Futures Point To Higher Opening On Earnings News

by: SA Editors
SA Editors
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U.S. Breaking Newssee today's Wall Street Breakfast for earlier news

P&G Q2 Net Up 12%, FY Guidance Raised

Procter & Gamble reports Q2 profit increased 12% to $2.86 billion, or $0.84/share, helped by double-digit sales growth in its Blades & Razors and Fabric Care & Home Care segments, as it achieved growth across all segments with revenue on the quarter up 8% to $19.73b. Analysts polled by Thomson and Bloomberg expected $0.83/share on $19.57b, but 'Reuters Estimates' shows analysts expected $0.84/share on $19.61b. Colgate-Palmolive-CL-1yr-chart-01-29-07 Procter-Gamble-PG-1yr-chart-01-29-07 P&G's $0.84/share beat its earlier forecast of $0.81 - $0.83. It raised its full year guidance to $2.99 - $3.03/share, or a 13 - 15% increase over '06, compared to its prior estimate of $2.97 - $3.02/share. Bloomberg reports analysts were looking for $3.02/share. Separately, Colgate-Palmolive reports an 11% rise in Q4 profit to $401.2m, or $0.73/share ($0.80/share excluding charges, beating analysts' average estimate of $0.77/share) on revenue growth of 10.5% to $3.21b, also beating analysts' estimates ($3.12b). Colgate attributed its sales growth to a double-digit increase in global advertising spending. P&G is trading lower by about 1.35% to $64.00 in the pre-market on light volume of about 28k. Colgate has only traded 100 shares, currently up 0.4% at $67.00.
• Sources: P&G earnings release, Colgate earnings release, Bloomberg, Forbes-AP, MarketWatch
• Related commentary: Procter & Gamble: A Classic Investment With Great Potential, Why Does Proctor & Gamble Need Dental Laser Technology?, Proctor & Gamble Signs Joint Venture with Inverness Medical. Conference call transcripts: P&G F1Q07, Colgate-Palmolive Q3'06
• Stocks and ETFs to watch: Procter & Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL). Competitors: Johnson & Johnson (NYSE:JNJ), Kimberly-Clark (NYSE:KMB), Unilever (NYSE:UL). ETFs: Consumer Staples Select Sector SPDR (NYSEARCA:XLP), Vanguard Consumer Staples (NYSEARCA:VDC), iShares Dow Jones US Consumer Goods (NYSEARCA:IYK), DIAMONDS Trust, Series 1 (NYSEARCA:DIA)

Merck's Earnings Fall 58%; Wyeth's Rise 17%

Merck & Co. reported fourth quarter earnings this morning and they weren't pretty: profits fell 58% on a combination of acquisition costs and weakening sales of its best-selling product, Zocor.mrk By the numbers, net income fell to $473.9 million, or EPS of just $0.22, versus earnings of $1.12 billion (EPS of $0.51) during the prior-year period. Excluding one-time charges, EPS was $0.50. Revenue rose 4.8% to $6.04 billion from $5.77 billion in the year earlier period. Revenue topped consensus estimates of $5.37 billion but EPS fell a bit shy of the Bloomberg projection of $0.51 a share; the Wall Street Journal estimated EPS at $0.50 meaning Merck was in-line before one-time items. Merck shares fell by $0.48 cents, or 1%, to $45.51, in trading yesterday. Zocor sales were hurt as health insurers switched cholesterol patients to cheaper generic versions of the drug. In related news, Merck competitor Wyeth reported earnings rose 17% to $903.5 million after one-time expenses, good for EPS of $0.66, up from $746.9 million (EPS of $0.55) cents a share. Revenue increased 10% to $5.22 billion. Thomson consensus estimates were for EPS of $0.71 on revenue of $5.12 billion.
• Sources: Merck: Press Release, Wall Street Journal, Bloomberg, MarketWatch, Reuters. Check back later for Merck's latest conference call transcript. Wyeth: Press Release, AP, Wall Street Journal
• Related commentary: Merck Investors Consider Future Liabilities Despite Company's Legal Victories, Pharmaceutical Losses: Thinking Through Pfizer and Merck, Pharmaceutical Shares Slip on Concerns Over Democratic House
• Stocks and ETFs to watch: Merck & Co. (NYSE:MRK), Wyeth (WYE). Competitors: Pfizer Inc. (NYSE:PFE), Schering-Plough Corp. (SGP), Novartis AG (NYSE:NVS), Teva (NASDAQ:TEVA), AstraZeneca plc (NYSE:AZN), GlaxoSmithKline plc (NYSE:GSK), Sanofi-Aventis (NYSE:SNY), Eli Lilly & Co. (NYSE:LLY), Abbott Laboratories (NYSE:ABT), Amgen (NASDAQ:AMGN). ETFs: ETFs: iShares Dow Jones US Pharmaceuticals (NYSEARCA:IHE), Pharmaceutical HOLDRs (NYSEARCA:PPH)

