Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:50 AM EST
S&P 500: -2.40; 1,509.80
NASDAQ 100: -5.25; 1,900.25
Dow: -18.00; 13,328.00
NIKKEI 225: +0.52%; 17,748.12 (+91.28)
HANG SENG: +0.67%; 20,844.78 (+138.43)
S&P/ASX 200: +0.58%; 6,341.00 (+36.60)
BSE SENSEX 30: +0.12%; 13,781.51 (+16.05)
FTSE 100: -0.11%; 6,543.50 (-6.90)
CAC 40: -0.09%; 6,028.87 (-5.38)
XETRA-DAX: -0.01%; 7,441.54 (-0.66)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.19%; $62.38 (+$0.12)
Gold: -0.06%; $687.00 (-$0.40)
Natural Gas: -0.03%; $7.635 (-$0.002)
Silver: -0.48%; $13.535 (-$0.065)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
News Corp. Revenue Beat Fueled by Movie Unit
Media conglomerate News Corp. Wednesday morning posted FQ3 earnings of $0.27/share ($871 million, up 6.2%), in-line with analyst estimates. Revenue was up 21% to $7.53 billion, well ahead of consensus forecasts of $6.81 billion. Earnings from its movie unit were up a whopping 82% -- its single largest contributor to profit --while increased ratings at Fox News helped boost cable-network profits 34%. Newspaper earnings were up 2% to $156 million and revenue increased 11%. In its book publishing unit, profits grew 12% to $29 million on strong sales of The Measure of a Man by Sidney Poitier, The Proper Care and Feeding of Marriage by Dr. Laura Schlessinger and Somebody's Gotta Say It by Neal Boortz. News Corp. plans to launch its CNBC-competitor Fox Business Channel by year-end. Last week the company made an unsolicited offer of $60/share to acquire Dow Jones Company, whose unparalleled business resources would be a boon to Fox Business. The Dow Jones board said it would take no action on the offer following its rejection by the Bancroft and Ottaway families. Shares are up 6.2% YTD and 25.8% over the past year.
Sources: Press release, Wall Street Journal, Bloomberg, MarketWatch
Commentary: News Corp. Offers $60/Share for Dow Jones • Dow Jones Offer Shows Murdoch's Genius • Did News Corp Hope to Profit From the Yahoo/Microsoft Merger Hoax?
Stocks/ETFs to watch: News Corp. (NASDAQ:NWS), Dow Jones & Company Inc. (DJ). Competitors: Time Warner Inc. (NYSE:TWX), CBS Corp. (NYSE:CBS), Viacom Inc. (NYSE:VIA), Walt Disney Company (NYSE:DIS). ETFs: PowerShares Dynamic Media Portfolio ETF (NYSEARCA:PBS), Consumer Discretionary SPDR ETF (NYSEARCA:XLY)
Conference call transcript: News Corporation F2Q07, NWS Earnings Conference Call Transcript (later today)
DirecTV Misses on Earnings and Subscriber Growth
Satellite TV provider DirecTV said Q1 profit jumped 43%, but fell short of analyst estimates as subscriber growth fell. Net income was $0.27/share ($336 million) vs. $0.17 ($235 million) last year -- analysts were looking for $0.30. Revenue rose 15% to $3.91 billion, in-line with expectations. DirecTV added 235,000 subscribers, upping its total to 16.2 million, but analysts were looking for a more robust 281,000. According to Bloomberg, analysts say they are skeptical of DirecTV's ability to compete against cable-TV companies (which are adding phone and internet services), and telephone providers (which are adding TV and internet). Of the 20 analysts following the stock, three say Sell, 13 have it as a Hold, and four say Buy. Shares are up 0.8% in pre-market trading to $24.57; they are up 47% over the past year, but have lost 2.2% YTD.
