Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:50 AM EST
S&P 500: +1.60; 1,438.30
NASDAQ 100: +5.75; 1,812.25
Dow: +1.00; 12,611.00
NIKKEI 225: +0.66%; 17,424.18 (+113.74)
HANG SENG: +2.19%; 20,772.22 (+444.50)
S&P/ASX 200: +0.94%; 5,726.60 (+53.50)
BSE SENSEX 30: +0.19%; 14,209.24 (+26.53)
FTSE 100: +0.34%; 6,258.50 (+21.30)
CAC 40: +0.34%; 5,633.88 (+19.18)
XETRA-DAX: +0.10%; 6,753.86 (+6.69)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.29%; $52.14 (+$0.15)
Gold: -0.17%; $635.30 (-$1.10)
Natural Gas: +4.47%; $7.19 (+$0.31)
Silver: -0.27%; $12.895 (-$0.035)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
• Pfizer Beats Street Estimates; All Eyes on CEO Kindler's Cost Cutting Plans
Pfizer reports a jump in Q4 net income to $9.45b, or $1.32/share, versus $2.73b, or $0.37/share, helped by the $7.9 billion profit from the sale of its consumer division to Johnson & Johnson. Adjusted earnings of $0.43/share beat analysts' average estimate of $0.42/share, but is a 12% decline from $0.49/share last Q4. Revenue totaled $12.6b, a 0.4% increase y-o-y, also beating analysts' estimate of $12.26b. Sales of prescription drugs, which account for more than 90% of Pfizer's revenues increased by approx. $20m to $11.67b, hurt most noticeably by a 79% drop in worldwide sales of Zoloft to $166m. In its analyst meeting this afternoon in New York, Pfizer will discuss its guidance for 2007 and CEO Jeffrey Kindler is expected to elaborate on additional cost-cutting plans. In pre-market trading Pfizer's shares were up about 0.8% at $27.45, from Friday's close of $27.22 on volume slightly over 100k.
• Sources: Earnings press release, Bloomberg, WSJ
• Related commentary: Pfizer CEO Kindler Set To Overhaul Budget, Antidepressant Drug Market: New FDA Warning To Have Limited Impact, Pfizer Trading Well Below Its Intrinsic Value, Howling At The Moon: Dogs and Flying Five 2007 Stock Picks
• Potentially impacted stocks and ETFs: Pfizer (NYSE:PFE). ETFs: iShares Dow Jones US Pharmaceuticals (NYSEARCA:IHE), iShares Dow Jones US Healthcare (NYSEARCA:IYH), Pharmaceutical HOLDRs (NYSEARCA:PPH), Vanguard Health Care (NYSEARCA:VHT), Health Care Select SPDR (NYSEARCA:XLV), First Trust Morningstar Dividend Leaders (NYSEARCA:FDL)
• Citigroup Acquires ABN Amro Mortgage Group For Undisclosed Sum
This morning Citigroup and ABN Amro announced the sale of ABN Amro's Mortgage Group to Citigroup for an undisclosed sum. The deal will give CitiMortgage Inc. another 1.5 million customers while adding another 2,500 wholesale brokers to its operations making it the fourth largest U.S. mortgage loan services company as well as the third largest originator of loans. ABN Amro explained the deal would help it to focus on the mid-market client segment. While neither company disclosed the terms of the sale, analysts at Keefe Bruyette and Woods estimated ABN Amro will record a gain of around $200 million, while UBS analyst Michael Schenk believes that with the housing bottom possibly in place, "ABN risks, after years of refusing to sell this business, having sold this business at the bottom." Schenk estimates Citigroup is paying $3 billion for the unit.
• Sources: Press Release, Reuters, MarketWatch
• Related commentary: Housing Stocks: Is the Worst Over?, Real Estate Gauge: Private Residential Investment as a Percentage of GDP
• Potentially impacted stocks and ETFs: Citigroup (NYSE:C), ABN Amro (ABN). ETFs: iShares Cohen & Steers Realty Maj. (NYSEARCA:ICF)
• Philips' Q4 Profit Doubles, Beats Estimates, Despite Drop in Sales
Royal Philips Electronics reports Q4 net income more than doubled to €680 million ($881.9 million), or €0.59/share, from €332m, or €0.27/share last year, beating analysts' estimates of €396m to €400.6m, on revenue of €8.19b, which missed analysts' range of €8.32b to €8.34b. Philips was helped by a reduction in the Dutch corporate tax rate resulting in 90% lower income taxes and from a €240m tax on the partial sale of its stake in Taiwan Semiconductor Manuf. in the year-earlier period. Philips will boost its annual dividend for 2006 to €0.60/share from €0.44/share, its biggest dividend hike in 10 years, resulting in a 50% payout ratio with plans to maintain that level compared to its 25% to 35% historical payout rate. Philips attributed its sales decline to the sale of its semiconductor division to private equity. It also noted a challenging operating environment for flat screen TVs, which resulted in 6% lower sales for its consumer electronics division, although operating profit grew 11%. Philips expects annual average sales growth of 5% to 6% in '07 and EBITA as a percentage of sales of 7.5%, versus 5.1% in '06.