3M: In-line Earnings, Soft Guidance, Shares Drop Sharply

3M Inc., maker of industrial adhesives, Post-it notes, Scotchguard and Thinsulate, reported this morning its Q4 income jumped 58% to $1.57/share ($1.18 billion) from $0.97 ($746 million) in Q4 2005, slightly lower than consensus estimates of $1.61. Excluding a $0.47 gain from the sale of its 3M 30 01 2007 Chartpharmaceutical unit, net income from continuing operations was $1.14. Revenues were up 9% to $5.78b, but only 6.5% after accounting for currency discrepancies. 3M gave 2007 guidance of $5.20-$5.45; forecasts had been for $0.03-$0.18 higher than that. 3M saw strong sales of its optical film coating for liquid-crystal display TVs. John Inch, Merrill Lynch analyst: "2007 could be a strong year for 3M... A robust international economy, a lower dollar, abating raw material prices, optical films strength, the future benefit from acquisitions should all contribute." Shares, which were up yesterday $0.27 to $78.96, are trading down 4.9% at $75.08 in the pre-market.
• Sources: Press Release, Bloomberg, MarketWatch, TheStreet
• Related commentary: The Long Case for 3M, Falling Dollar: Who Stands To Gain?
• Stocks and ETFs to watch: 3M Company (NYSE:MMM). Competitors: Owens Corning Inc. (NYSE:OC), Cabot Microelectronics Corp. (NASDAQ:CCMP), E.I. DuPont de Nemours (NYSE:DD), Johnson & Johnson (JNJ), Avery Dennison Corp. (NYSE:AVY). ETFs: Vanguard Industrials ETF (NYSEARCA:VIS) has a 3.3% holding

UPS: Earnings on Target, Revenues Miss, Shares Drop

United Parcel Service (NYSE:UPS), the world's biggest package shipper, said this morning that its Q4 net income rose to 7.5% to $1.13B ($1.04/share) up from $1.05B ($0.95) in Q4 2005, while revenues rose 5.6% to $12.63B from $11.95B. Analysts expected EPS of $1.04 on revenues of $12.87 billion. The UPS 30 01 2007 Chartcompany issued 2007 guidance of $4.10-4.25/share, up from 2006's total of $3.86. UPS is the #1 shipper of internet purchases; internet-based revenues jumped 26% in Nov. and Dec. Package volume rose 3.3% and international package volume went up 10%. Competitor FedEx., the largest air-cargo carrier, reported in Dec. that its Q4 profits rose 8.5% to $511 million ($1.64 a share) on increased revenues of $8.93 billion (+10%). The company bought back 32.6 million shares in 2006, reducing shares outstanding by 2.5%. Shares, which were up 1.6% yesterday to $73.65, are trading down 3.3% to $71.20 in pre-market trading.
• Sources: Press Release, MarketWatch, Bloomberg
• Related commentary: So You Want To Invest Like Buffett? Here's An Easy Trick, UPS -- A Historical Look, Check for UPS's Earnings Conference Call Transcript later today.
• Potentially impacted stocks and ETFs: United Parcel Service (UPS). Competitors: FedEx Corp. (NYSE:FDX), TNT N.V. (TNT)

