Seeking Alpha
Profile|
( followers)
For breaking news and key market indexes, see
Wall Street Breakfast's Pre-Market Snapshot

TECHNOLOGY

Apple Trounces Estimates on Strong Sales Growth

Apple Inc. said Wednesday FQ3 net income jumped 73% to $818 million. EPS of $0.92 was well ahead of the analyst consensus estimate of $0.72/share, Apple's projection of $0.66, and year-earlier earnings of $0.54. Revenue climbed 24% to $5.41 billion, beating analyst estimates of $5.29B. Apple said it sold 1.76 million Macintosh computers and 9.8 million iPods during the quarter; analysts forecasted 1.68M Macs and 9.6M iPods. The company sold 270,000 iPhones during the last two days of the quarter, when it first went on sale, a number one analyst called, "okay, but not as good as more bullish expectations." CEO Steve Jobs said the company expects to have sold one million iPhones by the end of the next quarter. CFO Peter Oppenheimer gave typically conservative Q4 guidance: "Looking ahead to the fourth AAPL 25 07 2007 EarningsChartfiscal quarter of 2007, we expect revenue of about $5.7 billion and earnings per diluted share of about $0.65." Analysts had been looking for $0.83/share on $6.05B. "Their gross margin at 37% was extremely strong and bodes well for HP and Dell from a commodity-price perspective," said Cross Research's Shannon Cross. S&P wrote in a July 24 note to clients, "We believe AAPL continues to benefit from its strategy of providing simple, superior and differentiated offerings. Its computer sales are outpacing the industry's, while also enjoying materially higher average selling prices. Moreover, we think the iPhone will be notably accretive to earnings, reflecting solid initial sales and considerable associated customer traffic." Near a 52-week high, Apple shares have more doubled in value since a year ago. Shares are up 9% AH trading to $149 after gaining 1.8% during regular hours. Apple's earnings call is at 5 p.m. Check for Apple's earnings call transcript later today.
Sources: Press release, MarketWatch
Commentary: Apple's Pre-Earnings JittersA Small EPS Beat May Not SufficeiPhone Activation Delay Exclusions Shouldn't Impact Apple Significantly
Stocks/ETFs to watch: AAPL. iPhone Competitors: MOT, RIMM, PALM. Mac Competitors: IBM, DELL, HPQ, MSFT
Earnings call transcript: Apple F2Q07

Symantec Breezes Past Forecasts, Ups Outlook

Shares of Symantec surged almost 10% AH after the security software maker posted fiscal 2008 first-quarter earnings of $263M ($0.29/share) on revenue of $1.42B, blowing past analyst estimates for earnings of $0.20/share and revenue of $1.32B. Last year, Symantec earned $253M SYMC 26 07 2007 EarningsChart($0.24/share) on revenue of $1.26B. Deferred revenue, which indicates sales that will be recognized over time, excluding some items, was $2.71B vs $2.34B last year. "Performance for the quarter was driven by strong demand in many of our core and emerging technology solutions, as well as solid execution by our services, consumer and Altiris teams," said CEO John W. Thompson (see full earnings call transcript). Consumer security software, which accounts for about 33% of total revenue, rose 11% to $423.75, while sales of software for corporate data centers topped analysts' expectations with a gain of 5%. Analysts were overwhelmingly bullish on the results, aside from Bear Stearns, which reiterated its Underperform rating, saying, "The risk to shareholders is that investors start to value SYMC on its actual business performance, rather than whether it beats low expectations or not." For the fiscal second-quarter, Symantec expects earnings of $0.24-$0.26/share on revenue of $1.37B-$1.4B. Operating cash flow is seen below the $276M in the year-ago quarter.
Sources: Press release, TheStreet.com, MarketWatch, Bloomberg
Commentary: Five Reasons To Buy SymantecGoldman Gets Enthused Again On Symantec
Stocks/ETFs to watch: SYMC. Competitors: MFE, MSFT, CA. ETFs: SWH, IAH, IGV

