Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:52 AM EST
S&P 500: -1.30; 1,491.80
NASDAQ 100: -0.50; 1,862.00
Dow: -1.00; 13,018.00
NIKKEI 225: +0.02%; 17,455.37 (+2.75)
HANG SENG: -0.05%; 20,556.57 (-10.02)
S&P/ASX 200: +0.03%; 6,209.20 (+1.70)
BSE SENSEX 30: +0.22%; 13,928.33 (+30.92)
FTSE 100: -0.17%; 6,475.80 (-11.00)
CAC 40: -0.48%; 5,910.35 (-28.55)
XETRA-DAX: -0.06%; 7,338.17 (-4.37)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.41%; $64.37 (+$0.26)
Gold: -0.24%; $694.10 (-$1.70)
Natural Gas: -1.06%; $7.30 (-$0.08)
Silver: -0.47%; $13.89 (-$0.065)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Kimberly-Clark Beats, Reaffirms Full-Year Guidance
Kimberly-Clark Corp., maker of personal hygiene products Kleenex and Huggies, reported earnings this morning that surpassed analyst expectations, as well as the expectations it had set for itself a month ago. First quarter net earnings climbed 64% to $452 million, good for EPS of $0.98; excluding one-time items, adjusted earnings were $1.03 a share, up from $0.93 in the prior year period. The company had announced it expected to pull in EPS of "$1.01 or more" last month. Revenue was higher by 7.8% to 4.39 million on increased sales, reduced costs, and a lower effective tax rate. Thomson Financial analysts were expecting EPS of $1.01 on revenue of $4.27 billion. Kimberly-Clark's shares closed at a six-year high of $71.94 on Friday; they trade at 15.8 times next year's expected earnings, versus larger rival Procter & Gamble's shares, which go for 18.4 times next year's projected earnings. Kimberly-Clark reaffirmed its full-year adjusted EPS guidance of $4.10-$4.20.
Sources: Press Release, Bloomberg, MarketWatch, Reuters
Commentary: Consumer Staples Far Below 50-DMA: Buying Opportunity? • Kimberly Clark: Watch the Paper -- Barron's • Cramer's Take on KMB
Stocks/ETFs to watch: Kimberly-Clark Corporation (KMB). Competitors: The Procter & Gamble Company (PG), Playtex Products (PYX). ETFs: Consumer Staples Select Sector SPDR (XLP), Vanguard Consumer Staples ETF (VDC), PowerShares Dynamic Consumer Staples (PSL)
L-3 Communications Posts Earnings Beat, Buys Satellite Company
L-3 Communications reported this morning its Q1 earnings climbed 14% to $1.29/share on 14% higher sales ($3.3 billion) -- just beating analyst estimates of $1.27/share on revenue of $3.2 billion. The company raised 2007 EPS forecast to $5.65-$5.75 on sales of $13.2-$13.3 billion; its previous forecast was from $5.55-5.65/share on revenue of $12.9-$13.1 billion and analysts forecast $5.69/share on sales of $13.15 billion. In 2006, L-3 earned $4.22/share on revenue of $12.48 billion. Net income was up 17% to $162 million vs. $139 million in 2006 on strong sales of its military electronics and intelligence services to the DoD. Separately, the company announced it has completed its Jan. 31 acquisition of unmanned aerial vehicle technology provider Geneva Aerospace, and that it has agreed to acquire Global Communications Solutions, a leading provider of portable satellite communications [SATCOM] equipment and products. The GCS acquisition is expected to be completed in Q2, and to generate $90 million in sales this year. CEO Michael T. Strianese said the company continues to invest in new products and technologies and look for acquisitions that add meaningful synergies at attractive prices. He called today's results, "a very good start to the year." Shares are up 0.5% to $92.95 in pre-market trading.
Sources: Earnings press release, Acquisitions press release, MarketWatch, AP, Bloomberg
Commentary: Foolish Forecast: 3 in a Row for L-3? [Motley Fool] • L-3 Communications: Playing Defense • Jim Cramer's Take on LLL
Stocks/ETFs to watch: L-3 Communications Holdings Inc. (LLL). Competitors: Honeywell International Inc. (HON), Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC), Raytheon Company (RTN). ETFs: iShares Dow Jones US Aerospace & Defense (ITA), PowerShares Aerospace & Defense (PPA)
Delta: Q1 Loss Narrows, Plans to Exit Ch. 11 This Week
Delta Air Lines' Q1 net loss decreased to $130 million, after reporting a more than $2b loss in the same period last year. Excluding reorganization costs, its loss totaled $6m, compared to $356m last Q1. Delta benefited from lower operating costs and higher fares leading to an 11% increase in revenues to $4.14b. International passenger revenue rose 6.4% on higher capacity to Latin American and transatlantic markets. North American revenue increased 6.4%, despite a 5.4% capacity reduction. Reuters reports Delta "aims to exit Chapter 11 later this week ...." Shares of Delta trading on the pink sheets gained 10.8% to $0.205 on Friday, after having hit an all-time low of $0.145 earlier in the week.
