Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:54 AM EST
S&P 500: +3.60; 1,479.00
NASDAQ 100: +4.50; 1,852.75
Dow: +29.00; 12,798.00
NIKKEI 225: -0.57%; 17,527.45 (-100.85)
HANG SENG: +0.15%; 20,788.61 (+31.08)
S&P/ASX 200: -0.18%; 6,186.50 (-11.20)
BSE SENSEX 30: -0.65%; 13,607.04 (-88.54)
FTSE 100: -0.51%; 6,482.90 (-33.30)
CAC 40: +0.00%; 5,862.07 (+0.10)
XETRA-DAX: +0.19%; 7,351.95 (+13.89)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.75%; $64.09 (+$0.48)
Gold: +0.01%; $694.60 (+$0.10)
Natural Gas: -1.20%; $7.44 (-$0.09)
Silver: -0.46%; $14.015 (-$0.065)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Housing Starts Beat Forecasts, CPI Lower Than Expected
New home starts rose 0.8% in March on warm weather, according to Commerce Department estimates released Tuesday morning. The seasonally adjusted rate of 1.518 million is the highest level so far in 2007. Building permits were also up 0.8% to 1.544 million. The estimates beat economist forecasts of housing starts of 1.5 million and permits of 1.52 million. Year over year, housing starts dropped 23% and permits 26%. Starts in the Midwest jumped 44% to lead all regions. New home completions were down 0.7% to 1.63 million annually -- the lowest rate since August 2003. The Department of Labor said this morning March CPI in the U.S. increased 0.6%, fueled by a 5.9% rise in energy prices --– the fastest in over two years. Economists had forecast a 0.7% rise in CPI, following a 0.4% increase in February. Core CPI (ex-food and energy) was up 0.1%, less than the 0.2% expected by economists and the lowest reading since December.
Sources: Housing Starts press release (.pdf), CPI press release (.pdf), MarketWatch I, II
Commentary: Inflation Confined to Rest of the World • Inflation Outlook Remains Cloudy: Fresh Numbers, Old Questions • Even The NAR Expects Further Housing Price Drops
Stocks/ETFs to watch: S&P 500 Index (NYSEARCA:SPY), Diamonds Trust Series 1 ETF (NYSEARCA:DIA), iShares Lehman Aggregate Bond (NYSEARCA:AGG)
Johnson & Johnson Beats Forecasts, Shares Up 3%
Johnson & Johnson said this morning its Q1 net income fell 27% to $2.6 billion ($0.88/share) from $3.3 billion ($1.10) in Q1 2007. Excluding items, EPS was $1.16, beating analyst consensus estimates of $1.05/share, and 17% higher than a year ago. Customer sales rose 14% to $15.04 billion, ahead of the $14.44 billion forecast by Thomson Financial. The company cited strong growth in its pharmaceutical business. CEO William C. Weldon: "Our solid first-quarter results demonstrate the strength of our broadly- based businesses, especially the strong performance of our pharmaceutical business." However, the company was forced in March to warn patients that its anemia drug Procrit ($3.2 billion in 2006 sales) raised risks of death, heart attack and stroke. Cypher stent ($2.6 billion) sales dropped after European regulators linked the devices to higher risk of blood clots. Leerink Swann & Co analyst Bruce Cranna: "Procrit and Cypher are going to drive weakness in J&J's pharmaceutical and device operations for several more quarters." Shares are up 3% to $64.90 in pre-market trading.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Johnson & Johnson: Capitalize On Its Growth • Johnson & Johnson: Stock Climbs While Valuation Falls • Ten Takeaways From Buffett's Annual Letter
Stocks/ETFs to watch: Johnson & Johnson (NYSE:JNJ). Competitors: Pfizer Inc. (NYSE:PFE), Proctor & Gamble Co. (NYSE:PG), Boston Scientific Corp. (NYSE:BSX), Novartis AG (NYSE:NVS), Abbott Laboratories (NYSE:ABT), Merck & Co. Inc. (NYSE:MRK), Schering-Plough Corp (SGP). ETFs: Pharmaceutical HOLDRs (NYSEARCA:PPH), iShares Dow Jones US Pharmaceuticals (NYSEARCA:IHE)
Coke Beats by a Penny, Shares Trading Higher
Coca-Cola reported Q1 net income of $1.26 billion, or $0.54/share, a 13.5% year-over-year increase and a penny better than Wall Street estimates. Revenues rose 16.6% to $6.1 billion, also beating analysts' average estimate ($5.63b). Coke says worldwide unit case volume growth of 6% on the quarter was its highest since 2002, led by international operations (up 9%), which helped offset a 3% decline in N. America. President and COO Muhtar Kent commented in a press release: "We know what we need to do in North America and are carefully addressing the issues. It will take some time to achieve the results we desire in this key market, but we expect sequential improvement as we move into the second half of the year." Coke said it repurchased $676m of its stock in Q1 and plans to buyback $2.5b - $3.0b for the full year. Shares of Coca-Cola gained 0.8% to $50.27 yesterday, its highest close since July '04. In pre-market activity, Coke is up about 1% to $50.75 (trading between $50.60 - $51.25) on volume of over 114,000.
