Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:52 AM EST
S&P 500: +7.60; 1,437.20
NASDAQ 100: +10.00; 1,800.25
Dow: +71.00; 12,459.00
NIKKEI 225: 0.05%; 17,263.94 (+9.21)
HANG SENG: +1.37%; 19,821.78 (+267.91)
S&P/ASX 200: +0.64%; 5,960.90 (+37.70)
BSE SENSEX 30: +0.74%; 12,979.66 (+95.32)
FTSE 100: +0.77%; 6,315.20 (+48.00)
CAC 40: +1.29%; 5,624.45 (+71.76)
XETRA-DAX: +1.17%; 6,896.51 (+79.62)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.39%; $64.33 (+$0.25)
Gold: -0.33%; $670.70 (-$2.20)
Natural Gas: -0.65%; $7.62 (-$0.05)
Silver: -0.63%; $13.37 (-$0.085)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Fourth Quarter GDP Revised Upwards, Sending Futures Higher
The Commerce Department presented its revised U.S. GDP figures for the fourth quarter of 2006 Thursday, raising the previously reported GDP rate of 2.2% to 2.5%. Economists surveyed by both Bloomberg and MarketWatch were expecting the initial estimate of 2.2% to be unrevised. The revised figure means the economy grew 3.3% in FY2006, compared with 3.2 percent in FY2005. The core PCE price index (ex-energy and food) was revised downward a tenth of a point to 1.8%. In slightly negative news, corporate profits were down for the first time in five quarters, falling by $4.9 billion, or a 0.3%. Still, for FY2006, before-tax profits rose by $285 billion, or 21.4%, the most since 1983. Meanwhile, home construction fell at an annual rate of 19.8 percent, its worst performance since 1991. In other economic reporting, initial unemployment claims fell by seasonally adjusted 10,000 to 308,000 according to the Labor Department. The four-week initial claims average fell by 7,250 to 316,750. The single-week initial claims figure was the lowest since Jan. 13, the four-week average the lowest since Feb. 3. U.S. futures rose sharply on the GDP news.
Sources: Bloomberg, MarketWatch (i), (ii)
Commentary: Durable Goods Orders Come in Below Expectations; Aircraft Orders Recover • Staying Short Treasuries After Big Ben's Speech • With Employment, Housing and Consumption as Drags, Can Production Remain Positive?
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
PlayStation 3 Sales Solid in Europe Debut
Sony's PlayStation 3 started off strong, selling around 600,000 units during its Europe launch last weekend, compared to Microsoft's Xbox 360 and Nintendo's Wii first month sales in the region totaling 500,000 and 700,000, respectively. British and French retailers are reporting "huge demand" for the PS3. The Financial Times reports Sony said an estimated €400 million of PS3-related sales were made over the weekend in Europe for consoles, games and peripherals. The FT also notes the PS3 launch has smashed that of the PS2, which took several weeks to reach similar levels. One reason for its initial success is loyal fans waiting for the console's Europe debut. Also, there are more games available for the PS3 than its rivals when they were launched. Gartner is mentioned in the FT article, forecasting the PS3 will have outsold both the Xbox 360 and Wii by 2009, given a larger selection of games that will be made for the console.
Sources: Financial Times
Commentary: Microsoft to Offer 'Elite' Version of Xbox 360 • Microsoft vs. Sony vs. Nintendo: Demand Doesn’t Lie • Nintendo Wii Wins Console Sales Battle in February
Stocks/ETFs to watch: Sony (SNE). Competitors: Nintendo (OTCPK:NTDOY), Microsoft (MSFT). Gaming software publishers: Electronic Arts (ERTS), Activision (ATVI), Konami (KNM), Take Two (TTWO), THQ (THQI). ETFs: BLDRS Asia 50 ADR Index (ADRA), iShares S&P/TOPIX 150 Index (ITF), iShares MSCI Japan Index (EWJ)
CarMax Posts 15% Earnings Gain, Shares Drop 8%
CarMax Inc., #1 used-car dealer in the U.S., said Thursday morning its FQ4 2007 earnings increased 15% on strong sales from both its store-based and internet sales divisions. Net earnings went from $36.7 million in Q4 2006 to $42.1 million this year. On the year, earnings jumped 48% to $199 million. EPS were up from $0.17 to $0.19, and $0.92 for the year. Total Q4 sales revenues were up 16% to $1.88 billion, and up 19% on the fiscal year for a total of $7.47 billion in sales. Its CarMax Auto Finance unit saw a 25% rise in income to $31.7 million. CarMax said it plans to open 13 new used car superstores in F2008, along with three additional car buying centers. It forecast F2008 sales growth of 14-20%, and EPS of $1.03-$1.14. CarMax fell just short of analyst Q4 earnings estimates of $0.21/share on revenues of $1.9 billion. In the pre-market, shares are down 8% to $24.95 as of 8:20 ET.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: CarMax: Fast Earnings, Huge Turnover • CarMax's Impressive Growth? We Believe They're Just Getting Started • CarMax Underappreciated by Wall Street (KMX) • CarMax Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Carmax Inc. (KMX). Competitors: AutoNation Inc. (AN), United Auto Group Inc. (UAG), Sonic Automotive Inc. (SAH), Copart Inc. (CPRT), Group 1 Automotive Inc. (GPI)
