Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:51 AM EST
S&P 500: -2.90; 1,392.50
NASDAQ 100: -5.50; 1,739.50
Dow: -30.00; 12,185.00
NIKKEI 225: -0.47%; 16,764.62 (-79.88)
HANG SENG: -0.73%; 18,918.64 (-139.92)
S&P/ASX 200: +0.93%; 5,825.30 (+53.50)
BSE SENSEX 30: -0.92%; 12,579.75 (-117.34)
FTSE 100: -0.09%; 6,132.70 (-5.80)
CAC 40: +0.14%; 5,444.49 (+7.36)
XETRA-DAX: +0.16%; 6,605.48 (+10.48)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.31%; $60.88 (+$0.19)
Gold: +0.31%; $648.20 (+$2.00)
Natural Gas: +0.20%; $7.49 (+$0.02)
Silver: +0.85%; $13.095 (+$0.11)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
American Eagle Earnings In-Line; Soft Guidance Sends Shares Lower
American Eagle Outfitters reported 'record' for both its recently ended 4Q06 as well as for FY 2006 as a whole, boasting a 40% increase in EPS for the quarter and 35% growth for the year.According to CEO Jim O'Donnell, "Fiscal 2006 was a remarkable year, as it was our third consecutive year of positive comparable store sales growth and record operating margins." By the numbers, net income was $150.2 million, good for EPS of $0.66, versus $107.5 million EPS of $0.47 in the previous year period. Revenue rose 27% in the quarter to $973.4 million. Thomson Financial consensus estimates had projected EPS of $0.66 cents a share for the quarter. Same-store sales rose 14% in the quarter. For the year, operating income jumped 28% to $586.8 million on a 20% sales increase to $2.8 billion. In a separate release this morning, the company reported a February sales increase of 16% versus the prior year. American Eagle projected first quarter EPS of $0.31-$0.33; consensus estimates were for $0.33, according to Reuters. Yesterday the board authorized the buyback of an additional 7 million shares and set its quarterly cash dividend at $0.075 a share, payable to shareholders of record as of March 30. Shares were lower by $1.53, or 5.13%, to $28.30 in pre-market action.
• Sources: Press Release, MarketWatch, Reuters (i), (ii), AP. [Check for AEOS' conference call transcript later today.]
• Commentary: Retailers Post January Same Store Sales • American Eagle Outfitters: A Case-Study in Value Investing • Kissing My Shares in American Eagle Goodbye
• Stocks and ETFs to watch: American Eagle Outfitters (AEOS). Competitors: Limited Brands Inc. (LTD), Abercrombie & Fitch Co. (NYSE:ANF), Gap Inc. (NYSE:GPS), Pacific Sunwear of California Inc. (NASDAQ:PSUN), Urban Outfitters (NASDAQ:URBN). ETFs: Retail HOLDRs (NYSEARCA:RTH), Consumer Discretionary SPDR (NYSEARCA:XLY)
Sony Reveals Social Gaming Platform for PS3
Sony revealed this morning its new online social network designed to generate interest in its PlayStation3 gaming console. PlayStation3 has suffered thus far due to its high price tag ($600) and product shortages. At the Game Developers Conference in San Francisco, Phil Harrison, president of worldwide studios for Sony's Computer Entertainment division, described the components of the network in a keynote address. Game 3.0, he said, will redefine gaming in that it incorporates user-generated content, enabling users to define their own gaming experience. Accessed through the PlayStation3 console, Home (the name of Sony's new service) allows users to create and develop online identities (avatars) as they move through a 3D world inhabited by other Home subscribers. Gamers can collect 'trophies' and other keepsakes from PS3 games and add them to their Home world. Separately, in an interview Harrison said that Sony sees PS3 as a bet on the future of the digital home; the console not only plays games but also allows users to download and share music and video files. Harrison also demonstrated a new game title, "LittleBigPlanet," which allows gamers to create their own games with materials found in the virtual world. He also unveiled a new set of developer tools for PS3 programmers.