• Sources: Earnings report and presentation, Bloomberg, MarketWatch, Reuters
• Related commentary: LG.Philips Reports Big Q4 Loss Due to Falling LCD TV Prices, Philips Comments on Weak Flat Panel Sales and Its Consumer Electronics Business, Improving Q3 & Q4 Outlook for LCD Makers. Conference call transcripts: Philips Electronics Q3'06 [Oct. 16], LG.Philips LCD Q4'06 [Jan. 16]
• Potentially impacted stocks and ETFs: Koninklijke Philips Electronics (NYSE:PHG)
• Credit Suisse to Initiate $6B Share Buyback
Credit Suisse Group said today during an investor presentation it plans to use the $10 billion (12.3 billion francs) it made on the sale of its Winterthur insurance unit to buy back as much as $6.4 billion of its shares over the next three years (7.7% of its current market value). It said it set aside 3.5 billion francs for possible wealth management acquisitions in the U.S., Middle East and Asia. Credit Suisse is looking to close the gap on rivals including Bear Stearns in providing brokerage services to hedge funds. CEO Oswald Gruebel: "We have the requisite resources to grow our business, while at the same time returning capital to our shareholders." FCO Renato Fassbind said the bank would use its cash to generate 'double-digit' earnings growth. The company acknowledged it had more to do to cut costs, a long-time area of concern. Shares were up 1.1% in Zurich.
• Sources: Bloomberg, MarketWatch
• Related commentary: Fundamentalism in Asset Management, Eight Top Picks From Big-Cap Giants Rob Lyon and Jerry Senser
• Potentially impacted stocks and ETFs: Credit Suisse Group (NYSE:CS). Competitors: Allianz Aktiengesellschaft (AZ), HSBC Holdings plc ADR (HBC), Bear Stearns Companies Inc. (NYSE:BSC), UBS AG (UBS), Deutsche Bank AG (NYSE:DB), Barclays PLC (NYSE:BCS), Morgan Stanley (NYSE:MS), JPMorgan & Chase Co. (NYSE:JPM), Citigroup Inc. (C), Wachovia Corp. (NASDAQ:WB), Goldman Sachs Group Inc. (NYSE:GS), Merrill Lynch & Co. Inc. (MER). ETFs: iShares S&P Global Financial Index Fund (NYSEARCA:IXG), WisdomTree International Financials Fund (DRF)
Asian Headlines (via Bloomberg.com)
• Asian Stocks Rise to Three-Week High; Hong Kong, China Close at Records Asian stocks rose to the highest in three weeks as benchmarks in Hong Kong, China, Australia and Singapore closed at all-time highs.
• Asian Central Bankers Call for Protection Against Damaging Capital Inflows Asian nations need better protection to prevent ``massive'' capital inflows from damaging their economies, according to central bank governors from the region.
• Chinese Investors' `Blind Optimism' Spurs Concern Stock Bubble May Burst China's stock market has become the most expensive in Asia, leading strategists at Citigroup Inc., HSBC Holdings Plc and UBS AG to warn investors to stay away.
• China Mobile to Buy Majority Stake in Millicom's Pakistan Cell-Phone Unit China Mobile Communications Corp. (NYSE:CHL), the world's biggest cell-phone company by market value, agreed to buy Pakistan's Paktel Ltd. in its first acquisition abroad to gain access to a market that added 34 million users in 18 months.
• Maruti Udyog's Net Rises 11 Percent on Indian Car Demand, Misses Estimates Maruti Udyog Ltd., the maker of half of all cars sold in India, posted a less-than-expected 11 percent gain in third-quarter profit, as costs from consolidating a unit hurt earnings.
European Headlines (via Bloomberg.com)
• European Stocks Climb to Six-Year High, Led by Total, BHP, Credit Suisse European stocks rose to a six-year high after gains in oil and metal prices boosted commodity producers and plans by Credit Suisse Group (CS) to expand through takeovers buoyed banks.
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