Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:55 AM EST
S&P 500: +3.70; 1,446.70
NASDAQ 100: +7.75; 1,810.25
Dow: +30.00; 12,690.00
NIKKEI 225: +0.78%; 17,519.50 (+136.08)
HANG SENG: +1.61%; 20,430.16 (+323.74)
S&P/ASX 200: +0.70%; 5,814.10 (+40.70)
BSE SENSEX 30: +1.25%; 14,267.18 (+176.26)
FTSE 100: +1.31%; 6,284.60 (+81.50)
CAC 40: +1.07%; 5,668.34 (+60.03)
XETRA-DAX: +0.90%; 6,849.89 (+60.78)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.10%; $58.08 (-$0.06)
Gold: +0.64%; $662.10 (+$4.20)
Natural Gas: +2.23%; $7.84 +$0.17)
Silver: +0.59%; $13.65 (+$0.08)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
• Exxon Again Sets Record For Largest Corporate Profit Despite Earnings Decline in 4Q06
Exxon Mobil reported it first decline in quarterly earnings Thursday before the market open but still managed to post the largest annual corporate profit in U.S. history for FY 2006. By the numbers, Exxon's 4Q06 profits declined 4% versus the prior year period, pulling in $10.25 billion, good for EPS of $1.76, on revenue of $90.03 billion. During 4Q05, the U.S.'s largest oil company earned $10.71 billion (EPS of $1.71) on revenue of $99.34 billion. Excluding special items, the company earned $9.84 billion, or EPS of $1.69 in its recent quarter. Thomson consensus estimates called for earnings of $1.51 a share. The lower earnings did not stop the company from pulling in earnings for the year of $39.5 billion, upping its previous record of $36.1 billion during the previous year. The quarterly losses were largely due to lower natural gas realizations and refining margins. Shares are up $0.72 (0.97%) to $74.82 in pre-market action.
• Sources: Wall Street Journal, CNN Money, Reuters, MarketWatch. Exxon Mobil earnings conference call transcript (available later).
• Commentary: ETFs vs. Oil Stocks - When to Worry and When Not • Crude Oil Price Rebounds on U.S. Reserve Plan • Oil vs. Energy Stock Prices: Something's Gotta Give
• Stocks and ETFs to watch: ExxonMobil Corp. (NYSE:XOM). Competitors: ConocoPhillips (NYSE:COP), BP plc (NYSE:BP), Chevron Corp. (NYSE:CVX), Royal Dutch Shell (NYSE:RDS.A), Total (NYSE:TOT). ETFs: Energy Select Sector SPDR (NYSEARCA:XLE), Vanguard Energy ETF (NYSEARCA:VDE), PowerShares Dynamic Energy Exploration & Production Port (NYSEARCA:PXE)
• Archer Daniels Midland Boosts Earnings on Higher Ethanol Prices
Archer Daniels Midland Co., the world's #1 grain processor, announced FQ2 2007 earnings this morning of $0.67/share ($441.3m) on revenues of $11b -- up 19.6% from $0.56 ($367.7m) in FQ2 2006 -- beating analyst consensus estimates of $0.64 on revenues of $9.52b. The company said higher ethanol prices helped offset higher corn costs. Citigroup analyst David Driscoll, in a pre-earnings report: "We continue to see encouraging trends at ADM's major businesses including high fructose corn syrup, oilseeds and agricultural services, and believe ADM's outlook could prove considerably better than what the market appears to be factoring in." Archer Daniels Midland Co. shares were up $2.0 to $34 (+6%) in pre-market trading.
Sources: Press Release, Bloomberg, MarketWatch
Commentary: Alternative Energy Boom Has Its Limits • Ethanol and the Future of Alternative Fuels • Archer Daniels' Inadequate Wilmar Share Holdings Disclosure
Stocks/ETFs to watch: Archer Daniels Midland Co. (NYSE:ADM). Competitors: CHS Inc (CHSCP), General Mills Inc. (NYSE:GIS), Kellogg Company (NYSE:K). ETFs: PowerShares WilderHill Clean Energy ETF (NYSEARCA:PBW)
• Comcast Triples Q4 Earnings, Outstanding New Cable Subscriptions
Comcast Corp., the #1 U.S. cable-TV provider (24.2m subscribers), announced Q4 2006 earnings this morning of $0.18/share ($390m) on revenues of $7.03b -- up 200.0% from $0.06 ($133m) in Q4 2005 -- but below analyst consensus estimates of $0.24 on revenues of $7.13b. Comcast gave 2007 guidance of 11% revenue growth. Comcast's 'triple-play' TV, internet and phone packages brought it 110,000 new cable subscribers, the most in over 10 years and double analyst estimates. CEO Brian Roberts said he would boost capital spending to $5.7b in 2007 in a campaign to lure more new customers from telephone and satellite-TV providers. Comcast also announced a 3-for-2 stock split. Roberts called 2006, "Simply our best year ever... We added more revenue-generating units than at any other time in our history and reported terrific growth in cable revenue and operating cash flow... we could not be more enthusiastic about the future." Comcast Corp. shares were down $0.80 to $43.55 in pre-market trading.
