Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:52 AM EST
S&P 500: -5.30; 1,473.70
NASDAQ 100: -12.50; 1,839.75
Dow: -31.00; 12,795.00
NIKKEI 225: +0.80%; 17,667.33 (+139.88)
HANG SENG: -0.06%; 20,777.09 (-11.52)
S&P/ASX 200: +0.81%; 6,236.90 (+50.40)
BSE SENSEX 30: +0.48%; 13,672.19 (+65.15)
FTSE 100: -0.75%; 6,449.00 (-48.80)
CAC 40: -0.71%; 5,816.32 (-41.82)
XETRA-DAX: -1.22%; 7,258.99 (-89.84)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.40%; $62.85 (-$0.25)
Gold: -0.06%; $692.10 (-$0.40)
Natural Gas: +0.75%; $7.47 (+$0.06)
Silver: -0.57%; $13.94 (-$0.08)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Motorola: Q1 Loss, In-line with Estimates, Q2 Guidance Disappoints
Motorola posted a Q1 loss of $181 million, or $0.08/share, compared to a $686m ($0.27/share) profit in the year earlier; but excluding certain items EPS was $0.02, in-line with analysts' average estimate of $0.01 - $0.02. Sales were down 1.8% to $9.43b, beating the Street consensus estimate of $9.25b. Q2 guidance for EPS of $0.02 - $0.03 and sales of $9.4b, is short of analysts' expectations of $0.08 on revenue of $9.98b. Motorola said it "expects to see gradual quarterly improvements in both sales and operating margin in the second half of the year." CEO Ed Zander commented: "As I said a few weeks ago, the performance in our Mobile Devices business in the first quarter is unacceptable and we are committed to restoring it to an appropriate level of profitability." Zander also said Motorola will "accelerate the repurchase of $2.0 billion of our shares under our current share repurchase program." Shares of Motorola gained 0.7% to $17.95 in normal trading yesterday, and last traded at $18.15 (+1.1%) in pre-market activity (range: $17.78 - $18.15) on volume approaching 390,000.
Sources: Press release, Bloomberg
Commentary: Motorola: Piper Jaffray Cautious, I'm Bullish • Earnings Preview: Four Companies That Could Surprise • Icahn Pushes for Motorola Board Seat; Urges Postponement of Buyback • Motorola Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Motorola Inc. (MOT). Competitors: LM Ericsson Telephone Co. (NASDAQ:ERIC), Nokia Corp. (NYSE:NOK). ETFs: Broadband HOLDRs (NYSE:BDH), Wireless HOLDRs (NYSEARCA:WMH), Vanguard Information Technology (NYSEARCA:VGT)
JPMorgan Chase Trounces Forecasts for Ninth Straight Quarter
JP Morgan Chase, #3 bank in the U.S. by market cap, said Wednesday morning its Q1 net income jumped 55% on strong client growth, record earnings in investment banking, and private equity gains. Net income was $4.8 billion ($1.34/share), compared with $3.1 billion ($0.86) in Q1 2006. Total net revenue rose 25% to a record $18.97 billion. Both earnings and revenues were well ahead of analyst forecasts of $1.02 and $16.9 billion respectively. It was the bank's ninth straight earnings beat. Profit from investment banking was up 81% ($1.54 billion); the company advised on 68 completed takeovers valued at $134.7 billion during the quarter. Its consumer banking arm was down 2%. Return on equity was 17% vs. 11% a year ago. The company also increased its dividend for the first time in six years, by 12% to $0.38, and initiated a $10 billion stock repurchase program, replacing a previous $8 billion program in which $850 million remained unspent. Its provision for credit losses was $292 million, up by $207 million from the prior year due to higher losses in the subprime mortgage portfolio and an increased provision in the home equity portfolio related to weaker housing prices. CEO Jamie Dimon: "The firm’s strong results include some benefit from the generally favorable credit environment, which we do not expect to continue indefinitely." Share are up 2.65% to $51.51 in pre-market trading.
Sources: Press release, MarketWatch, Bloomberg
Commentary: JP Morgan Chase and the Pakistan Steel Acquisition: Draw A Line in the Sand • U.S. Investment Banks Likely to Continue Enjoying High IPO Fees • Where's the Money Flowing in Financial Stocks?
