfee (MFE): Q2 EPS of $0.60 beats by $0.03. Revenue of $469M (+18%) vs. $467M. (PR)
• MetLife (MET): Q2 EPS of $0.88 beats by $0.20. Revenue of $8.4B (+4%) vs. $11.7B. (PR)
• Mohawk Industries (MHK): Q2 EPS of $0.67 beats by $0.20. Revenue of $1.4B (-24%) in-line. Ex-restructuring charge EPS of $0.79. (PR)
• Monster Worldwide (MWW): Q2 EPS of $0.03 beats by $0.02. Revenue of $223M (-37%) vs. $225M. (PR)
• PDL BioPharma (PDLI): Q2 EPS of $0.47 beats by $0.04. Revenue of $126M (+18%) vs. $124M. Sees full-year revenue of $310M-325M vs. $331M. (PR)
• PerkinElmer (PKI): Q2 EPS of $0.28 beats by $0.01. Revenue of $435M (-14%) vs. $460M. Sees full-year EPS of $1.18-1.22 vs. $1.27. (PR)
• Pitney Bowes (PBI): Q2 EPS of $0.55 misses by $0.05. Revenue of $1.38B (-13%) vs. $1.43B. Sees full-year EPS of $2.15-2.35 vs. $2.46. (PR)
• Silver Wheaton (SLW): Q2 EPS of $0.06 misses by $0.01. Revenue of $41M (-17%) vs. $53M. (PR)
• Southwestern Energy Company (SWN): Q2 EPS of $0.35 in-line. Revenue of $478M (-21%) vs. $387M. Cuts full-year production view to 278-288 Bcfe from 289-292 Bcfe. (PR)
• Stone Energy (SGY): Q2 EPS of $0.65 beats by $0.48. Revenue of $263M (-35%) vs. $129M. (PR)
• Synaptics (SYNA): FQ4 EPS of $0.47 beats by $0.03. Revenue of $115M (+19%) vs. $112M. Announces retirement of CEO Francis Lee, succeeded by Thomas Tiernan. (PR)
• Varian Semiconductor Equipment Associates (VSEA): FQ3 EPS of -$0.20 beats by $0.05. Revenue of $73M (-60%) vs. $69M. (PR)
• Vistaprint (VPRT): FQ4 EPS of $0.43 beats by $0.04. Revenue of $135M (+22%) vs. $128M. Sees Q1 EPS of $0.32-0.35 vs. $0.40. (PR)
• Weingarten Realty Investors (WRI): Q2 FFO of $0.61 beats by $0.11. Revenue of $147M (-4%) vs. $144M. (PR)
• YRC Worldwide (YRCW): Q2 EPS of -$3.53 misses by $1.82. Revenue of $1.3B (-45%) vs. $1.6B. (PR)

Today's Markets

Asia markets were broadly higher Friday, Europe is mixed, and futures are up from yesterday's close.

• Asia: Nikkei +1.89% to 10,357. Hang Seng +1.68% to 20,573. Shanghai +2.72% to 3,412. BSE +1.83% to 15,670.
• Europe at midday: London flat. Paris +0.1%. Frankfurt -0.1%.
• Futures: Dow +0.5% at 9083. S&P +0.4% to 981. Nasdaq +0.3%.
  Crude -0.1% at $68.88. Gold +0.2% to $939.50.
  30-year Tsy future +0.21%. 10-year +0.19%. 5-year +0.13%. 2-year +0.03%.
  Euro +0.4% vs. dollar. Yen flat. Pound +0.4%.

Friday's Economic Calendar

• 8:30 GDP Q2 (Advance)
  8:30 Employment Cost Index
  9:45 NAPM Chicago Business Barometer
  3:00 PM Farm Prices
• Notable earnings before Friday's open: AEP, AGN, AIV, AN, CEG, CVX, D, ITT, PEG, PKD, SRE, TOT, WY

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Comments

[AndrewBaker:]

So bankers get bonuses greater than the banks' net income. This is history, not news; and a shame on bank bosses and politicans who rely on money from that source for campaign funds and more. The big banks just carry on with their profligacy, whilst the smaller banks get treated harshly to enable regulators and others to opine that they are doing their job and cleaning things up.

Banks are raking in the cash right now with low interest on their borrowed funds and high charges on their loans; and just hoping to make a buck before the bad debts currently being hidden away, and still growing in all loan books (mortgages, cars, credit cards, personal loans, commercial mortgages et al), finally get into the path of the fans that will blow them up against not just the walls but into our faces too.

Momentum traders are doing well now, and I hope that they are quick in getting out when the northbound momentum fails, and the southbound takes over.

Jul 31 07:42 AM

[doubleguns:]

I hope that if these same banks run into financial trouble soon we let them fall flat on thier faces this time. They should be shoring up not pissing away the profits on bonuses.

Shame on them and to he## with them if they get back in trouble. It will be time to FAIL!!!!