Sources: Press Release, MarketWatch, Bloomberg, Wall Street Journal
Commentary: Comcast Earnings Preview: Expecting the Best • Apple TV: Direct Attack on Cable TV's Business Model • The Right Time To Buy Comcast: Not Now • Comcast Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Comcast Corp. (NASDAQ:CMCSA). Competitors: Time Warner Inc. (NYSE:TWX), Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), The DirecTV Group Inc (DTV), EchoStar Communications Corp. (NASDAQ:DISH), Cablevision Systems Corp. (NYSE:CVC), Shaw Communications Inc. (NYSE:SJR). ETFs: PowerShares Dynamic Media Portfolio ETF (NYSEARCA:PBS), HOLDRS Broadband (NYSE:BDH)
• Shell: Positive Q4 Earnings Surprise and Dividend Hike
Royal Dutch Shell reports Q4 net income increased 21% to $5.28 billion, for a calendar year 2006 profit of $25.44b. Excluding one-time items and changes in inventory values it earned $5.5b on the quarter, topping analysts' forecast. Oil and gas production rose 4.1% to the equivalent of 3.65m BPD despite disruptions at its operations in Nigeria. Shell lowered its '07 production forecast to 3.3m - 3.5m BPD, compared to 3.5m - 3.6m BPD previously. Shell reported weakness in its refining business where profits fell 37% on an adjusted basis. It raised its Q4 dividend payout by 9% to €0.25/share and will pay its dividend in U.S.$ from Q1, at $0.36/share, or a 14% increase y-o-y. In pre-market trading Shell was up 1.64% to $69.37 after closing yesterday at $68.25.
Sources: Earnings release and 2007 strategy update, Bloomberg, MarketWatch
Commentary: Barron's Euro Dogs of the Dow 2007 • Minimal Spare Oil Capacity • Sakhalin-2 Ownership Dilemma Resolved, Gazprom Takes Control
Stocks/ETFs to watch: Royal Dutch Shell (RDS.A). Competitors: Exxon Mobile (XOM), PetroChina (NYSE:PTR), BP (BP), Chevron (CVX), Total (TOT). ETFs: iShares S&P Global Energy (NYSEARCA:IXC), DJ STOXX 50 (NYSEARCA:FEU), iShares MSCI United Kingdom Index (NYSEARCA:EWU), BLDRS Europe 100 ADR Index (NASDAQ:ADRU)
• Putnam Investments to be Sold for $3.9B
Marsh & McLennan Companies has announced the signing of a definitive agreement to sell Putnam Investments for $3.9 billion in cash to Great-West Lifeco, a financial services holding company controlled by Canada-based Power Financial Corporation. The deal is set to close by mid-year subject to regulatory and client approval. Putnam had $192b under management at the end of '06. Regarding the deal, MMC's president and CEO commented, "We will receive an attractive price for Putnam, strengthen our ability to focus on our core businesses, and significantly enhance our financial flexibility." He mentions the possibility of using the proceeds along with cash flow to further invest in core businesses as well as stock repurchases and debt reduction. The Wall Street Journal reported of a provisional MMC-Power Financial deal last month. Goldman Sachs and Merrill Lynch advised MMC on the transaction. MMC's shares lost 0.3% closing at $29.50 in normal trading yesterday.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Power Corp. To Acquire Putnam for $3.9 Billion • A General Insurance Brokers Story • Putnam May Fetch a Good Offer Despite Difficulties
Stocks/ETFs to watch: Marsh & McLennan Companies (NYSE:MMC). Competitors: American International Group (NYSE:AIG), Aon (AOC), ING Group (NYSE:ING). ETFs: streetTRACKS KBW Insurance (NYSEARCA:KIE)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Advance, Led by Sharp, Rio Tinto on Earnings; Toyota Gains Asian stocks rose the most in almost three weeks after Sharp Corp. (OTCPK:SHCAY) and drugmaker Daiichi Sankyo Co. reported higher third-quarter profits and Rio Tinto Group (RTP) posted record net income.
• Rio Tinto Full-Year Profit Rises 43 Percent as Chinese Demand Lifts Prices Rio Tinto Group (RTP), the world's third-largest mining company, posted a 20 percent gain in second-half profit after prices for copper and iron ore surged on demand from China.
• Yuan Posts Biggest Advance in Two Weeks; Paulson Defends Currency Policy The yuan rose the most in two weeks after U.S. Treasury Secretary Henry Paulson defended China's policy of allowing gradual appreciation and called for greater exchange-rate flexibility.
• Matsushita Third-Quarter Profit Rises 60 Percent on Panasonic Plasma TVs Matsushita Electric Industrial Co. (NYSE:MC), the world's largest maker of consumer electronics, reported a 60 percent gain in third-quarter profit, helped by a weaker yen and sales of Panasonic plasma televisions and cameras.
• Nikko Shares Record Biggest Two-Day Drop in 22 Years on Accounting Probe Nikko Cordial Corp. (OTC:NIKOY) shares posted the biggest two-day slump in at least 22 years after a probe implicated former executives in an accounting fraud that may cost Japan's third-largest brokerage its stock market listing.
European Headlines (via Bloomberg.com)
• AstraZeneca to Cut 3,000 Jobs to Trim Costs as Generic Competition Mounts AstraZeneca Plc (NYSE:AZN) will eliminate 3,000 jobs, or about 4.6 percent of the workforce, as the U.K. drugmaker reduces expenses to counter generic competition to its medicines.
• European Stocks Rise on U.S. Growth Outlook; BASF, GlaxoSmithKline Advance European stocks advanced to a six-year high after the Federal Reserve said economic growth in the U.S., the region's biggest trading partner, is accelerating without generating faster inflation.
• Deutsche Bank Earnings Triple on Tax Gain, Increased Revenue From Trading Deutsche Bank AG, Germany's biggest bank, said fourth-quarter profit more than tripled, helped by lower taxes and higher revenue from trading stocks and bonds.