Stocks/ETFs to watch: JPMorgan & Chase Co. (NYSE:JPM). Competitors: Bank of America Corp. (NYSE:BAC), Citigroup Inc. (NYSE:C), Merrill Lynch & Co. Inc. (MER), Bear Stearns Companies Inc. (NYSE:BSC), Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc. (NYSE:GS). ETFs: streetTRACKS KBW Capital markets (NYSEARCA:KCE)
United Tech. Posts 6.6% Earnings Rise
Industrial manufacturer United Technologies, a Dow component, said this morning its net income rose 6.6% in Q1 2007 on growth in its aerospace and commercial construction units. EPS were $0.82 ($819 million) vs. $0.76 ($768 million) in Q1 2006. Excluding items, such as a $295 million fine levied by the European Commission for violation of competition rules, earnings were $0.89/share, beating consensus analyst estimates of $0.80. Revenue jumped 16% to $12.28 billion, ahead of Street forecasts of $11.48 billion. Orders in its Otis elevator unit were up 27%, and revenue in its Carrier air conditioning unit went from $2.9 billion to $3.13 billion (+13%), despite a weaker U.S. housing market; over 60% of the company's sales are overseas. The company reiterated 2007 earnings forecasts of $4.05-$4.20/share. Shares are up 1.25% to $67.00 in pre-market trading.
Sources: Press release, MarketWatch, Bloomberg
Commentary: The Short Case for United Technologies • United Technologies: Ride The Aerospace Upturn • You've Got to Go With the (Money) Flow!
Stocks/ETFs to watch: United Technologies Corp. (NYSE:UTX). Competitors: General Electric Co. (NYSE:GE), Honeywell International Inc. (NYSE:HON), Boeing Co. (NYSE:BA). ETFs: Diamonds Trust Series 1 ETF (NYSEARCA:DIA), iShares Dow Jones US Aerospace & Defense (NYSEARCA:ITA)
Bank of N.Y., PNC Financial Beat Estimates; PNC Profit Jumps 30%
Two major regional banks reported earnings this morning: The Bank of New York reported first quarter profits rose 3%, while PNC Financial Services reported its first quarter profit jumped 30%. By the numbers, The Bank of New York's net earnings rose to $434 million, good for EPS of $0.57, versus $422 million (EPS of $0.55) in the year earlier period. Adjusted earnings were $0.59 a share on revenue of $1.9 billion. Thomson First Call forecast earnings of $0.57 on revenue of $1.88 billion. Meanwhile, PNC Financial Services said its first-quarter earnings jumped to $459 million, good for EPS of $1.46, up from $354 million (EPS of $1.19) a year earlier. Excluding one-time items, earnings were $1.38 a share on slightly lower revenue of $1.71 billion (adjusted revenue was $1.56 billion). Thomson Financial consensus estimates were for EPS of $1.32 a share on revenue of $1.6 billion.
Sources: Bank of New York: Press Release, MarketWatch, Reuters. PNC Financial Services: Press Release, AP, MarketWatch
Commentary: Bank of NY-Mellon: Historic Merger, Poised for Future Growth • Cramer's Take on BK • Regional Bankers Offering Bundled-Product Model, M & A Advice to Mid-Tier Companies
Stocks/ETFs to watch: Bank of New York (NYSE:BK), PNC Financial Services (NYSE:PNC). Competitors: Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wachovia (NASDAQ:WB), Wells Fargo (NYSE:WFC). ETFs: streetTRACKS KBW Bank (NYSEARCA:KBE), iShares Dow Jones US Regional Banks (NYSEARCA:IAT), Regional Bank HOLDRs (NYSEARCA:RKH)
Linear Tech's Q3 Earnings Down, But In-line; Shares Soar on Buyback News
Linear Technology said Q3 net income fell 11% to $98.6 million, or $0.32/share, on a 9% decline in revenue to $255m. This is in-line with analysts' average estimates of $0.32/share on sales of $254m. Its shares are up around 10% outside of normal trading on news of a $3b share repurchase, which it said it will finance with cash and a $1.7b convertible note issue. Linear CEO Lothar Maier described the quarter as "difficult" and commented: "Although inventory in the marketplace appears to be more balanced than in previous quarters, visibility continues to be low and customers remain guarded in their forecasting and inventory management. In summary, we currently expect revenue to increase 3% to 6% with operating margins up similarly.” Shares of Linear Tecnology gained 0.8% to $32.12 during normal trading yesterday, but jumped 9.3% to $35.10 in the after-hours (range: $31.91 - $35.38) on volume of 2.27m shares. In the pre-market today, Linear has traded as high as $35.69, last at $35.40, on volume of about 50,000.