Commentary: EA's Dr. Andrew Garrett: Skip the PlayStation3 • Sony Spin Factor • The Real Reason Nintendo Rules the Gaming World
Stocks/ETFs to watch: Sony Corp. (NYSE:SNE). Competitors: Microsoft Corp. (NASDAQ:MSFT), Nintendo (OTCPK:NTDOY). ETFs: PowerShares Dynamic Leisure & Entertainment (NYSEARCA:PEJ)
Conference call transcript: Sony F3Q06 (Qtr End 12/31/06)
Microsoft: VoIP Software Market to Grow to $35B - $40B
Microsoft is eyeing a shift in the way businesses use telephony and sees a move to web-based phone systems, or Voice over Internet Protocol [VoIP], according to Jeff Raikes, president of Microsoft's business division. It expects 100 million business users to make VoIP calls on its Office Communications software within three years. That is more than double the size of the current VoIP business market. Reuters reports only 8% of U.S. businesses have fully incorporated VoIP technology despite 82% of them using VoIP somewhere in their network, according to the Yankee Group. Cost has been a deterrent, but Microsoft says it expects a halving of prices in the next three years. Currently Microsoft faces business VoIP competition from Avaya and Cisco. Two versions of Microsoft's Office Communications software will be available for beta testing later this month. Microsoft's Raikes says, "Software is set to transform business phone systems as profoundly as it has transformed virtually every other form of workplace communication."
Sources: Press release [I, II], CNET, Reuters
Commentary: Vonage Holdings: Time to Hang Up The Phone • Calling on eBay: How is Skype Holding Up? • Yahoo "Go" to Run on Windows Mobile Devices
Stocks/ETFs to watch: Microsoft (MSFT), Nortel Networks (NT). Competitors: Avaya (NYSE:AV), Cisco Systems (NASDAQ:CSCO), Skype - owned by eBay (NASDAQ:EBAY), Vonage Holdings (NYSE:VG), Telecom carriers: AT&T (NYSE:T), Quest (NYSE:Q), Sprint Nextel (NYSE:S), Verizon (NYSE:VZ). ETFs: Technology Select Sector SPDR (NYSEARCA:XLK), Software HOLDRs (NYSE:SWH), Broadband HOLDRs (NYSE:BDH)
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Asian Headlines (via Bloomberg.com)
• Asia's Emerging Markets Advance on Growth Outlook; China, Malaysia Gain Shares in Asia's emerging markets rose for a second day after U.S. Treasury Secretary Henry Paulson said global economic growth is ``solid.'' Canon Inc. (NYSE:CAJ) paced a drop in the Nikkei 225 Stock Average after a gain in the yen raised concern the value of Japanese exports will decline.
• Thailand Names Chalongphob, Opponent of Capital Controls, Finance Minister Chalongphob Sussangkarn, president of a private think tank who criticized currency controls on foreign investors, was named finance minister in Thailand's military- backed government, a week after the man he's replacing quit.
• Jardine Matheson Profit Rises 15 Percent as Hong Kong Growth Boost Sales Jardine Matheson Holdings Ltd., which owns real estate, supermarkets and drugstores in Asia and runs hotels worldwide, said underlying profit rose 15 percent last year on higher sales.
• Sun Hung Kai Properties Profit Falls 19 Percent on Lower Apartment Sales Sun Hung Kai Properties Ltd., Hong Kong's largest builder by market value, said first-half profit fell 19 percent after Hong Kong's residential prices declined the most in Asia last year.
European Headlines (via Bloomberg.com)
• European Stocks Rise for Second Day; E.ON, Debenhams, Sportingbet Advance European stocks advanced for a second day as investors bet takeovers will increase in the retail and gaming industries.
• Arnault, Colony Capital Buy 9.8 Percent Stake in Carrefour; Shares Advance French billionaire Bernard Arnault and Colony Capital bought 9.8 percent of Carrefour SA, intensifying speculation that Europe's biggest retailer is a takeover target as its chairman faces pressure to resign.
• Vivendi Fourth-Quarter Profit Declines 51 Percent After Year-Earlier Gains Vivendi SA, owner of the world's largest music company, said fourth-quarter profit fell 51 percent from a year earlier, when the company had a tax credit and one-time gains from asset sales.
• Adidas Profit Misses Analyst Estimates as Reebok Orders Fall; Shares Slump Adidas AG, the world's second-largest sporting-goods maker, reported fourth-quarter profit that missed analysts' estimates and said orders for its Reebok brand fell, sending the shares to the lowest in almost eight months.
• European Union Ramps Up Conflict With Spain for Shielding Endesa From E.ON European Union regulators ramped up their conflict with Spain over restrictions imposed on the takeover bid by German utility E.ON AG (EON) of Endesa SA (ELE), the country's largest power producer.