Sources: Press release [Complete results in pdf], MarketWatch
Commentary: Jim Cramer's Take on Coca-Cola • Coca-Cola Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Coca-Cola (NYSE:KO). Competitors: PepsiCo (NYSE:PEP), Cadbury Schweppes (NYSE:CSG), Nestle (OTCPK:NSRGY). ETFs: Consumer Staples Select Sector SPDR (NYSEARCA:XLP), iShares Dow Jones US Consumer Goods (NYSEARCA:IYK), Vanguard Consumer Staples (NYSEARCA:VDC)
EMC Shares Gain On Earnings Beat
Shares of EMC Corp. jumped 2.64% to $15.15 in pre-market trading on the company's earnings beat. By the numbers, EMC's net income rose 15% in the first quarter to $312.6 million, good for EPS of $0.15, up from a profit $272.5 million (EPS of $0.11) in the year earlier period. Revenue was higher by 17% to $2.98 billion, up from $2.55 billion a year ago. Thomson Financial consensus estimates were for EPS of $0.13 on revenue of $2.94 billion. EMC said it is firmly on track to meet 2007 financial targets. Looking forward to the rest of FY2007, EMC Chairman, President and CEO, Joe Tucci, said his company's "first-quarter performance and our focus on integration and execution place us firmly on track to meet our financial targets for 2007."
Sources: Press Release, TheStreet.com, Reuters, MarketWatch. [Check back for TRANSCRIPTS FOR EMC »">EMC's conference call transcript later today]
Commentary: Bullish On EMC For Core Business And VMware • EMC Has Authentic Value - Barron's • EMC Boosts Earnings on Strong Demand for Storage • Conference call transcripts: EMC Q4 2006 Earnings Call Transcript
Stocks/ETFs to watch: EMC Corp. (EMC). Competitors: Hewlett-Packard Co. (NYSE:HPQ), International Business Machines Corp. (NYSE:IBM), Dell Inc. (NASDAQ:DELL), Sun Microsystems Inc. (NASDAQ:SUNW), Seagate Technology (NASDAQ:STX), NCR Corp. (NYSE:NCR). ETFs: PowerShares Dynamic Hardware & Consumer Electronics (PHW), HOLDRS Internet Architecture (NYSE:IAH)
Dow Jones Posts Earnings Beat, WSJ Ad Revenue Down
Dow Jones & Co. said Tuesday morning its Q1 net income fell 63% to $22.6 million ($0.27/share) from $61.5 million ($0.74/share) in Q1 2006. Last year's earnings were boosted by the partial reversal of a lawsuit reserve. Before items, EPS was $0.24, beating analyst average estimates of $0.19 and up from $0.14 last year. Revenue rose 18% to $507 million vs. estimates of $510 million, driven by Dow Jones' recent acquisition of the half of business information provider Factiva it didn't already own. Ad revenue at the Wall Street Journal, the #2 newspaper by circulation in the U.S., was down 1.8%. The Journal won Two Pulitzer Prizes this week, for its reporting on stock options backdating, and on China's booming economy. Dow Jones, which owns Barron's and MarketWatch, is the first U.S. newspaper publisher to report earnings this season. Analysts are calling for an average 5% drop in revenue and an 18% drop in EPS -- the industry's biggest in five years. Shares are flat ($35.11) in pre-market trading.
