Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:52 AM EST
S&P 500: -0.90; 1,430.00
NASDAQ 100: -3.50; 1,788.75
Dow: -8.00; 12,526.00
NIKKEI 225: -0.09%; 17,408.57 (-15.61)
HANG SENG: -0.01%; 20,769.70 (-2.52)
S&P/ASX 200: +0.15%; 5,735.00 (+8.40)
BSE SENSEX 30: -1.18%; 14,041.24 (-168.00)
FTSE 100: -0.24%; 6,203.60 (-14.80)
CAC 40: -0.46%; 5,553.89 (-25.89)
XETRA-DAX: -0.47%; 6,656.08 (-31.23)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +1.67%; $53.46 (+$0.88)
Gold: +1.07%; $640.90 (+$6.80)
Natural Gas: +2.84%; $7.53 (+$0.21)
Silver: +1.46%; $13.19 (+$0.19)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
• Excluding One-Time Expenses, Johnson & Johnson Beats Estimates
Johnson & Johnson released its 4Q06 earnings shortly after 8:00 AM this morning announcing that net income rose to $2.17 billion (EPS of $0.74), from $2.1 billion (EPS of $0.70) during the prior-year quarter. Excluding a one-time charge surrounding its acquisition of Pfizer Inc.'s consumer healthcare unit, JNJ earned $0.81 cents a share on revenue of $13.68 billion versus revenue of just $12.61 billion during last year's 4Q. Thomson consensus estimates were for EPS of $0.79 on revenue of $13.68 billion. Worldwide sales for the year 2006 were $53.3 billion, an increase of 5.6% over 2005; international sales were up 11.2% versus the prior year, largely the result of positive currency impact.
• Sources: Press Release, MarketWatch, Reuters
• Related commentary: Johnson & Johnson: Capitalize On Its Growth, Johnson & Johnson and Coke: How Much Is A Brand Worth?, Big Pharma's Big Decision: Diversify Or Focus?. Conference Call Transcript: Check for JNJ's Earnings Conference Call Transcript later today.
• Potentially impacted stocks and ETFs: Johnson & Johnson (JNJ). Competitors: Merck & Co. Inc. (MRK), Novartis AG (NVS), Proctor & Gamble Co. (PG), GlaxoSmithKline plc (GSK), Pfizer Inc. (PFE). ETFs: iShares Dow Jones US Pharmaceuticals (IHE), iShares Dow Jones US Healthcare (IYH), Pharmaceutical HOLDRs (PPH), Vanguard Health Care (VHT), Health Care Select SPDR (XLV)
• BoA Boosted by MBNA Acquisition, Q4 Net Jumps 47%, Beats Street
Bank of America reports Q4 net income jumped 47% to $5.26 billion, or $1.16/share on revenue growth of 34% to $18.82b. Excluding pre-tax merger and restructuring costs, EPS was $1.19/share, beating the Street by a penny. Revenue also came in higher than the $18.1b analysts estimated. BoA cites growth in card income from its acquisition of MBNA and pointed to strength in capital markets and investment banking. For the year, BoA's net income rose 28% to $21.13b and EPS grew 14% to $4.59/share (diluted). Excluding charges net income totaled $21.64b, or $4.70/share. BoA closed slightly higher yesterday at $53.65 and is trading around $54.00 (+0.6%) in the pre-market on thin volume.
• Sources: Press release, Bloomberg, WSJ
• Related commentary: Jim Cramer's Take on BAC, Bank of America: Impressive Numbers Prove We Were Wrong -- Barron's, Bank of America: Looking Forward to 2007
• Potentially impacted stocks and ETFs: Bank of America (BAC). ETFs: Financial Select Sector SPDR (XLF), iShares Dow Jones US Financial Services (IYG), iShares S&P Global Financials (IXG), KBW Bank (KBE), Regional Bank HOLDRs (RKH)
• EMC Boosts Earnings on Strong Demand for Storage
EMC Corp., the world's biggest maker of data-storage computers and software, said fourth-quarter profit was $389 million ($0.18/share), tripling the $0.06/share it earned in Q4 2006 and matching analyst estimates, helped by strong sales of its super-huge computers as customers continue to require more space for digital document storage. Sales were up 19% to $3.2 billion. EMC gave 2007 earnings guidance of at least $0.64/share on revenue of at least $12.7 billion. A.G. Edwards & Sons Inc. analyst Aaron Rakers in St. Louis: "We are starting to see competitive dynamics shift to EMC." He rates the stock Buy/Aggressive, and says HP will not have a product to compete with EMC until at least 2008. Shares traded up $0.23 (1.7%) to $13.70 in pre-market trading.
• Sources: Bloomberg, MarketWatch
• Related commentary: Goldman On IT Trends: What Tech Companies Stand To Gain?, Goldman On IT Trends: What Tech Companies Stand To Gain?, LBO Fever -- Barron's Looks at Who May Be Next. Conference call transcripts: Check for EMC's Earnings Conference Call Transcript later today.