Sony's Q1 Profit Doubles Despite Widening Game Losses

Sony reported fiscal Q1 net income jumped 106% to ¥66.5 billion ($552m) or ¥32.25/share, on sales growth of 13.3% to ¥1.98t ($16.4b). The weak yen increased operating profit by ¥25.7b ($213m) and strength across most units more than offset SNE 26 07 2007 Charta 9% drop in operating profit at its Game division (¥-29.2b, -$242m). Game division sales increased around 60%, but losses were exacerbated when Sony cut the price of the PlayStation 3, which was already being sold at a loss. Consumer Electronics sales rose 11.6% and operating profit climbed 77.3% on strong camera sales. Sony's Pictures division returned to profitability on the success of Spider Man 3. Sony Life Insurance helped the Financial division record a 49% increase in sales and 637% surge in operating profit. Sony Ericsson also reported strong quarterly earnings growth. Sony reiterated its full fiscal year (ending March) guidance for operating income of ¥440b ($3.65b), compared to last year's profit of ¥71.75b and analysts' average estimate of ¥423.7b. Ordinary shares of Sony gained 1.1% to ¥6,350 ($52.74 ADR equiv. at ¥120.4/$1) ahead of its earnings release. Its ADRs rose 1.3% to $52.31 on Wednesday.
Sources: Press release, Bloomberg, Reuters
Commentary: Goldman Keeps 'Buy' Rating on Sony, Raises TargetSony's Playstation 3 Battle Plan Isn't About Gaming - It's About CostsSony Ericsson's Q2 Profit Soars, But Misses; Gains Global Market Share
Stocks/ETFs to watch: SNE. Competitors: MC, NTDOY.PK, CAJ, AAPL, PHG. ETFs: ADRA, ITF, EWJ
Related: Sony full Earnings Release [pdf], Earnings Presentation [pdf], Annual Report

Cadence Design Systems Posts Doubling of Q2 Net, Boosts Guidance

Cadence Design Systems Inc., the world-leading manufacturer of software used in the design of computer chips, reported a doubling of quarterly profit on the back of strong demand for tools used to construct low-power semiconductors. Net income rose to $59.6 million ($0.20/share) from $30.4 million ($0.10) in the year-ago quarter (see earnings call transcript). Revenue increased 9.1% to $391 million, ahead of analyst expectations of $383.3 million. Excluding items, EPS were up to $0.30 from $0.23, beating analyst forecasts by a penny. Sales were up 23% for digital integrated chip design products, Cadence's biggest business. Functional verification product revenue gained 16%. For Q3, Cadence is forecasting revenue of $395-405 million, with EPS of $0.31-0.33 excluding items. Analysts are expecting EPS of $0.32 on revenue of $399.3 million. For full-year 2007, Cadence has bumped up its revenue forecast to $1.59-1.64 billion from $1.58-1.63 billion. The company is projecting full-year EPS excluding items of $1.28-1.36, an increase from $1.27-1.35. Analysts are expecting revenue of $1.62 billion and EPS of $1.33. In June, Cadence shares went up on a report that the company was in talks with KKR and Blackstone about a buyout. They fell again when another report said talks had foundered over price.
Sources: Press release, TheStreet.com, Reuters, Bloomberg, MarketWatch
Commentary: Beat and Raise May Not Be Enough For Cadence and TerexCadence Buyout Talks with Blackstone, KKR Suspended -- NYTPrivate Equity to Buy Cadence Design Systems?
Stocks/ETFs to watch: CDNS. Competitors: LAVA, MENT, SNPS. ETFs: EMV, IGV, PSJ

LSI Falls to Loss on Post-Merger Charges

As expected, LSI Corp. fell to a loss in its first combined quarter with Agere Systems as the chipmaker took steps to accelerate the merger integration process. LSI posted a second-quarter loss of $378M ($0.50/share), or $14.2M ($0.02/share) excluding $363M of charges, on revenue of $670M.LSI 26 07 2007 Chart For the comparable period in 2006, LSI posted earnings of $54M ($0.13) or $57M ($0.14) after charges on revenue of $490M. Results were in line with the lowered guidance provided by the company in June. LSI, which during the second-quarter agreed to sell its consumer products business, on Wednesday announced a deal to sell its Thailand assembly and test operations to STATS ChipPAC for $100M, and also said it would transition similar functions at Singapore and Wichita, Kansas facilities to current partners. LSI believes the actions will result in the loss of 2,100 jobs and cut annual costs by $20M to $25M. "The steps taken during the second quarter and the manufacturing decisions announced today are significant components of positioning the company for profitable growth," said CFO Byron Look (see full conference call transcript). Lehman Bros. told clients it believed the second-quarter was "the bottom" for LSI and Deutsche Bank said the sale and restructuring would be positive drivers for the company. For the third quarter, LSI expects a loss of $0.09/share to $0.15/share, or earnings of $0.02/share to $0.05/share excluding items, on revenue of $675M-$705M and gross margin of 30%-34%. Second-quarter gross margin was 23%. Analyst estimates for the third quarter range from a loss of $0.01 to earnings of $0.07/share and revenue ranging from $660M to $738M. Shares gained 1.4% in after-hours trading.
Sources: Press release, Reuters, MarketWatch
Commentary: LSI To Cut 900 Jobs, Lowers Q2 GuidanceLSI: Multiple Potential Catalysts for Shares
Stocks/ETFs to watch: LSI. Competitors: TXN. ETFs: SMH, IGW, XSD