Sources: Press release, MarketWatch, Bloomberg
Commentary: Cable Providers Continue To Balk At 'A La Carte' Offering • DirecTV, EchoStar Enjoy Free Cash Flow Growth • Satellite TV: EchoStar No Cheaper than DirecTV
Stocks/ETFs to watch: DirecTV Group Inc. (DTV). Competitors: EchoStar Communications Corp. (NASDAQ:DISH), Comcast Corp. (NASDAQ:CMCSA), Gilat Satellite Networks Inc. (NASDAQ:GILT), ViaSat Inc. (NASDAQ:VSAT). ETFs: PowerShares Dynamic Media Portfolio ETF (PBS), PowerShares Dynamic Telecom & Wireless ETF (PTE)
Conference call transcript: DIRECTV Q3 2006 Earnings Call Transcript, DirecTV Earnings Conference Call Transcript (later today)
HP: 36% Asia Sales Growth Is Double Industry's
HP Consumer Products & Mobile Business, Asia-Pacific and Japan VP Chin Hon Cheng said Wednesday HP shipments are growing at a 36% clip in Asia -- about twice the average market growth rate. Industry-wide shipments for the region were up 18% according to data released by IDC in April. About 1/3 of HP's business comes from PC sales. It has about 800-1,000 Asian employees. In a recent conference call, the company said revenue growth in Asia was up 15%, and 12% net of currency fluctuations. HP traded up 2.8% Tuesday when the company hiked its Q2 outlook; shares are up 9.2% YTD and 32.9% over the past year.
Sources: HP FQ1 2007 Earnings Call, Reuters
Commentary: Hewlett-Packard Updates Guidance, Sending Shares To Six-Year High • HP: Switching From IT to Business Technology • HP Emerges as the No. 1 Global PC Maker - Barron's
Stocks/ETFs to watch: Hewlett-Packard Co. (NYSE:HPQ). Competitors: Dell Inc. (NASDAQ:DELL), Lenovo Group Ltd. (OTCPK:LNVGY), International Business Machines Corp. (NYSE:IBM), Apple Computer Inc. (NASDAQ:AAPL)
Related: HP in Asia Pacific
Toyota Reports 9% Rise in Net, Sees Stagnant Growth Over Next Year
Toyota reported its net profit rose 9% from the year earlier period, but the company saw operating profit fall 2.8% in its latest quarter. Raw material costs and spending on quality control cut into the company's operating profit. Sales rose to $52.5 billion, a 10% gain over the year ago period, while North American vehicle sales came in at 714,000 - a 6.9% rise for the march-ended quarter. Looking to the next 12-month period, Toyota expects growth to stagnate with net income rising just 0.4% to $13.8 billion. In the just-ended fiscal year, profit rose 20% to ¥1.64 trillion yen. One reason is increased Capex spending to develop new vehicle models. Another reason for Toyota's expected slowdown is weakening North American sales. Toyota predicts sales gains there will slow to 1.6% in its next fiscal year after gaining 15.1% in its last fiscal year. Toyota shares traded down 0.55% in Japanese trading.
Sources: Press Release, Bloomberg, Wall Street Journal, TheStreet.com, MarketWatch,
Commentary: Note to US Auto Manufacturers - Adapt or Die • Toyota Threatens GM's Reign as Biggest Automaker • Toyota Continues To Gain U.S. Market Share At Expense of Big 3
Stocks/ETFs to watch: Toyota (NYSE:TM). Competitors: Honda (NYSE:HMC), Nissan (OTCPK:NSANY), General Motors (NYSE:GM), Ford (NYSE:F), DaimlerChrysler (DCX). ETFs: BLDRS Asia 50 ADR Index (NASDAQ:ADRA)
Related: Toyota Investor Relations
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Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
Most strategists and investors are pondering the possible implications of today's Fed meeting and announcement following two days behind closed doors. But the consensus is that there will be no change in interest rates. Nevertheless, the wording of the text will be closely scrutinized to try and determine what is in the minds of the Fed governors regarding future trends in economic growth and inflation.
And, as usual, there were some investors concerned that the market is overpriced and due for a pullback -- the fact that it just set a record as the longest winning streak in 80 years makes them uncomfortable.
