Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:45 AM EST
S&P 500: +2.60; 1,491.00
NASDAQ 100: +4.00; 1,883.25
Dow: +14.00; 13,130.00
NIKKEI 225: -0.72%; 17,274.98 (-125.43)
HANG SENG: 20,318.90; (04/30)
S&P/ASX 200: -0.33%; 6,145.80 (-20.20)
BSE SENSEX 30: 13,872.37; (04/30)
FTSE 100: -0.40%; 6,423.30 (-25.90)
CAC 40: 5,960.04; (4/30)
XETRA-DAX: 7,408.87; (4/30)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.14%; $65.62 (-$0.09)
Gold: -0.60%; $679.40 (-$4.10)
Natural Gas: -1.36%; $7.76 (-$0.11)
Silver: -0.66%; $13.485 (-$0.09)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Procter & Gamble Reports and Guides In-line
The Procter & Gamble Company reported its fiscal third quarter earnings rose 14%, while sales rose 8%. Both were in-line with Wall Street's projections; shares fell in pre-market action by 1.27% to $63.58 after gaining 2.25% to $64.40 in regular trading Monday. By the numbers, P&G reported net of $2.51 billion, good for EPS $0.74, up from EPS of $0.63 a year earlier. Sales for the quarter were $18.69; Thomson Financial consensus estimates predicted EPS of $0.74 on revenue of $18.56 billion. The company raised its 2007 EPS forecast to $3.01-$3.03 on total sales growth of 11%-12%; analysts had been expecting FY2007 EPS of $3.03. Higher prices for Folgers coffee and Duracell batteries, and increased demand for Tide laundry detergent, Head & Shoulders shampoo and Mach 3 razors all boosted P&G's results in the quarter. The company is the largest consumer goods maker with a market cap of $203.2 billion.
Sources: Press Release, Bloomberg, MarketWatch, AP, Reuters [check back for PG's earnings call transcript later today]
Commentary: Cramer's Take on PG • Tracking Money Flow in Consumer Staples Stocks • Portfolio with Substantial Single-Stock Concentration
Stocks/ETFs to watch: The Procter & Gamble Company (NYSE:PG)Competitors: Johnson & Johnson (NYSE:JNJ), Kimberly-Clark Corporation, Colgate-Palmolive Company (NYSE:CL). ETFs: Vanguard Consumer Staples (NYSEARCA:VDC), Consumer Staples Select Sect. SPDR (NYSEARCA:XLP), PowerShares FTSE RAFI Consumer Goods (PRFG)
Conference call transcripts: Procter & Gamble F2Q07 (Qtr End 12/31/06) Earnings Call Transcript
Related: P&G Investor Relations
24/7 Real Media Shares Skyrocket on $1 Billion Microsoft Buyout Rumor
It what may be the latest in a spat of internet advertising acquisitions, Microsoft is looking to buy internet ad firm 24/7 Real Media Inc. for about $1 billion, according to unnamed sources in the New York Post. The Post reported last month that WPP Group was a suitor for the company. Microsoft, the Post says, is driven by recent competitors Yahoo and Google acquisitions of internet ad firms Right Media and DoubleClick (respectively). It says Microsoft's fear of being outdone, and its deep pockets, could potentially drive the price up even further; analysts recently placed a $600 million price tag on the company. A Microsoft spokeswoman described the report as speculation and rumor. There had been speculation Microsoft was considering a bid for DoubleClick competitor aQuantive, but some analysts say its creative ad agency AvenueA/Razorfish doesn't fit within Microsoft's business outlook. 24/7 Real Media shares are up 33.3% in pre-market trading.