QUALCOMM Shares Up 2.5% on Q3 Beat and Revised Guidance

Shares of QUALCOMM rose 2.5% to $43.50 in extended trading Wednesday (after falling 1.5% during normal trading), following an adjusted Q3 EPS beat of $0.55 vs. $0.51, and upward revised current quarter revenue guidance of $2.15b-2.25b (+8% to +13% over prior estimates), with EPS between $0.48-0.50. QCOM 26 07 2007 EarningsChartAnalysts were expecting $0.47 on sales of $2.21b. Sales increased 19% to $2.33b, topping analysts' forecast of $2.27b. Chip revenues rose 20% to $1.37b, while licensing revenues expanded 20% to $766m. QUALCOMM is in an ongoing patent dispute with rival Broadcom and was issued an injunction against mobile phones containing its chips last month by the U.S. ITC (see full summary). QUALCOMM CEO Paul Jacobs commented "... the next few months represent a crucial litigation time-frame and we can't predict the outcomes at this time." (see earnings call transcript). QUALCOMM said it is interested in reaching a similar deal to the one Broadcom offered Verizon Wireless last week, in which the latter will pay up to $200m as a settlement in order to bypass a ban on QUALCOMM's chips.
Sources: Press release, Bloomberg I, II, MarketWatch, TheStreet.com
Commentary: Sweet Deal For Qualcomm: Are They Smarter Than We Think?Qualcomm Decline Presents Low Risk Entry PointQualcomm, Broadcom and the ITC Ruling: What It Means For Investors
Stocks/ETFs to watch: QUALCOMM (NASDAQ:QCOM). Competitors: NOK, BRCM, TXN, Samsung Electronics [not traded in U.S.; see iShares S. Korea (NYSEARCA:EWY)]. ETFs: Broadband HOLDRs (NYSE:BDH), Wireless HOLDRs (NYSEARCA:WMH), iShares Goldman Sachs Networking (NYSEARCA:IGN)
Related: QCOM Earnings Presentation [pdf], CDMA and WCDMA Handset Shipments Estimate [pdf]

INTERNET

Buzz Builds About Facebook IPO

Despite protestations by Facebook management that the company is unlikely to go public within the next year and a half, rumors are building that the networking site is heading for an IPO. Company director Peter Thiel said Facebook might also consider a buyout in excess of $10 billion. Speculation was spurred by a job listing on the site for a stock administration manager, a position usually required only at public companies. Last year, Facebook turned down a $1 billion offer from Yahoo. Earlier in July, rumors swirled that Microsoft was considering a $6 billion bid. Thiel told thedeal.com Facebook prefers neither a sale nor an IPO, but "[t]he buzz factor is very, very high," said Norwest Venture Partners GP Jeff Crowe. In related news, Facebook's 23-year-old CEO Mark Zuckerberg will appear before Judge Douglas Woodlock Thursday to defend himself against charges he stole the idea and code for Facebook from networking site ConnectU. ConnectU's founders, who were at Harvard with Zuckerberg, are demanding Facebook be shut down and control of the site, as well as its profits, be handed over to them. Woodlock has given them until August 8 to provide information justifying their accusations of fraud, copyright infringement and misappropriation of trade secrets. "Dorm room chit chat does not make a contract," Woodlock said.
Sources: Dow Jones, Times Online, Wall Street Journal, Forbes
Commentary: Rumor Mill Buzzing With Possibility of Microsoft/Facebook MergerWhat If Facebook Can’t Sell Any Ads?Will IncrediMail Be Facebook's Next Acquisition?Google Willing to Talk to Facebook, But Acquisition Seems Unlikely
Stocks/ETFs to watch: NWS, MSFT, GOOG, YHOO. ETFs: HHH, FDN
Earnings call transcripts: Google Q2 2007, Yahoo! Q2 2007, Microsoft F4Q07, News Corporation F3Q07

