Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:49 AM EST
S&P 500: -11.10; 1,441.50
NASDAQ 100: -25.25; 1,812.50
Dow: -82.00; 12,572.00
NIKKEI 225: -0.52%; 18,119.92 (-95.43)
HANG SENG: -1.76%; 20,147.87 (-360.08)
S&P/ASX 200: -0.83%; 5,993.80 (-50.20)
BSE SENSEX 30: -1.25%; 13,478.83 (-170.69)
FTSE 100: -1.68%; 6,326.70 (-108.00)
CAC 40: -2.13%; 5,639.92 (-122.62)
XETRA-DAX: -1.60%; 6,914.81 (-112.78)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -1.60%; $60.41 (-$0.98)
Gold: -0.96%; $683.20 (-$6.60)
Natural Gas: -1.99%; $7.55 (-$0.15)
Silver: -1.33%; $14.635 (-$0.197)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Durable Goods Orders Decline Most in 18 Months Sending Futures Lower
After durable goods orders rose 2.8% in December, orders plunged 7.8% in January, on reduced demand for transportation equipment, especially commercial aircraft and excess inventories. Consensus estimates had been for a drop of between 3% (Bloomberg) and 5.5% (MarketWatch) and for a drop ex-transport of just 0.3%. Commercial aircraft orders fell 60% while transport orders on the whole fell 18%. Ex-transport, durables were down 3.1% - their biggest drop since July 2005. Orders for core capital equipment were another area of weakness falling 6% - their biggest drop since January 2004. Futures, which were already lower on weakness in Asian and European markets, fell further on the news.
• Sources: Bloomberg, MarketWatch
• Commentary: Greenspan: Recession Possible by End of 2007 • Earnings Trends: Materials Expected to Drop in Q1 • Economic Report Summary: Core Inflation Rose, Broad Equity Markets Weakened
• Stocks and ETFs to watch: S&P 500 Index (NYSEARCA:SPY), Diamonds Trust Series 1 ETF (NYSEARCA:DIA), iShares Lehman Aggregate Bond (NYSEARCA:AGG)
Federated Posts Strong Earnings, Weak Forecast
Federated Department Stores Inc., America's #2 department-store chain, said this morning its Q4 net income rose 5% to $733 million on a 4.5% drop in revenues to $9.16 billion. EPS were $1.40, up from $1.26 in Q4 2005. Excluding one-time items, EPS were $1.66, beating analyst forecasts of $1.58 and the company's Feb. 8 forecast of $1.55-1.60. For 2007, Federated gave guidance of $2.45-2.60 a share; analysts were looking for $2.84. Federated also said it plans to change the company's name to Macy's Group Inc., and that its board approved the repurchase of $4 billion of company stock. The company plans to open seven new stores in 2007 -- Macy's in IL, MA, TN, and TX; a Macy's Furniture Gallery in NY; and Bloomingdale's in CA and MD. Federated shares were down $0.55 (1.24%) to $43.65 in pre-market trading.
Sources: Press Release I, II, MarketWatch
Commentary: Five Companies That Could Surprise This Week • Federated Department: No Longer Getting My Shopping or Investment Business • Federated Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Federated Department Stores Inc. (FD). Competitors: Saks Inc. (NYSE:SKS), Nordstrom Inc. (NYSE:JWN), J.C. Penney Company Inc. (NYSE:JCP), Target Corp. (NYSE:TGT), Wal-Mart Stores Inc. (NYSE:WMT). ETFs: Retail HOLDRS ETF (NYSEARCA:RTH), SPDR S&P Retail (NYSEARCA:XRT), PowerShares Dynamic Retail (NYSEARCA:PMR)
Target Earnings Hit the Mark
Target Corp., America's #2 discounter, said this morning its Q4 net income rose 19% to $1.12 billion on a 16% rise in revenues to $19.71 billion. EPS were $1.29, up from $1.06 in Q4 2005 and beating analyst forecasts of $1.27. Same store sales were up 5% from the comparable period last year. Target shares were down $0.30 (0.50%) to $62.25 in pre-market trading.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: Earnings This Week: Five Companies That Could Surprise • Target: Hitting the Mark • The Stealth E-Commerce Stocks? • Target Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Target Corp. (TGT). Competitors: Wal-Mart Stores Inc. (WMT), Costco Wholesale Corp. (NASDAQ:COST), Federated Department Stores Inc. (FD). ETFs: Retail HOLDRS ETF (RTH), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR)
Sirius Earnings Meet Expectations, Revenue Beats
A day after future partner XM Satellite Radio reported narrowing its loss from the previous year, Sirius Satellite Radio reported narrowing its loss from the previous fourth quarter as well. By the numbers, Sirius reported EPS of negative $0.17 (-$245 million), versus a year-ago EPS loss of $0.23 ($311 million). Revenue more than doubled to $193 million from just $80 million in the previous year's quarter. Thomson Financial consensus estimates were expecting an EPS loss of $0.17 on lower revenue of $173 million. Sirius claimed positive free cash flow of $30.4 million in the quarter; in the future it will no longer provide cash flow guidance as it prepares to merge with XMSR. The company nearly doubled subscriptions in 2006 to 6 million, up from 3.3 million at the end of 2005. The company expects to have more than 8 million subscribers by the end of 2007 as well as revenues approaching $1 billion. FY2006 revenues were $637.2 million versus $242.2 million in 2005; EPS losses were $0.79 in 2006 versus $0.65 in 2005.