Sources: MarketWatch, Reuters
Commentary: Positive Traffic Reports and Lower Oil Prices Boost Airline Stocks • US Airways Retracts Bid; Delta Reaches Deal with Creditors • Open Skies Agreement Between U.S. and China? Not Anytime Soon
Stocks/ETFs to watch: Delta Air Lines, Inc. (DALRQ.PK). Competitors: US Airways Group, Inc. (LCC), AMR Corporation (AMR), Southwest Airlines Co. (LUV), UAL Corp. (UAUA), JetBlue Airways Corp. (JBLU)
Hasbro Returns to Q1 Profitability, Easily Beats Street Estimates
Hasbro reported Q1 net income of $32.9 million, or $0.19/share, compared to a net loss of $4.9m ($0.03/share) last Q1, and well head of analysts' average estimates of a breakeven quarter (Thomson) to EPS of $0.01 (Bloomberg). It was helped by "significantly" higher revenue across all major product categories in N. America, as total revenues rose 34% to $625.3m, versus a Street estimate of $508m (Thomson) to $512.3m (Bloomberg). N. American sales rose 36% and international sales increased 29%, while operating profit in the former segment grew nearly tenfold to $45.3m and loss narrowed to $108k, from $8.3m in the latter. Hasbro said it repurchased 2.5 million shares of common stock at a total cost of $74m during the quarter. Shares of Hasbro are up 6.75% to $32.25 in pre-market activity on thin volume of only 1,500 shares. It closed 0.27% higher on Friday to $30.21, renewing multi-year intra-day and closing highs.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Hasbro, Inc.: Ahead of the Game • Mattel's Q1 Profit Drops, But Beats Street As Sales Increase 18.5% • Hasbro's 'Wizards of the Coast' Renews Lucasfilm Agreement
Stocks/ETFs to watch: Hasbro (HAS). Competitors: Mattel (MAT), JAKKS Pacific (JAKK)
Motorola Buys Video Bandwith Optimizer Terayon
Motorola said this morning it would buy video processing technology Terayon Communication Systems Inc. for $1.80/share in cash -- or about $140 million. It expects the deal to be completed in Q2-Q3 2007, and foresees no effect on EPS. Terayon's video services help wireless companies offer regional content and optimize bandwidth usage, and will give Motorola video-processing technology that allows for the insertion of digital ads, graphic overlays, channel branding, and "cutting-edge ad insertion delivery." Dan Maloney, Motorola President of Connected Home Solutions: "Operators around the world are looking for a digital video core that will maximize bandwidth and enable the delivery of revenue-generating services. The acquisition of Terayon will enhance Motorola's end-to-end portfolio for the delivery of next-generation services such as targeted advertising."
Sources: Press release, Reuters
Commentary: Motorola Will Get Its Mojo Back • Becoming A Motorola Bull Amidst All The Pessimism • Profiting From the Global Cellular Wireless Boom
Stocks/ETFs to watch: Motorola Inc. (MOT), Terayon Communication Systems Inc. (TERN.PK). Competitors: Nokia Corp. (NOK), Telefonaktiebolaget LM Ericsson ADR (ERIC), Cisco Systems Inc. (CSCO), Qualcomm Inc. (QCOM), Palm Inc. (PALM). ETFs: HOLDRS Broadband (BDH), HOLDRS Wireless (WMH)
Conference call transcript: Motorola Q1 2007 Earnings Call Transcript
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Gain as Earnings Damp Economic Concern; JFE, Exporters Climb Asian stocks rose for a second day, led by exporters, after earnings reports damped concern the global economy is headed for a slowdown.
• Japan's Debt Rating Raised One Level to AA by Standard & Poor's on Economy Japan's debt ratings were raised one level to AA, the third-highest grade, by Standard & Poor's after the government cut borrowing and nursed a recovery in corporate earnings.
• Barclays to Shift 10,800 Jobs to India to Cut Costs After Buying ABN Amro Barclays Plc (BCS) plans to shift 10,800 jobs to India and other low-wage countries, betting reduced costs will help win support for its acquisition of ABN Amro Holdings NV (ABN), the world's largest financial services takeover.
• Bank of Communications May Raise $3.3 Billion in Shanghai Stock Offering Bank of Communications Co., China's sixth-largest by assets, may raise as much as 25.2 billion yuan ($3.3 billion) in a Shanghai stock sale, three people with knowledge of the matter said.
• Morgan Stanley Names Stephen Roach to Replace Morrison as Chairman in Asia Stephen Roach, the Morgan Stanley (MS) chief economist who predicts China will overtake the U.S. as the dominant economy within two decades, will become the firm's Asia chairman, leading a push to arrange more takeovers and stock sales in the region.
European Headlines (via Bloomberg.com)
• European Stocks Drop From 6 1/2-Year High; Barclays, AstraZeneca Decline European stocks fell from the highest in more than six years on concern companies may spend too much on mergers and acquisitions.
• British Airways May Offer to Buy Iberia Together With Private-Equity Group British Airways Plc (BAB), Europe's third-largest airline, may make an offer for Iberia Lineas Aereas de Espana SA with a group of private equity investors to protect its joint operations with the Spanish carrier.
• Fiat Profit More Than Doubles on Improved Productivity at Car, Truck Units Fiat SpA (FIA), Italy's biggest manufacturer, said first-quarter profit more than doubled as vehicle-making divisions' productivity improved.