Baidu Jumps 19% on Huge Beat, Upward Guidance

Shares of Baidu.com were last up more than 19% to $218.30 in after-hours trading following the release of its Q2 earnings. Baidu reported net income BIDU 26 07 2007 EarningsChartsurged 166% to 141.9 million yuan ($18.8m), or 4.09 yuan/share ($0.57/ADR), on a 120% rise in revenues to 401.3M yuan ($52.7M). Both figures easily beat analysts' average forecast of $0.44/ADR on $48M. Baidu offered Q3 sales guidance of 492M-506M yuan ($64.6M - $66.5M), +106-111% y/y or +23-26% q/q, compared to analysts' average estimate of $59.6M. Baidu said its active online market customers grew by 14.3% to around 128,000 customers, while revenue per customer reached the dollar equivalent of approximately $407, a 24% sequential increase. Baidu gained 4.7% to $183.23 in normal trading. Baidu's earnings call is at 8 P.M. Eastern. Check for Baidu's earnings call transcript later today.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Pacific Crest Upgrades Baidu, Sina On Strong China Net Ad MarketAre Baidu and Google Ready to Move Higher?
Stocks/ETFs to watch: BIDU. Competitors: GOOG, YHOO, MSFT, SINA, SOHU, TOMO. ETFs: PGJ

MACRO AND HOUSING

Pulte Homes Swings to Loss; Revenue Falls 40%

Pulte Homes posted a second-quarter loss of $507.6M ($2.01/share) as revenues skid 40% to $2B from $3.4B a year earlier amid continued deterioration in the U.S. housing market. Last year, Pulte earned $243.9M ($0.94/share) in the second quarter. Earnings were at the low-end PHM 26 07 2007 EarningsChartof the $2.00-2.10/share loss range the company forecast last week (see full summary), causing shares to rise 2.1% in AH trading. Analysts were expecting a loss of $2.04/share. Previously, the Bloomfield Hills, Mich.-based homebuilder had expected results to be break-even to a $0.10/share loss, excluding charges. "As reported in our preliminary release last week, the homebuilding industry continues to face an extremely difficult environment that includes record existing and new home inventory levels, intense price competition and weak consumer sentiment for housing," said CEO Richard J. Dugas, Jr. Meanwhile on Wednesday, the chief economist for the National Association of Homebuilders lowered his forecasts for new construction. "It's fair to say the performance of the housing market during the first half [of 2007] and the outlook for the second half and next year are a lot weaker than six months ago," said David Seiders, in a mid-year housing outlook. Seiders said the "unanticipated and sudden turmoil in the subprime-mortgage sector" and still rising delinquencies and foreclosures create "massive uncertainty over where we're going." He blamed the downturn on the unsustainable boom of new housing sales that was driven by an "overly aggressive monetary policy." Looking ahead, Pulte said it expects third-quarter EPS of $0.10-0.20/share excluding charges, but that due to the lack of longer-term visibility it wouldn't provide guidance beyond that period.
Sources: Press release, MarketWatch
Commentary: Homebuilders Recovered, But Nobody Showed UpHomebuilders Sinking Into the Subprime Mess
Stocks/ETFs to watch: PHM. Competitors: LEN, CTX, TOL, BZH, DHI. ETFs: XHB, ITB