• Potentially impacted stocks and ETFs: EMC Corp. (EMC). Competitors: Hewlett-Packard Co. (HPQ), International Business Machines Corp. (IBM), Dell Inc. (DELL), Sun Microsystems Inc. (SUNW), Seagate Technology (STX). NCR Corp. (NCR). ETFs: PowerShares Dynamic Hardware & Consumer Electronics (PHW), HOLDRS Internet Architecture (IAH)
• United Technologies Reports Beat Quarter, Confirms Forward Guidance
Dow component United Technologies Corp. announced a 38% rise in profits for 4Q06 on sales growth of its Otis elevators and aircraft parts units. By the numbers, profits rose to $865 million, good for EPS of $0.87 for the quarter, up from $626 million, or EPS of $0.62 during the year-earlier period, while revenue came in at $12.79 billion, versus $11.26 billion in the year-earlier quarter. A Bloomberg survey put EPS at just $0.85 for the quarter while Thomson First Call consensus was for EPS of $0.85 on revenue of $12.17 billion. Sales grew 14 percent to , Hartford, Connecticut- based United Technologies said today in a statement. Overall, profits rose in four of six United Tech segments as Pratt & Whitney and Hamilton Sundstrand aerospace equipment benefited from record airline demand and Otis elevators won more Asian orders as a result of the continent's current boom in commercial construction. In terms of forward guidance, the company The company reiterated EPS will rise to between $4.05 to $4.20 in FY 2007, in line with analyst expectations of $4.17.
• Sources: Press Release, Bloomberg, MarketWatch, Reuters, AP
• Related commentary: United Technologies Forecasts Stronger Defense Sector and Housing Market, Falling Commodities Prices, Cramer's Take on UTX
• Potentially impacted stocks and ETFs: United Technologies Corp. (UTX). ETFs: iShares Dow Jones US Aerospace & Defense (ITA), iShares Dow Jones US Industrial (IYJ), PowerShares Aerospace & Defense (PPA), Vanguard Industrials (VIS)
• Coach Continues to Grow Sales, Income, and Beat Street
Coach Inc., the largest luxury leather-goods manufacturer in the U.S., said FQ2 2007 profits were up 31% to $0.61/share ($227 million) from $174.2m last year, helped by its high-end Legacy handbag line introduced in September at prices about 45% above the company's average prices. The numbers exceeded analyst estimates of $0.58 and its own forecast of $0.56. Sales were up 29% to $836.4m. CEO Lew Frankfort called sales "very strong" and raised 2007 full-year guidance from $1.63 to $1.71, better than Street forecasts of $1.67. Coach profits have risen at least 30% over each of the last five years. Sales at stores open more than one year were up 21%, and discount sales were up 33%. Shares were up 3.5% ($1.52) to $45.50 in pre-market trading.
• Sources: MarketWatch, Bloomberg
• Related commentary: Coach: Rapidly Growing Market Share in Japan, Stocks To Capture China’s Baby Boomers, Coach Can Double Market Share by 2010. Check for Coach's Earnings Conference Call Transcript later today.
• Potentially impacted stocks and ETFs: Coach Inc. (COH). Competitors: Target Corp. (TGT), Fossil Inc. (FOSL), Jaclyn Inc. (JLN), Tandy Leather Factory Inc. (TLF), Liz Claiborne Inc. (LIZ)
Asian Headlines (via Bloomberg.com)
• Asian Shares Decline From Three-Week High; Elpida Falls on Demand Concerns Asian stocks fell from a three-week high, led by Elpida Memory Inc. and High Tech Computer Corp. on concern demand for their electronics products will decline.
• State Bank of India Third-Quarter Profit Falls 4.5 Percent to $241 Million State Bank of India, the nation's biggest financial-services firm, said third-quarter profit declined 4.5 percent on higher provisions and rising costs. Shares dropped as much as 4.5 percent.
• Bharti Airtel Third-Quarter Profit Doubles to Record on Mobile-Phone Users Bharti Airtel Ltd., India's largest mobile-phone operator, reported third-quarter profit more than doubled to a record after the company added customers in a country where about one in seven people owns a handset.
• Macau Surpassed Las Vegas Strip in 2006 as World's Largest Gambling Market Macau's gaming revenue surged 22 percent in 2006, surpassing the Las Vegas Strip as the world's biggest casino market.
• Tata Motors Third-Quarter Profit Gains on Rising Indian Demand for Trucks Tata Motors Ltd. (TTM), India's biggest maker of trucks and buses, posted an unexpected 12 percent increase in third-quarter profit after demand for commercial vehicles rose and a foreign-exchange gain.
European Headlines (via Bloomberg.com)
• Tate & Lyle Shares Drop Most in 18 Years; Profit Growth to Miss Forecast Shares of Tate & Lyle Plc, the maker of the sweetener Splenda, fell as much as 17 percent, the most in at least 18 years, after the company said profit growth will miss its target.
• Shell Increases Offer for Minority Stake in Canadian Unit to $7.4 Billion Royal Dutch Shell Plc (RDS.A), Europe's biggest oil company, raised an offer to buy out its Canadian unit by 13 percent to C$8.7 billion ($7.4 billion) to gain increased production from oil sands.
• European Stocks Decline, Paced by Alcatel, Logica Shares on Profit Concern European stocks dropped for a second day, pushed lower by technology companies, after Alcatel-Lucent (ALU) reported a slide in revenue and LogicaCMG Plc said sales growth fell short of its forecast.
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