• Sources: Press Release, TheStreet.com, AP, Reuters
• Commentary: Sirus/XM Merger Could Create An Ad-Driven Google In The Sky • XM Satellite Radio Shares Rise On Revenue Gains • XM/Sirius Merger: Defending Mel Karmazin
• Stocks and ETFs to watch: Sirius Satellite Radio (NASDAQ:SIRI). Competitors: XM Satellite Radio Holdings Inc. (XMSR), Clear Channel Communications (NYSE:CCU)
CBS Posts Strong Earnings Beat
CBS Corp., owner of America's most-watched television network, said this morning its Q4 2006 income was $355 million (vs. a year-ago Q4 loss of $9.14 billion) on a revenue increase of 2.5% to $3.88 billion. Last year's loss was a result of a one-time writedown of its broadcasting and radio assets. EPS were $0.43 (vs. last-year's loss of $12.00/share), or $0.60 net of one-time items -- beating analyst estimates of $0.47. Regarding its 2007 outlook, CBS said it expects revenue "comparable to that of 2006." CEO Sumner Redstone called CBS' first year since splitting with Viacom "a great one." Its radio unit fared the worse, dropping 8% on the quarter, while its outdoor advertising unit gained 10%, its TV operations 3%, and its Simon & Schuster publishing unit gained 7%. CBS shares are up 28% since last year, and closed up $0.08 yesterday to $31.40.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: CBS Announces New Internet Strategy • CBS Deserves the Spotlight • More On The Online Push At CBS • CBS Corp. Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: CBS Corp. (NYSE:CBS), Viacom Inc. (NASDAQ:VIA). Competitors: Time Warner Inc. (NYSE:TWX), News Corp. (NASDAQ:NWS), Walt Disney Company (NYSE:DIS), Clear Channel Communications Inc. (CCU). ETFs: PowerShares Dynamic Media Portfolio ETF (NYSEARCA:PBS), PowerShares Dynamic Leisure & Entertainment (NYSEARCA:PEJ)
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Asian Headlines (via Bloomberg.com)
• Mizuho Won't Challenge Citigroup for Nikko Cordial Stake, Officials Say Mizuho Financial Group Inc. (NYSE:MFG), Japan's second-largest bank, scrapped a plan to acquire Nikko Cordial Corp. (OTC:NIKOY) and will instead seek an alliance with rival bidder Citigroup Inc. (NYSE:C), two company officials said.
• Maxis Will Spend 50 Percent More This Year to Expand Aircel India Network Maxis Communications Bhd., Malaysia's biggest mobile-phone operator, said it will spend 50 percent more this year to expand its network in India, part of a strategy to counter slowing demand at home.
• Proton, in Talks With GM, Posts Loss as Sales Fall to Lowest This Decade Proton Holdings Bhd., the Malaysian carmaker in talks to sell a stake to General Motors Corp. (NYSE:GM), reported a third straight quarterly loss as sales slumped to the lowest in at least seven years.
European Headlines (via Bloomberg.com)
• European Stocks Slide After Chinese Index Plunges; BHP Billiton, Rio Drop European shares fell the most in eight months after a plunge in the Chinese stock market rattled investor confidence.
• Volkswagen, MAN AG's Largest Shareholder, Increases Stake to 29.9 Percent Volkswagen AG (OTCQX:VLKAY), Europe's biggest carmaker, increased its holding in MAN AG to 29.9 percent as part of an effort to create Europe's largest truckmaker in a three-way combination including Swedish competitor Scania AB.
• Retail Sales in Europe Dropped in February, Led by Germany on Tax Increase European retail sales dropped for a second month in February after a tax increase discouraged German shoppers, the Bloomberg purchasing managers index showed.
• Standard Chartered Profit Rises 21 Percent; Shares Drop on Cost Forecast Standard Chartered Plc, a U.K. bank that makes most of its money in Asia, may not repeat last year's profit gain in the first half of 2007 as costs rise faster than revenue.
• Garganas of ECB Says Stronger European Economy Is Boosting Inflation Risks European Central Bank council member Nicholas Garganas said economic growth may prove stronger than the bank forecasts and inflation risks are increasing.