Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:54 AM EST
S&P 500: +7.20; 1,487.50
NASDAQ 100: +11.50; 1,860.50
Dow: +77.00; 12,948.00
NIKKEI 225: +0.46%; 17,452.62 (+80.65)
HANG SENG: +1.31%; 20,566.59 (+266.88)
S&P/ASX 200: +0.69%; 6,207.50 (+42.40)
BSE SENSEX 30: +2.04%; 13,897.41 (+277.71)
FTSE 100: +0.82%; 6,493.20 (+52.60)
CAC 40: +1.44%; 5,913.19 (+84.15)
XETRA-DAX: +1.31%; 7,337.35 (+94.62)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +1.41%; $62.70 (+$0.87)
Gold: +1.13%; $696.10 (+$7.80)
Natural Gas: -0.33%; $7.47 (-$0.02)
Silver: +1.42%; $13.93 (+$0.195)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Caterpillar Shares Spike On Beat and Raise Quarter
Caterpillar reported a 2.9% decline in net income to $816 million, due to higher core operating costs, a higher tax rate and other one-off items. EPS however, came in at $1.23 (vs. $1.20 last year), well ahead of analysts' average estimates of $1.08 (Bloomberg) to $1.09 (Thomson), as it had 34 million fewer shares outstanding. Revenues rose 7% to $10.02b, topping the Street's consensus estimate of $9.12b. These were record results for Caterpillar, despite "severe weakness" in N. American on-highway truck engines and U.S. housing-related markets. Caterpillar predicts the Fed will cut interest rates by 0.5% and sees weak U.S. housing starts of 1.5m in '07. Still, based on worldwide strength, Caterpillar upward revised both its full-year '07 EPS and sales guidance to $5.30 - $5.80 (from $5.20 - $5.70) and $42b - $44b (from $41.5b - $43.6b), respectively. Analysts were expecting $5.46/share on sales of $39.87b. Shares of Caterpillar last traded at $72.55 (+5.7%) in the pre-market on volume approaching 500,000 shares. It lost 1.1% to $68.62 in normal trading yesterday.
Sources: Press release [i, ii], Bloomberg, MarketWatch
Commentary: Housing Slowdown Hitting Other Industries With a Lag • Komatsu: The Japanese Caterpillar
Stocks/ETFs to watch: Caterpillar (NYSE:CAT). Competitors: CNH Global NV (NYSE:CNH), Komatsu (OTCPK:KMTUY), Volvo AB (VOLV). ETFs: DIAMONDS Trust, Series 1 (NYSEARCA:DIA), Industrial Select Sector SPDR (NYSEARCA:XLI), PowerShares Dyn Building & Construction (NYSEARCA:PKB), iShares Dow Jones US Industrial (NYSEARCA:IYJ)
Pfizer's Earnings Beat, But Shares Slip On Lowered Outlook
Pfizer saw its net earnings slip 18% (after one-time items) in the first quarter, but the company still managed to top estimates by $0.11 a share. Still, its shares slipped nearly 1.4% in pre-hours trading, as the company was forced to lower its outlook for FY2007 to $2.08-$2.15 a share before items; the Street had projected EPS to be $2.16 for the year. Net income declined to $3.39 billion (EPS of $0.48); excluding restructuring costs, EPS was $0.68 on revenue of $12.5 billion. Consensus estimates called for EPS of $0.57 cents on revenue of $11.77 billion. Greater competition from generics is expected to take a bite out of the company's full year earnings. Particularly, Pfizer cited a court ruling that allowed sales of generic versions of blood pressure med Norvasc to begin during the last week of the first quarter, six months earlier than expected. As the company's second-biggest-selling drug, competition from generics is expected to lower full year Norvasc sales by $1.2 billion. Sales of anti-depressant Zoloft were also hurt by generic competition in the quarter.