Sources: Press release I, II, MarketWatch, Bloomberg
Commentary: Dow Jones Capitalizing on the Changing Media Market • Dow Jones Capitalizing on the Changing Media Market • Death of the Newspaper
Stocks/ETFs to watch: Dow Jones & Company Inc. (DJ). Competitors: Gannett Co. Inc. (NYSE:GCI), Tribune Company (TRB), The New York Times Co. (NYSE:NYT), Washington Post Co. (WPO), News Corp. (NASDAQ:NWS), Yahoo! Inc. (NASDAQ:YHOO), Reuters Group PLC (RTRSY)
Conference call transcript: Dow Jones Q4 2006 Earnings Call Transcript, Dow Jones & Co. Earnings Conference Call Transcript (later today)
Intel Unveils New Products Including System-On-A-Chip Processors
Intel announced twenty new products at its semiannual developer conference, which is being held in Beijing for the first time ever. One of two system-on-a-chip (SoC) products -- a new area for Intel -- is code-named "Tolapai." In 2008, Tolapai is expected to reduce chip sizes by 45% and power consumption by around 20%, compared to standard four-chip design. Tolapai is designated for use in devices such as industrial-control systems and special-purpose handheld computers used by businesses, according an Intel spokesman. The second SoC is unnamed, but will be used in digital set-top boxes and networked media players. Also, a working version of its 45nm Penryn processor was on display. Intel's CTO says Penryn will begin production "late this year" and be on sale by year's end. Intel announces Q1 earnings after the market closes today. Its shares gained 1.1% to $20.69 during normal trading yesterday.
Sources: Press releases [i, ii], Bloomberg, The Wall Street Journal
Commentary: Intel Unveils ‘Tolapai’ System-On-A-Chip Program • Intel Details Penryn and Nehalem Processors • IBM Announces 3-D Chip Stacking • Intel Q1 Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Intel (NASDAQ:INTC). Competitors: Advanced Micro Devices (NYSE:AMD), International Business Machines (IBM). ETFs: Semiconductor HOLDRs (NYSEARCA:SMH), iShares Goldman Sachs Semiconductor (IGW), SPDR Semiconductor (NYSEARCA:XSD)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Slide From Seven-Week High; BHP Billiton, China Life Decline Asian stocks fell from a seven-week high, with benchmarks in Australia and South Korea retreating from records. BHP Billiton (NYSE:BHP) and China Life Insurance Co. (NYSE:LFC), drivers of the recent rally, led declines.
• European Trade Deficits With China, Japan Expand, Adding Currency Pressure Europe's trade deficits with China and Japan continued to expand in January, underscoring concerns among European officials that the yen and the yuan need to strengthen against the euro.
• India's Rupee Extends April Gains to 4.2 Percent on Buying by Exporters India's rupee rose for a fourth day, bringing its gains this month to 4.2 percent, on speculation exporters are rushing to buy the currency to protect earnings.
• China Southern Narrows Fourth-Quarter Loss as Yuan Gains Offset Fuel Costs China Southern Airlines Co. (NYSE:ZNH), the country's biggest carrier, narrowed its fourth-quarter loss 85 percent as gains from a stronger yuan countered higher jet fuel and borrowing costs.
European Headlines (via Bloomberg.com)
• U.K. Inflation Quickens to Fastest Pace in a Decade, Sending Pound to $2 U.K. inflation unexpectedly accelerated to 3.1 percent in March, the fastest pace in a decade, sending the pound to $2 for the first time since September 1992 on speculation interest rates will keep rising.
• German Investor Confidence Surges More Than Estimated to a 10-Month High German investor confidence rose to a 10-month high in April on evidence Europe's largest economy is overcoming the effects of a U.S. slowdown and a rising euro.
• Tesco Second-Half Profit Rises 18 Percent; Retailer Doubles Stock Buyback Tesco Plc's (OTCPK:TSCDY)) second-half profit increased 18 percent after the U.K.'s biggest retailer expanded stores and sold more flat-screen televisions and clothes.
• Debenhams Full-Year Profit to Miss Analysts' Estimates as Sales Decline Debenhams Plc, Britain's second- largest department-store chain, said profit this year will trail analysts' estimates as increased competition from Marks & Spencer Group Plc hurts clothing sales. The stock had a record decline.