Ericsson's CEO Suggests More Multimedia Acquisitions
Ericsson CEO Carl-Henric Svanberg told the Svenska Dagbladet newspaper, a Swedish daily, that he sees more acquisitions on the horizon to grow the firm's multimedia division, according to a report by Reuters. He was upbeat about the division's prospects, but said networking equipment will continue to be Ericsson's largest business over the next five years. Recent acquisitions include a Norwegian digital broadcast systems maker and an IP messaging components company. Svanberg is quoted saying, "There will be more acquisitions on the multimedia side. We do not need to take a breath just because we have made several acquisitions." In addition, he said the Alcatel-Lucent merger has helped Ericsson with the merger of two competitors in one.
Commentary: Sony Ericsson to Target Lower-end Cell Phone Segment • Ericsson Outbids Arris in Grab for Tandberg TV • Sony Ericsson Sees Opportunity in Mobile TV
Stocks/ETFs to watch: Ericsson (ERIC). Competitors: Alcatel-Lucent (ALU), Siemens (SI), Motorola (MOT), Nokia (NOK), Nortel (NT), Cisco (CSCO)
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Asian Headlines (via Bloomberg.com)
• Asian Energy Stocks Climb on Oil Price; BHP, Cnooc Advance, Sony Drops Asian energy stocks rose, led by BHP Billiton Ltd. (BHP) and Cnooc Ltd. after oil traded near a six-month high on concern supplies from the Middle East will be disrupted.
• Cnooc 2006 Profit Rises 22 Percent, Slowest Pace Since 2002 on Oil Prices Cnooc Ltd. (CEO), China's largest offshore oil producer posted the smallest second-half profit growth in three years after crude prices fell from a record and output suffered because of a typhoon.
• China's ICBC Overtakes Bank of America as Second-Biggest by Market Value Industrial & Commercial Bank of China Ltd. overtook Bank of America Corp. (BAC) as the world's second-most valuable financial firm, even though the Beijing-based company earns about one-third the profit.
• Mizuho Values Investment Bank at $6.5 Billion in Shinko Securities Deal Mizuho Financial Group Inc. (MFG), Japan's second-largest bank, agreed on terms for its acquisition of Shinko Securities Co., a deal that will create the nation's third-biggest brokerage by revenue.
• Prince to Add Citigroup Jobs in Asia; Investors Pressure Bank to Cut Costs Citigroup Inc. (C) Chief Executive Officer Charles Prince may add more than 10,000 employees in Asia through acquisitions as the biggest U.S. bank presses for growth in some of the world's fastest-growing economies.
European Headlines (via Bloomberg.com)
• European Stocks Advance, Led by Air France, Compass, KarstadtQuelle Shares European stocks climbed for the first time in four days on speculation this week's declines have overstated the threat of an economic slowdown in the U.S.
• Retail Sales in Europe Rise for First Time in Three Months, Led by Germany European retail sales rose for the first time in three months in March as German consumer spending recovered from a tax increase at the beginning of the year.
• 3i to Return $1.6 Billion to Shareholders After Cash From Asset Sales Rose 3i Group Plc, Europe's largest publicly traded buyout firm, plans to return 800 million pounds ($1.6 billion) to shareholders, its third such payment in as many years, after an increase in cash from asset sales.
• HSBC Plans to Scale Back U.S. Subprime Mortgage Division to Recover Losses HSBC Holdings Plc (HBC) Chairman Stephen Green said the U.S. subprime mortgage services division will be ``run down significantly'' as the world's fourth-biggest bank by market value tries to recover from loan losses.
• Diageo Prefers to Buy Drink Brands, Is Considering Bid to Acquire Absolut Diageo Plc (DEO), the world's largest liquor maker, would rather buy drink brands than make a ``transformational'' acquisition, and is considering bidding for Absolut vodka, Chief Executive Officer Paul Walsh said.