Sources: Press Release, Bloomberg, MarketWatch, Reuters
Commentary: FDA Refuses Approval To Generics Of Pfizer Drug, Except Mylan • A Few Lessons From Exubera • Pfizer and Mylan Fight to Defend Norvasc Against Generics
Stocks/ETFs to watch: Pfizer (NYSE:PFE). Competitors: Amgen (NASDAQ:AMGN), Biogen (NASDAQ:BIIB), Bristol Myers Squibb (NYSE:BMY), Glaxosmithkline (NYSE:GSK), Eli Lilly (NYSE:LLY), Teva (NYSE:TEVA), Merck (NYSE:MRK), Schering-Plough (SGP), Sanofi-Aventis (NYSE:SNY), AstraZeneca (NYSE:AZN). ETFs: iShares Dow Jones US Pharmaceutical Indx (NYSEARCA:IHE), Pharmaceutical HOLDRS (NYSEARCA:PPH), Vanguard Health Care ETF (NYSEARCA:VHT)
Xerox Q1 Profit and Sales Rise, Beat; Q2 Guidance In-line
Xerox reported Q1 net income grew 16.5% to $233 million, or $0.24/share (including a $0.02 restructuring charge), beating analysts' average EPS estimates of $0.20 (Thomson) to $0.21 (Bloomberg). Revenues rose 3.8% to $3.84b, ahead of analysts' expectations of $3.81 (Bloomberg) to $3.82b (Thomson). Xerox projects Q2 EPS of $0.26 - $0.27, compared to analysts' average estimate of $0.27. The chief investment officer at Fischer Investment Group commented: "They continue to be strong and stable. They need to keep improving, and they've addressed their issue somewhat through the acquisition of Global Imaging [announced earlier this month for $1.5B]." CEO Anne M. Mulcahy believes that "along with progress on the top line, excellent operational performance and improved margins [gross at 40.6%, +0.5% y-o-y] led to a 17% increase in net income and earnings that exceeded our expectations." Ordinary shares of Xerox lost 0.33% to $18.08 during normal trading yesterday. There was no pre-market activity at the time of publishing.
Sources: Press release [pdf], Bloomberg, MarketWatch
Commentary: Xerox to Acquire Global Imaging Systems for $1.5B • Earnings Outlook for Week of April 16 • Xerox Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Xerox (NYSE:XRX). Competitors: IKON Office Solutions (IKN). ETFs: PowerShares Dyn Hardware&Con Electronics (PHW)
Related: Xerox Q1 earnings related documents
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Rebound as Concern of Global Rout Eases; BHP, Toyota Rise Asian shares rose after a record close on the Dow Jones Industrial Average eased concern a slump in China yesterday would precipitate a global sell-off.
• China Citic Bank Raises $5.4 Billion in the World's Biggest IPO This Year China Citic Bank Corp. sold $5.4 billion of stock in the world's biggest offering this year, said two people with direct knowledge of the matter.
• China Mobile First-Quarter Profit Rises 22 Percent on Record Gain in Users China Mobile Ltd. (NYSE:CHL), the world's largest mobile-phone operator by market value, said first-quarter profit rose 22 percent on a record gain in subscribers.
• KKR, Westpac, Macquarie Bid as Much as $831 Million for RAMS, People Say Kohlberg, Kravis Roberts & Co. and General Electric Co. (NYSE:GE) offered as much as A$1 billion ($831 million) to buy Australia's RAMS Mortgage Corp., six people with knowledge of the matter said.
• China Telecom First-Quarter Profit Rises on High-Speed Internet Services China Telecom Corp. (NYSE:CHA), the nation's biggest fixed-line telephone carrier, posted a 3.4 percent increase in first-quarter profit as more consumers subscribed to the company's high-speed Internet services.
European Headlines (via Bloomberg.com)
• Stocks in Europe Climb, Led by Alliance Boots; Societe Generale Advances European stocks climbed for the first time in three days after Alliance Boots Plc (OTC:ABOYY) received a sweetened $21.3 billion offer and takeover speculation intensified in the banking and steel industries.
• Hands Raises Alliance Boots Bid to $21.8 Billion to Top KKR, Pessina Offer Guy Hands's Terra Firma Capital Partners Ltd. raised its bid for Alliance Boots Plc (OTC:ABOYY), the U.K.'s largest drugstore chain, to about 10.9 billion pounds ($21.8 billion) to trump an offer from Kohlberg Kravis Roberts & Co.
• Pound May Extend Rally After Reaching 26-Year High, Currency Options Show The British pound's rally to the highest in 26 years may continue as options traders and money managers grow more bullish about the currency.