The Dow Industrials closed lower by four points yesterday at 13,309 despite upticks by Dow components Alcoa (NYSE:AA), Hewlett-Packard (HPQ) and Disney (DIS), which gained 1.4% ahead of earnings results announced after the close. Its Q2 came in at 44 cents a share, while 38 cents was expected, but sales fell short of expectations. The S&P 500 gained two points at 1,508 and the Nasdaq gained one point to close at 2,572. Volume on the NYSE was 1.5 billion shares while 1.9 billion traded on the Nasdaq; breadth was negative by an average of 4-to-3 on both exchanges.
Crude oil (June contract) rose by 79 cents, breaking a five-day downtrend, and closed at $62.26 a barrel. Meanwhile, the Amex Energy SPDR (NYSEARCA:XLE) gained 6 cents and ended the day at $64.89 -- a new record closing high for the XLE. This could negate the daily reversal of Friday if prices close higher today.
Gold futures (June contract) fell by $3 to close at $687.40 per troy ounce, and the Philly Gold and Silver Index [XAU] fell by $1.44 to close at $141.70, which is below the 20-day moving average. Support for the XAU is at the 50- and 200-day moving averages at about $138.50.
What the Markets Are Saying
Even though the Dow closed lower by a smidgeon yesterday, it has had a remarkable run of gains in 24 of the last 28 sessions.
Spencer Jakab of Dow Jones Newswires provided the following historical perspective, and it's worth passing along: "The Dow Industrials are now up 55% from its October 2002 low, the Dow saw its 20th high record (high) close of 2007 on Monday and tied an 80-year record of 27 days without more than three down sessions, and the last time (prior to the most recent stretch of five straight positive sessions that ended Tuesday) there were five consecutive days in a row was in April 1999."
Perhaps it is time for a bit of a rest, but don't count on it since virtually everyone is looking for it.
Today's Trading Landscape
The major focus of today will, of course, be the Fed announcement following its scheduled meeting, and that comes at 2:15 p.m. In addition, look for the Mortgage Banker Association's mortgage applications data and the Energy Department's report on petroleum supplies.
Analysts are looking for crude inventories to climb by 500,000 barrels, gasoline inventories to rise by 200,000 barrels and distillate to rise by 300,000.
Asian Headlines (via Bloomberg.com)
• Asian Stocks Rise to a Record on M&A Speculation; Rio, Sumitomo Metal Gain Asian stocks rose to an all-time high, led by mining companies and steelmakers, on expectations this year's record pace of takeovers will be sustained.
• Advantage Partners May Buy Tokyo Star Bank for $2.4 Billion, People Say Advantage Partners LLC, Japan's largest buyout fund, may acquire Tokyo Star Bank Ltd. for at least 290 billion yen ($2.4 billion) in the nation's biggest bank takeover in two years, two people with direct knowledge of the matter said.
• Oaktree Bids to Buy Taiwan Golf Club Head Maker Fu Sheng for $851 Million Oaktree Capital Management LLC, a U.S. buyout firm with $40 billion of assets, plans to take over Taiwan's Fu Sheng Industrial Co., the world's biggest maker of golf-club heads, for NT$28.3 billion ($851 million).
European Headlines (via Bloomberg.com)
• European Stocks Fall; Aegon, Danone and Ericsson Shares Pace the Decline European stocks dropped, led by Aegon NV (NYSE:AEG), Groupe Danone SA (DA) and Ericsson AB (NASDAQ:ERIC).
• BNP Paribas Profit Advances 25 Percent on Investment Bank, One-Time Gains BNP Paribas SA, France's largest bank by market value, reported a 25 percent increase in first-quarter profit on higher corporate and investment bank earnings and gains from asset sales. The shares rose to a record.
• Trichet Puts Brakes on Irish, Spanish Property Boom as Rates Head Higher European Central Bank President Jean- Claude Trichet arrives in Dublin today to signal he'll increase interest rates to a six-year high, putting the brakes on Ireland's property boom.
• E.ON First-Quarter Profit Jumps 50 Percent; Full-Year Net Forecast to Rise E.ON AG (EON), Europe's largest utility, said first-quarter profit increased 50 percent as it made more money from selling natural gas and from investments in securities.