Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:45 AM EST
S&P 500: +3.50; 1,504.30
NASDAQ 100: +9.25; 1,903.25
Dow: +25.00; 13,145.00
NIKKEI 225: +1.12%; 17,429.17 (+193.01)
HANG SENG: +0.64%; 20,667.29 (+130.51)
S&P/ASX 200: +0.39%; 6,212.20 (+24.00)
BSE SENSEX 30: +0.08%; 14,228.88 (+11.11)
FTSE 100: +0.59%; 6,500.00 (+38.10)
CAC 40:+0.26%; 5,962.69 (+15.36)
XETRA-DAX: +0.89%; 7,408.34 (+65.26)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.55%; $65.48 (-$0.36)
Gold: -0.60%; $683.30 (-$4.10)
Natural Gas: -0.66%; $7.64 (-$0.05)
Silver: -0.88%; $13.775 (-$0.122)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
ExxonMobil Beats as Net Grows 10%, But Revenues Dip, Shares Higher
ExxonMobil reported Q1 net income of $9.28 billion, or $1.62 per share, beating Street estimates of $1.52 (MarketWatch) to $1.54 (Bloomberg). Revenues fell 2% to $87.22b. Exxon said, "Higher refining, marketing and chemical margins were partly offset by a
decrease in crude oil and natural gas realizations." An analyst at Standard & Poor's called refining profit margins in the U.S. "really healthy," as they increased 37% y-o-y to $12.43 per barrel. Capex and exploration costs totaled $4.3b. Exxon repurchased 108 million shares ($7b) of its common stock during the quarter, reducing shares outstanding by 1.7%. Shares of Exxon gained 1.7% to $79.92 in normal trading yesterday. It was last trading at $80.52 (+0.75%) in pre-market activity.
Sources: Press release [pdf], Bloomberg, MarketWatch
Commentary: ExxonMobil Delivers Impressive Volume, More Impressive Return • Exxon Mobil: Now Undisputed World Market Cap Heavyweight • ExxonMobil, Sinopec, Seal Joint Chinese Refinery Venture • Exxon Mobil Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Exxon Mobil (NYSE:XOM). Competitors: ConocoPhillips (NYSE:COP), BP plc (NYSE:BP), Chevron (NYSE:CVX), Royal Dutch Shell (NYSE:RDS.A), Total (NYSE:TOT). ETFs: DIAMONDS Trust, Series 1 (NYSEARCA:DIA), Energy Select Sector SPDR (NYSEARCA:XLE), Vanguard Energy (NYSEARCA:VDE)
Related: Exxon Mobil Corporation 1Q'07 IR Supplement and Charts [pdf]
Ford Jumps On Decreased Losses, Powered By Strong European Performance
Ford shares jumped nearly 8% in pre-market action, as the company reported a significantly lower quarterly loss than Wall Street was expecting, buoyed by the strong performance of its European division. Ford lost only $282 million in 1Q07 after dropping $12.7 billion in earnings during FY2006. EPS was negative $0.15, or just -$0.09, after accounting for one-time expenses; consensus estimates called for a loss of $0.60 after expenses. Shares were higher by $0.62, or 7.87%, to $8.50 in pre-market trading as of 7:45 AM EST. The company's European unit reported a pretax profit of $219 million, powered by its luxury Premier Automotive Group, which reported a pretax profit of $402 million. That compares to a wider N. American loss of $614 million in the quarter. In addition, costs associated with its massive restructuring dropped to $113 million, from $2.52 billion in the prior year period. Ford is in the midst of laying off 40,000 workers to lower its overhead costs, in an attempt to return to profitability by 2009. In the same vein, Ford cut its N. American vehicle unit output by 16% in the quarter.