Fed: U.S. Economy Expanding Moderately

The Fed's Beige Book of regional economic conditions, released Wednesday, indicates that the economy expanded in June and early July as strength in the manufacturing and commercial real estate sectors compensated for continuing sluggishness in the housing sector. Consumer spending rose at a "modest pace," constrained by high food and energy prices, and sales were "mixed or below expectations" in several districts. Kansas City and Dallas posted slowing growth and Boston and Atlanta reported mixed conditions. Housing related sales, including furniture and DIY materials, were weak. Last week, Fed Chair Ben Bernanke told a Congressional hearing the housing slowdown could rein in economic growth, but reiterated that the Fed's primary concern is inflation. In related news, New York Fed President Timothy Geithner said Wednesday the economy is "performing well" and defaults on commercial and industrial loans are "extremely low." "Overall, the U.S. economy continues to display remarkable resilience and flexibility, despite a range of adverse shocks," he said. The Fed will next meet to decide monetary policy on August 7.
Sources: The Federal Reserve Board Beige Book, New York Times, KTRE.com, MarketWatch, Bloomberg, Reuters
Commentary: Bernanke Foresees Cooling Inflation, Stronger GrowthSlow Housing Stats, Continued Rebound In ManufacturingWhy is the Fed So Indecisive?
Stocks/ETFs to watch: SPY, DIA, AGG

RETAIL

Buffett Takes a Stake in Kraft

Kraft Foods, which has been targeted by activist-investors seeking faster change at the food giant, can add another big name to its shareholder list. The Wall Street Journal reports that Berkshire Hathaway, the investment vehicle of guru Warren Buffett, has acquired a stake of less than 5% in the company,KFT 26 07 2007 Chart citing a person familiar with the purchase. Veteran raiders Carl Icahn and Nelson Peltz already have holdings in the company. Kraft's German shares rose to the equivalent of $35.42 in Frankfurt, 1.7% above Wednesday's NYSE close. The source indicated that the Berkshire purchase predated news of Peltz's position last month. It was unclear, however, the Journal said, whether Buffett, traditionally a value investor, sides with the activists, or whether Buffett's history of investing in value companies with strong brands may have given Kraft a vote of confidence. Buffett declined to comment as did representatives of Kraft and Peltz. Kraft shares are up 11% since their March 30 spin-off from tobacco giant Altria but are down 1% this year. They gained 3.1% on July 13 when the Journal reported that Icahn had taken a stake in the company. It's unclear how big a stake Icahn owns, and he apparently isn't pressing as hard for change at Kraft as he is at some of his other holdings, the Journal said. Peltz, who owns a 3% stake, is calling on the company to sell its Maxwell House coffee and Post cereals businesses and to use the proceeds to buy back shares, the Journal said. Kraft says it is looking to increase value by increasing marketing spending and making a push overseas, not by selling off existing brands.
Sources: Wall Street Journal, Bloomberg
Commentary: Kraft Foods Shares Rise On Reports of Icahn Stake, Peltz MeetingKraft Foods May Go On a Value-Creating Acquisition Spree
Stocks/ETFs to watch: KFT, BRK.A, MO

Anheuser-Busch Beats By a Penny, Reaffirms Outlook

Wednesday Anheuser-Busch Companies reported it beat by a penny in its recently ended quarter, on strong domestic beer sales. Shares rose 0.96% in composite trading. BUD 26 07 2007 EarningsChart EPS was $0.88 on net sales of $4.52 billion; analysts were looking for $0.87 on net sales of $4.44 billion. The company also announced a nearly 12% boost to its quarterly dividend, from $0.295 to $0.33. Not including $0.01 per share from the sale of a Spanish amusement park, the company's EPS was in-line. Bud plans to raise prices, and offer less discounts for the rest of the year as a result of what CFO W. Randolph Baker termed on the conference call, a "pricing environment... that was favorable" and and outlook that "continues to be positive" (see full transcript). Anheuser-Busch's U.S. shipments to wholesalers rose 2.3%, against an increase in sales to retailers of just 0.1%, which could possibly create problems in the current quarter, as wholesalers may have to cut back on orders while they unload excess inventory to retailers. International sales rose 1.6%, as strong Canadian and Chinese sales of Bud offset weakness in the U.K. The company reiterated its long-term EPS growth target of 7%-10%, and believes its full-year 2007 EPS growth will exceed this range. Monday, a Citigroup analyst put the odds of a Anheuser-Busch merger with rival Belgian brewer InBev S.A. at 70%, saying it was the only hope the company had to raise its global profile. Anheuser-Busch became the exclusive U.S. distributor for InBev brand beers in February, including Beck's, Bass and Stella Artois.
Sources: Press Release, Bloomberg, MarketWatch, Dow Jones Newswires, AP
Commentary: Rumor or Reality: Is Anheuser-Busch A Takeover TargetAnheuser-Busch Shares Higher On Ackman Activist Target SpeculationAnheuser-Busch Jumps on Shake Out Rumors
Stocks/ETFs to watch: BUD, INBVF.PK. Competitors: TAP, STZ. ETFs: VDC, UGE, PSL
Earnings call transcripts: Anheuser-Busch Q2 2007 Earnings Call Transcript