Sources: New York Post, Reuters, ZDNet
Commentary: WPP - 24/7 Real Media Rumors: A Deal Makes Sense • Yahoo Purchase of Right Media Gives It Added Liquidity, Exit From DoubleClick • ValueClick: An Online Advertising Value Bet
Stocks/ETFs to watch: 24/7 Real Media Inc. (TFSM), Microsoft Corp. (NASDAQ:MSFT), WPP Group plc (NASDAQ:WPPGY), Google Inc. (NASDAQ:GOOG), Yahoo! Inc. (NASDAQ:YHOO), aQuantive Inc. (AQNT), ValueClick Inc. (VCLK)
Related: 24/7 Introduction to Digital Advertising
Qwest Q1 Net Nearly Triples, Beats Street Despite Sales Miss
Qwest Communications reported Q1 net income jumped more than 170% to $240 million, or $0.12/share, beating the Street's consensus estimate of $0.09/share. Revenues however, fell by less than 1% to $3.45b, short of analysts' average estimate of $3.49b. Qwest said data revenue rose 11% to $1.2b, as high-speed Internet subscribers increased 37% to 2.3m. Voice and long-distance revenues declined however, as did total market access lines, but the impact was lessened by a 6% increase in average revenue per unit to $52. During the quarter, Qwest was selected as a participant in the largest federal telecommunications contract ever announced: $20b - $48b over the next 10 years. Qwest reaffirmed its previous guidance for revenue, EBITDA, capex and free cash flow. Shares of Qwest lost 0.22% to $8.88 during normal trading Monday. In pre-market activity Qwest last traded at $9.06 (+2%), on thin volume of under 27,000 shares. It is trading at its highest levels since March '02.
Sources: Press release [pdf], Bloomberg
Commentary: Unusually High Institutional Ownership Stocks • AT&T, Qwest and Verizon, But Not Sprint, to Compete for Big Govt. Contracts • Qwest Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: Qwest Communications International (NYSE:Q). Competitors: AT&T (NYSE:T), Sprint Nextel (NYSE:S), Verizon Communications (NYSE:VZ). ETFs: iShares Dow Jones U.S. Telecom Sector Index (NYSEARCA:IYZ), Telecom HOLDRS (NYSEARCA:TTH), Vanguard Telecom Services (NYSEARCA:VOX)
Archer Daniels Midland Shares Stumble On Earnings Miss
Archer Daniels Midland, the largest U.S. food processor and ethanol maker, said strong corn processing revenue helped the company to a healthy revenue beat, but a challenging quarter kept them short of meeting analyst earnings estimates. FQ3 net income was $362.9 million ($0.56/share) include a $33 million gain from the sale of its Arkady food ingredient business, on a net revenue gain of 25% to $11.38 billion. Analysts expected earnings of $0.62 on revenue of $9.65 billion. Corn processing operations were bolstered by lower operating costs and increased ethanol and sweetener pricing, but partially offset by higher corn costs. Shares are down 4.7% in pre-market trading to $36.88.
Sources: Press release, AP, Reuters
Commentary: The Profitability of Ethanol Production • Is Big Oil Curbing Ethanol Growth? • Ethanol is Here to Stay
Stocks/ETFs to watch: Archer Daniels Midland Co. (NYSE:ADM). Competitors: Bunge (NYSE:BG), Corn Products International Inc. (CPO). ETFs: iShares Dow Jones US Consumer Goods ETF (NYSEARCA:IYK)
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Today's Market (via Sam Collins, ChangeWave.com)
The markets gave a great monthly performance in April -- in fact, as it was up 5.7%, this was the best month in four years. We also witnessed a good weekly performance (up 1.2%) during the final week of April, with Dow 13,000 finally breached. But yesterday brought a lousy daily performance, with the Dow off 0.44% and the Nasdaq down 1.26%...
Yesterday started off on the downside with news that Nominal Spending rose 0.3% in March while economists had expected a 0.5% increase. Then the Federal Reserve's favorite measure of inflation -- the core Personal Consumption Expenditure price index -- was flat in March, and so the year-over-year increase dropped to 2.1% from 2.4% in February.
Manufacturing in the Chicago area rose at a slower pace than expected, and spending for U.S. construction projects was also below expectations. So, the bottom line is that although inflation is modestly lower, growth is lower, too. And despite earnings gains by the retail group -- notably, RadioShack (NYSE:RSH) reported a strong Q1, as did Wrigley (WWY) and Alberto-Culver (NYSE:ACV) -- the market's attention shifted to economics rather than profits.
At the close yesterday, the Dow Industrials dropped 58 points to 13,063, the S&P 500 lost 12 at 1,482 and the Nasdaq lost 32, closing at 2,525. Volume on the Big Board totaled 1.7 billion shares, and 2.2 billion shares traded on the Nasdaq. Breadth was negative on both exchanges by an average of about 23-to-8.
The June crude oil contract lost 76 cents to close at $65.71 barrel, and the Amex Energy SPDR (NYSEARCA:XLE) fell 71 cents to $63.42. That drop followed a new high at $64.75 and thus triggered a Key Reversal Day (i.e., a new high was made but the close was lower than the previous day). Look for the XLE to fall to support at the last breakout point of the current move up, which is at about $61.