Sources: Press Release, Bloomberg, Wall Street Journal, AP, Reuters [check back for Ford's conference call transcript later today]
Commentary: Ford's Mulally: A Plan and a Purpose • Toyota Q1 Sales Edge Past GM for First Time • Cramer's Take on F
Stocks/ETFs to watch: Ford (NYSE:F). Competitors: General Motors (NYSE:GM), DaimlerChrysler (DCX), Toyota (NYSE:TM), Honda (NYSE:HMC), Nissan (OTCPK:NSANY)
Comcast Net Up 80%, In-line, Shares Trading Lower
Comcast reported Q1 net income jumped 80% to $837 million, or $0.26/share, but excluding a one-time gain, totaling $0.17/share, in-line with Street estimates. Revenue rose 32% to $7.39b, topping analysts' forecast of $7.36b. Video-related revenue increased 8% to $4.4b, high-speed Internet sales rose 21% to $1.5b, and phone revenue climbed 88% to $353m. Comcast said capex increased 49% to $1.4b. New subscriber additions to its triple play (phone, cable TV and high-speed Internet) services beat analysts' expectations. Comcast's CEO justified higher spending to meet demand. The company repurchased 18.7 million ($500m) of its Class A shares during the quarter. Comcast expects full-year revenues to grow at least 11%. Shares of Comcast gained 2% to $28.09 yesterday, adding 3.1% to $28.97 in the after-hours on volume of 800,000-plus. In today's pre-market it was last trading at $27.50 (-2.1%) on volume of over 143,000.
Sources: Press release, Associated Press, Bloomberg
Commentary: AT&T Takes Lead Over Comcast In Broadband Battle • Comcast: “Business Is On Fire” • Comcast Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Comcast Corp. (NASDAQ:CMCSA). Competitors: Time Warner Inc. (NYSE:TWX), Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), The DirecTV Group Inc (DTV), EchoStar Communications Corp. (NASDAQ:DISH), Cablevision Systems Corp. (NYSE:CVC), Shaw Communications Inc. (NYSE:SJR). ETFs: PowerShares Dynamic Media Portfolio (NYSEARCA:PBS), HOLDRS Broadband (NYSE:BDH)
Level 3 Comes Up Short
Internet backbone provider Level 3 Communications said its Q1 2007 loss more than doubled to $0.44/share ($674 million) including a $0.29/share charge for debt refinancing. Revenue was up 28% to $1.06 billion. Analysts expected a loss of $0.22/share; MarketWatch says it isn't clear whether estimates included the debt-refinancing charge or not. Level 3 reiterated 2007 and 2008 guidance; it sees $1-1.045 billion in Q2 revenue -- trailing analyst forecasts of $1.05 billion. On January 3, 2007, Level 3 completed the $1.4 billion purchase of data, voice, and media solutions company Broadwing, which it said would help it reduce overlapping costs and expand its customer base. The company said it is ahead of schedule in its integration. CEO James Crowe played up the debt restructuring in the company's press release: "We are pleased with our results for the first quarter, particularly with the substantial progress we made in reducing and restructuring our long-term debt." Shares are down 2.9% to $6.00 in pre-market trading.
Sources: Press release, MarketWatch, AP, Wikipedia
Commentary: Level 3 Communications and the Internet Video Explosion • Will Level 3 Communications Take Market Share from Akamai? • Questioning Level3's Growth Potential
Stocks/ETFs to watch: Level 3 Communications Inc. (NASDAQ:LVLT). Competitors: AT&T Inc. (T), Sprint Nextel Corp. (NYSE:S), Verizon Communications Inc. (VZ), Akamai Technologies Inc. (NASDAQ:AKAM)
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Today's Market (via ChangeWave.com)
At the close Wednesday, the Dow Industrials gained 134 points to 13,090, the S&P 500 rose 15 to 1,495, and the Nasdaq added 23 to end the day at 2,548. Volume on the NYSE came in at 1.67 billion shares, and the Nasdaq traded an impressive 2.68 billion shares. Breadth on both exchanges was very positive at 23-to-9 on the Big Board and 17-to-12 on the Nasdaq.
Even higher gasoline prices couldn't deter stocks' gains. The Energy Department reported the 11th-straight weekly drop in supplies and, as a result, both gasoline and crude jumped. Reformulated gasoline (May contract) closed higher by 3% and crude oil (June contract) was up $1.26, closing at $65.48 a barrel. This reverses the recent shallow pullback for crude and puts $67-$69 back in buyers' crosshairs.
The Amex Energy SPDR (XLE) closed at $64.18, up $1.18, breaking through a small double-top with the next target at $66-$68. Gold (June contract) fell by 30 cents, closing at $687.40, but the Philly Gold and Silver Index [XAU] was up $1.72 at $142.60, and this could confirm that its support at the 50-day moving average may prove to halt further declines.
What the markets are saying
The percentage of NYSE stocks trading above their 10-week moving averages dropped last week from 74.4% to 74%, and the percentage above their 30-week moving averages fell to 76% from 77.2%. Now, these might seem like small changes, but they could be indicating that, despite yesterday's triple-digit gain on the Dow, momentum may be slowing just a bit.