U.S. Steel Q4 Profit Beats Street on Higher U.S. Prices, EU Demand

U.S. Steel reported a year-over-year surge in Q4 profits which easily beat Street estimates ($2.50 vs. $2.19-$2.21/share), but says it expects a decline in Q1, sequentially from Q4. Q4 net income totaled $297 million (vs. $109m, $0.85/share last year) on sales growth of 8.8% to $3.77b. US-Steel-X-1yr-chart-01-29-07 Chairman and CEO John P. Surma commented on 2006, calling it "another outstanding year", saying strong cash flow generation was used to pay down $600m of debt, repurchase $442m shares, increase funding of its domestic benefits plans by $190m, "make significant" capex investments and double its common dividend to $0.20/share. For the firm's outlook, he says, "We expect first quarter results to decline from the fourth quarter, but flat-rolled demand is firming and we have restarted several domestic blast furnaces to bring our production in line with improving order rates." In pre-market trading U.S. Steel's shares were last at $78.20 on thin volume of about 10k, up 1.7% over yesterday's close of $76.88.
• Sources: Earnings release [pdf], Bloomberg, MarketWatch, WSJ
• Related commentary: U.S. Steel: Strong Prospects -- Barron's, Will Another Iron-ore Price Hike Stop Surging Steel Stocks?, WhisperNumber.com Earnings Estimates: At Odds With Traditional Analyst Estimates
• Stocks and ETFs to watch: United States Steel Corp (NYSE:X). Competitors: Mittal Steel (NYSE:MT), Nucor (NYSE:NUE). ETFs: Market Vectors - Steel (NYSEARCA:SLX), SPDR Metals and Mining ETF (NYSEARCA:XME)

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Asian Headlines (via Bloomberg.com)

Japan Industrial Output Jumps, Spending Drops as Growth Bypasses Consumers Japan's factory production rose to a record and household spending fell, underscoring the central bank's concern that growth has bypassed consumers and left the economy dependent on exports.

Asian Stocks Snap Three-Day Drop as Honda, Toyota Gain; China Mobile Rises Asian stocks snapped a three-day drop, led by Honda Motor Co. (NYSE:HMC) and Toyota Motor Corp. (NYSE:TM), as the yen fell to the lowest against the dollar in more than four years.

Rinker, Targeted by Cemex, Increases Profit 13 Percent on Cement Prices Rinker Group Ltd. (RIN), the Australian building materials maker fending off a takeover bid from Cemex SAB (NYSE:CX), said third-quarter earnings rose 13 percent, maintaining pressure on the Mexican company to sweeten its $11.7 billion offer.

India's Credit Rating Is Raised to Investment Grade by Standard & Poor's India's debt rating was raised to investment grade by Standard & Poor's for the first time in 14 years as Asia's fourth largest economy grows at a record pace.

European Headlines (via Bloomberg.com)

European Retail Sales Drop for First Time in 10 Months, Bloomberg PMI Says European retail sales dropped for the first time in 10 months in January as spending in Germany slumped, adding to signs economic growth is slowing, the Bloomberg purchasing managers index showed.

Stocks Rise in Europe, Paced by Siemens; Alitalia, Air France Shares Gain European stocks rose for a second day after Merrill Lynch & Co. advised buying shares of Siemens AG (SI), the region's largest engineering company, and takeover speculation boosted airlines.

Media-Industry Mergers May Top $52 Billion in Europe This Year, Study Says European media companies may be the target of 175 mergers and acquisitions this year with a value of about 40 billion euros ($52 billion), PricewaterhouseCoopers LLP said in a report.

SKF Shares Surge After Profit Increase Prompts Company to Raise Forecast Shares of SKF AB, the world's biggest maker of ball bearings for cars and airplanes, surged the most in eight months after the Swedish company raised its earnings targets and said it will return cash to investors after quarterly profit jumped 44 percent.