The June gold contract gained $1.70, closing at $681.90 per troy ounce, and the Philly Gold and Silver Index [XAU] fell by $2.66 and ended the day at $137.06 -- below support at the 200-day moving average. Yesterday could have marked a selling climax for the XAU, but unless a reversal occurs soon, the next support is at the bottom of the current trading range at about $128.
What the market's are saying
Reversals occurred on virtually all of the major indexes, and the Dow Industrials executed a sell signal from our proprietary indicator, the Collins Bollinger Reversal [CBR], for the first time since early February. Stochastics, Moving Average Convergence Divergence, the Relative Strength Index and other indicators signaled a short-term sell signal yesterday, and the Dow executed a Key Reversal. But these are all extremely short-term signals, and at this time they only indicate that a correction or pause is needed before the next leg of the bull market begins.
All key indexes are trading well above their 20-, 30-, 50- and 200-day moving averages, so the trend is still extremely bullish. But with the shift in attention going to the economic reports, we may experience a down week for the first time in a month and a half.
Today's trading landscape
Today brings the Institute for Supply Management's Manufacturing Index at 10 a.m., which is expected to come in at 51% -- that's still expansionary, but watch out if it comes in below 50%. Automakers will report sales during the day, and pending home sales will also be revealed.
On the earnings front, reports are due from YUM! Brands (NYSE:YUM), Nalco Holding Co. (NYSE:NLC), Archer Daniels Midland (ADM) (see above) and Automatic Data Processing (NASDAQ:ADP), among others. This morning, Celanese (NYSE:CE) announced that its profits went up 72%, beating estimates and spurring it to raise annual estimates. Also, Procter & Gamble (PG) (see above) met estimates and posted a 13.6% quarterly profit increase.
Asian Headlines (via Bloomberg.com)
• Japanese Stocks Decline, Led by Sony, on Slower U.S. Consumer Spending Japanese stocks fell for a second day, wiping out all the gains from last month. Sony Corp. (NYSE:SNE) and Honda Motor Co. (NYSE:HMC) led declines after personal spending slowed in the U.S., eroding demand for exports.
• Healthscope-Led Group Offers $2.3 Billion for Australia's Symbion Health Healthscope Ltd., Australia's second- biggest hospital owner, led a A$2.8 billion ($2.3 billion) cash and stock offer for Symbion Health Ltd. to take advantage of increased demand for X-rays and blood tests.
• Japan's Wages Decline 0.4 Percent, Hampering Growth in Consumer Spending Japanese wages fell for a fourth month in March, signaling that growth in consumer spending in the world's second-biggest economy will be constrained.
• Kirin Has First Quarterly Profit Gain in Year on Introduction of New Brand Kirin Brewery Co. (OTCPK:KNBWY), Japan's biggest seller of beverages, said profit grew for the first quarter in a year, aided by the introduction of its first major new brand of beer in 17 years.
• Santos May Become Takeover Target as Government Reviews Shareholder Cap Santos Ltd., Australia's third-biggest oil and gas producer, may get its ownership restrictions lifted, paving the way for a possible takeover of the A$7 billion ($5.8 billion) company.
European Headlines (via Bloomberg.com)
• U.K. Manufacturing Grows at Slowest Pace in Three Months on Stronger Pound U.K. manufacturing grew at the slowest pace in three months in April, a sign factory production is buckling under the burden of a stronger pound, a survey shows.
• ABN Amro Asks Royal Bank-Led Group to Provide Financing Details on Offer ABN Amro Holding NV (ABN), the subject of the biggest-ever banking takeover battle, asked a group led by Royal Bank of Scotland Group Plc (RBSPY) how it plans to finance a proposed 72.2 billion-euro ($98.5 billion) offer for the Dutch lender.
• German Unemployment Declined to 3.97 Million in April, Labor Minister Says German unemployment fell in April to 3.97 million as the pace of growth fueled hiring in Europe's largest economy, Labor Minister Franz Muentefering said.
• Imperial Tobacco Meets Altadis for First Time to Discuss $16 Billion Offer Imperial Tobacco Group Plc (ITY), the maker of Davidoff cigarettes, said it met with Altadis SA for the first time to discuss its 12 billion-euro ($16 billion) unsolicited offer for the Spanish company.
• Turkish Lira, Bonds Extend Losses as Government, Military Clash Over Gul Turkey's financial markets fell for a second day as the nation's highest court prepared to rule in a dispute over the presidency that pits the army against the governing party.