This is normal after a big breakout and it sometimes leads to a profit-taking retreat to a level where bargain-hunters emerge again. But for now it's just a warning, telling us that it might not be prudent to go chasing the blue chips that have been making new highs.
Instead, some of the technology stocks that show good value and strong technical patterns may be a better bet than their higher-priced cousins on the Big Board. The Philly Semiconductor Index [SOX] broke out of a six-month trading channel, and so shopping in that sector may prove rewarding.
Today's trading landscape
All eyes will again be on the tech stocks today following Apple's (NASDAQ:AAPL) dynamite earnings reported after yesterday's close. Earnings were up 88% in its FY Q2, and in after-hours trading, the stock jumped above $100 thanks to earnings topping estimates by 10 cents. And Qualcomm (NASDAQ:QCOM) beat its estimates too -- by 1 cent to 2 cents per share.
There are several economic reports on the docket for today that will be of interest, including the pre-opening Jobless Claims, and at 10 a.m. we'll see the Help Wanted Index. Decreases in both might cause some worry that the Fed could interpret this as inflationary.
After the close today, the U.S. Money Supply (M2) will be announced. But for now, the focus again is on earnings, earnings and more earnings. Here are some of the most important companies to look for: ExxonMobil (XOM), Microchip Tech (NASDAQ:MCHP), XM Satellite (XMSR), 3M (NYSE:MMM), Cypress Semi (NASDAQ:CY), Microsoft (NASDAQ:MSFT) and SanDisk (SNDK).
Dow Chemical (NYSE:DOW) reported earnings this morning that were in line with forecasts. Ford (F) surprised everyone by cutting losses to just 15 cents when a loss of 60 cents was expected, and Comcast (CMCSK) surprised too by coming in with 26 cents per share vs. an expected 17 cents. To add to the good news, the futures markets indicate a strong opening is in store.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Rise, Led by BHP on Oil, Metals Prices; Honda Gains on Profit Asian stocks rose the most in a week after companies including Honda Motor Co. (HMC) reported earnings that beat analysts' estimates, and higher oil and metals prices lifted commodities producers.
• Nissan, Reeling From Profit Slump, Predicts Rebound on U.S., Europe Sales Nissan Motor Co. (OTCPK:NSANY), after its first profit decline in seven years, said earnings will rise this fiscal year on increased sales in the U.S. and Europe.
• Nomura Fourth-Quarter Net Plummets 74 Percent; Commissions, Fees Decline Nomura Holdings Inc. (NYSE:NMR), Japan's largest securities firm, said fourth-quarter profit plunged 74 percent, worse than analysts' estimates, as brokerage commissions and investment-banking fees slumped.
• Reliance's Profit Rises to Record as Ambani Lifts Sales, Refining Margins Reliance Industries Ltd., the first Indian company worth $50 billion, reported record profit in the fourth quarter as Chairman Mukesh Ambani earned more from refining and chemicals.
• KDDI May Raise Earnings Forecast This Year on More Subscribers, CFO Says KDDI Corp., Japan's second-biggest mobile-phone carrier, may beat its earnings forecast this year on an increase in users, Chief Financial Officer Satoshi Nagao said.
European Headlines (via Bloomberg.com)
• European Stocks Advance on Earnings Outlook; Bayer, Cap Gemini Shares Rise European stocks advanced for a second day after ABB Ltd. (NYSE:ABB) reported earnings that beat analysts' estimates and Bayer AG (BAY) said profit rose almost fivefold.
• Barclays Probed by SEC for Trading Conflicts in Bankruptcies, People Say Barclays Plc (NYSE:BCS), Europe's biggest underwriter of corporate bonds, used confidential information from serving on creditors' committees to trade securities of bankrupt companies, two people with knowledge of a government investigation said.
• U.K. Home Prices Increase at Fastest Pace in Four Months, Nationwide Says House prices in the U.K. rose at the quickest pace in four months in April, adding to pressure on the Bank of England to raise interest rates next month, Nationwide Building Society said.
• Ericsson Profit Gains 27 Percent as Mobile Phone Earnings More Than Double Ericsson AB (NASDAQ:ERIC), the world's biggest maker of wireless networks, said first-quarter profit rose 27 percent after earnings at its handset venture with Sony Corp. more than doubled.