Sources: Press release (i, ii), Associated Press
Commentary: Maxim, Analog Devices Enjoy Good News From Linear • The Chip Glut Is Beyond Semi-Serious • Barron's: Who Will Be the Next Motorola? • Linear Technology Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Linear Technology (NASDAQ:LLTC). Competitors: Analog Devices (NYSE:ADI), National Semiconductor (NYSE:NSM), Texas Instruments (NYSE:TXN). ETFs: SPDR S&P Semiconductor (NYSEARCA:XSD), Semiconductor HOLDRs (NYSEARCA:SMH), First Trust NASDAQ Clean Edge US Liquid (NASDAQ:QCLN)
AOL 'First Look' Shows Upcoming Programs To Advertisers Before the Networks
In what it has described as a "coming out party for AOL" as a major online advertising platform, TimeWarner's internet unit invited more than 500 advertising executives to its "First Look" showcase Tuesday at Time Warner corporate headquarters. According to AOL CEO Randy Falco, his company is "interested in is making sure when advertisers and agencies are deciding what their budgets are for the coming year, they understand there's an enormous shift going on." The AOL initiative involves an ad-supported site where users can submit photos, video and stories for use on five upcoming programs including "The Ellen DeGeneres Show" and three games, including a second season of reality TV show "Gold Rush." The "First Look" showcase beats the major networks to the punch; they usually do their "upfronts" in May, in an attempt to pre-sell the bulk of the ad slots for their expected hit shows. According to Falco, "We're trying to get out there in front of the traditional broadcast upfronts so we can remind people who control budgets just how important online is becoming to their marketplace." Yahoo held similar events in February in New York and L.A.
Sources: Wall Street Journal/AP, AP, Reuters
Commentary: The Irony! Time Warner Considers Selling Cable To Focus On Internet • Time Warner's Attempts to Embrace New Media • Time Warner Mulls Its Options With Future of Cable Stake- WSJ
Stocks/ETFs to watch: Time Warner (NYSE:TWX), Yahoo (NASDAQ:YHOO). Competitors: Disney (NYSE:DIS), CBS (NYSE:CBS), News Corp. (NASDAQ:NWS), General Electric (GE), Google (NASDAQ:GOOG). ETFs: PowerShares Dynamic Media Portfolio ETF (NYSEARCA:PBS), PowerShares Dynamic Leisure & Entertainment (NYSEARCA:PEJ), Internet HOLDRS (NYSE:HHH)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Climb to a Record; Orica Jumps, Japanese Developers Advance Asian stocks rose to a record after Orica Ltd. received an $8.3 billion takeover offer and Tokyu Land Corp.'s earnings exceeded the company's forecast.
• Orica Rejects $8.3 Billion Takeover Bid Led by Blackstone, Bain as Too Low Orica Ltd., the world's largest explosives maker, rejected a A$9.95 billion ($8.3 billion) takeover bid led by Bain Capital Partners and Blackstone Group LP as too low.
• Advanced Semiconductor Shares Climb After Carlyle Scraps $5.7 Billion Bid Shares of Advanced Semiconductor Engineering Inc. (NYSE:ASX) rose after U.S. buyout firm Carlyle Group withdrew a bid to buy the world's largest chip-packager and tester because the Taiwan company said the offer was too low.
• GM Plans to Almost Double China Production by 2010 to Match Growing Demand General Motors Corp. (NYSE:GM), the largest overseas automaker in China, may almost double its production in the country to 1.7 million vehicles a year by 2010 to keep pace with growing demand.
• Lehman Brothers Names Kunho Cho as Bank's First Asia-Based Vice Chairman Lehman Brothers Holdings Inc. (LEH), the fourth-largest U.S. securities firm, said it appointed Kunho Cho as the firm's first Asia-based vice chairman.
European Headlines (via Bloomberg.com)
• European Stocks Decline, Led by Nokia, Atos Origin; Adidas Shares Advance European stocks fell for the first time in four days after earnings from U.S. companies including Yahoo! Inc. (YHOO) and International Business Machines Corp. (NYSE:IBM) disappointed investors.
• Pound Gains to Highest in More Than 25 Years After Bank of England Minutes The pound jumped to the strongest in more than a quarter-century after a U.K. report showed wage growth quickened and the Bank of England's minutes said two policy makers voted for higher interest rates.
• Wallenbergs of Sweden May Seek to Sell Gambro Dialysis Clinics, People Say Sweden's billionaire Wallenberg family is leading a group that may sell Gambro Healthcare, an owner of dialysis clinics in 15 countries, four people with knowledge of the plan said.
• Adidas Shares Rise on Speculation Apax May Buy Stake in Sportsgear Company Adidas AG (OTCQX:ADDYY) shares and credit-default swaps rose after Financial Times Deutschland said Apax Partners Worldwide LLP may buy 25 percent of the world's second-biggest sporting-goods maker.
• ABN Amro Is `Disingenuous' to Delay Royal Bank Talks, Shareholder TCI Says ABN Amro Holding NV's (ABN) refusal to meet with rival bidders to Barclays Plc (NYSE:BCS) before next week is ``disingenuous and disadvantageous for shareholders,'' according to London-based TCI Fund Management LLP.