Jul 31 07:50 AM

[absinop:]

7/31/09A. Earnings season is a great opportunity to earn some money. I've taken a position in the following stocks. Their earnings announcements are scheduled at the market period indicated. But please remember: Sell the Losers, Keep the Winners.

7/31 before Mrkt. opens: LOGC MWIV SNA

Jul 31 08:42 AM

[David White:]

The first Q2 GDP estimate came in at -1.0%. This was better than the expected -1.5%. However, some people had apparently been hoping for an even better result. Obama pre-announcing a negative result was a big clue that expectations were likely too high.

The Q1 GDP revision to -6.4% was a huge disappointment to the markets. The markets had been hoping for an upward revision. This means the overall result was worse than the market expectations. This result also makes the likelihood of a downward revision of Q2 GDP more likely. This is not good news for the markets either.

Jul 31 09:13 AM

[Old Trader:]

I can't help but wonder what all of the revisions will mean going forward. For example, in the PCE, food costs related to dining out are being stripped out of the measure. My first thought on hearing this, was wondering if this is related to attempting to "lower" the official inflation rate in the future....sort of a preemptive measure. I guess time will tell...

Jul 31 09:21 AM

[AndrewBaker:]

We've just opened: up! What is it the government has had put into the water or air supply? The markets' are not the only things on a high, and if we go into the weekend up, I'm gonna demand my own private supply of whatever it is, 'cos it'll be the only way I could stop myself going gaga before Monday comes around/ And if we're not down then, I'm gonna od on this stuff.

Jul 31 10:01 AM

[ScroogeMcduck:]

Wow (FSLR) beat by $0.49 and its down 10% today, does anybody know why?

Jul 31 10:08 AM

[spald_fr:]

[Cash for clunkers grinds to a halt. The government has suspended its 'cash for clunkers' program just six days after it started. Meant to encourage new car purchases, the $1B program turned out to be far more popular than expected and has already run through its entire budget, blowing away lawmakers' estimates that the funds would last until November.]

These are the people who want to run health care. What are we going to do? Turn away people from medical care when it gets too popular? And what about "clunkers" like me? Soap & Fertilizer, perhaps?

Jul 31 10:08 AM

[notsosmart:]

old clunkers & old geezers are in the same category.get rid of clunkers,raise gas mileage.get rid of geezers,help social security.they should pass out free smokes to all starting @ age 60.LOL

Jul 31 10:20 AM

[OldCodger:]

Have you looked around you at all the obese people? They are feeding us high fructose corn syrup and saturated fats so fast now that social security will be fixed within 10 years, if they can just drag out this health care thing...

Jul 31 10:53 AM

[OldCodger:]

Not "people" buying. It's been reported that 2% of the trading outlets account for 70+% of the trading volume through "high frequency trading". Mostly the insolvent "banks" ie; Government Sachs, JP Morgan Chase, etc. It doesn't pay for them to let the market seek it's true level because their stock price true level is zero. Although the trading fools out there were actually trading the old GM stock for days after it became worthless. Worst yet? The exchanges and regulators let them do it instead of suspending trading! The greed is almost overwhelming.

Jul 31 11:17 AM

[spald_fr:]

♫"The Vill...Laaa...Jizes...... friendly hometown...."♫

Jul 31 12:39 PM

[AndrewBaker:]

Wow! This article is being read by those on the happy bull pills that the government seems to be handing out now: my comment above put in a jocular way about the market opening higher for no sensible reasons and needing to come back down to reality has been thumbed down by most so far. Are these the same people buying this market? If so, then I won't be so sorry when it falls and they lose some of their shirt for buying because they were afraid to miss out on the so-called bull market and greedy enough to try to catch a lift up before they missed it. Truth is though that this market is coming way back down and will stay down before it gets to go back north again.

And doubleguns very good comment about letting the banks fail is slated too. Maybe it's bankers as well as substance users on here today (and some politicans too, perhaps?)

I want a rising market but an honest one, pleeeease.

Jul 31 02:23 PM

[PainfullyAware:]

I agree.

The worthwhile comments get the negatives and the Spammer -bort user - gets the positives.

"Sabotage Or Stupidity" - maybe a bit of both.

To Those Skewing The Ratings => Pretend At Your Own Peril - Safety IS A Function Of Awareness.


On Jul 31 02:23 PM AndrewBaker wrote:

> Wow! This article is being read by those on the happy bull pills
> that the government seems to be handing out now: my comment above
> put in a jocular way about the market opening higher for no sensible
> reasons and needing to come back down to reality has been thumbed
> down by most so far. Are these the same people buying this market?
> If so, then I won't be so sorry when it falls and they lose some
> of their shirt for buying because they were afraid to miss out on
> the so-called bull market and greedy enough to try to catch a lift
> up before they missed it. Truth is though that this market is coming
> way back down and will stay down before it gets to go back north
> again.
>
> And doubleguns very good comment about letting the banks fail is
> slated too. Maybe it's bankers as well as substance users on here
> today (and some politicans too, perhaps?)
>
> I want a rising market but an honest one, pleeeease.

Jul 31 04:27 PM