TRANSPORT AND AEROSPACE

Daimler Says Hitch Won't Derail Chrysler Sale

DaimlerChrysler's $7.4 billion deal to sell 80% of Chrysler to hedge fund Cerberus Capital Management is still on, despite the difficulty its bankers are having raising the money needed for the buyout. DCX 26 07 2007 Chart Investors are proving reluctant to accept the terms for $12 billion in loans that were meant to finance the purchase and Chrysler's restructuring. The New York Times quotes a "person with direct knowledge" as saying the banks, led by JPMorgan Chase, have agreed to take on the debt themselves and sell it later. "We are completely within the anticipated time schedule for the closing," said DaimlerChrysler CEO Dieter Zetsche during DaimlerChrysler's Q2 earnings call. A Cerberus spokesman also confirmed the deal will close on schedule. Bond fund manager Bill Gross has said several times recently that Chrysler might have trouble raising money because problems in the mortgage market have made investors more cautious. "Those that assert that this is merely an isolated subprime crisis should observe very closely the price and terms that lenders are willing to accept with Chrysler finance this week," Gross wrote Wednesday on his company's website (see full summary). "That more than anything else may...tell them that their world has suddenly changed." DaimlerChrysler shares closed up 4% at $93.02.
Sources: New York Times, Reuters
Commentary: Chrysler Struggling to Raise $20 Billion in Loans -- WSJBorrowing Costs Rising in Chrysler, Other Buyout DealsCerberus' Acquisition Makes Chrysler Circle The Wagons
Stocks/ETFs to watch: DCX. Competitors: F, GM, TM. ETFs: DPC, RXI, EWG

ENERGY AND MATERIALS

ConocoPhillips Net Drops 94% On Venezuela Charge; Beats Estimates

U.S. number-three oil producer by market cap, ConocoPhillips, saw its net income drop 94% in Q2 on a $4.51 billion one-time write-off stemming from the cessation of its Venezuelan operations.cop ConocoPhillips, along with U.S. number-one crude producer Exxon Mobil, decided last month to cease almost all Venezuelan operations after State-controlled oil company Petroleos de Venezuela seized at least 60% stakes in four different projects valued at a total of $31 billion with the support of President Hugo Chavez (full story). The result to Conoco's latest quarter was net income of $301 million, good for EPS of $0.18 cents a share. Excluding one-time charges, EPS was $2.90 (net income of $4.8 billion) on revenue of $47.4 billion. Consensus estimates were for EPS of $2.68. Conoco shares jumped 2.68% in composite trading Wednesday. The company anticipates its 3Q production will be lower as a result of the cessation of its Venezuelan operations (see full conference call transcript). Conoco recently announced a $15 billion share buyback (see full story).
Sources: Press Release, Wall Street Journal, Bloomberg, AP
Commentary: ConocoPhillips: Grit Your Teeth and Sell
Stocks/ETFs to watch: COP. Competitors: XOM, CVX. ETFs: IEO, XOP

Shell Posts 18% Q2 Profit Jump on Strong Margins

British-Dutch oil and natural gas company Royal Dutch Shell reported on Wednesday that Q2 profit went up 18% on strong refining margins that compensated for production lost amid unrest in Nigeria. RDS.A 26 July 2007The company posted net profit of $8.67 billion ($1.38/share) versus $7.32 billion ($1.13) in the year-ago period. Excluding one-time items, profit was $6.896 billion, ahead of analyst expectations of $6.770 billion. The Journal notes that the solid result highlights the advantage of being an integrated oil company, since refining margins outshone sluggish oil production. Shell is "in an extremely healthy state at the moment," said New Star Asset Management fund manager Edward Collins. "You are continuing to see the refining and marketing margins coming through even stronger now." Record gasoline prices in the U.S. offset production lost in the Niger Delta, where militant violence continues to curtail activities at refineries. Shell lost production of 195,000 barrels a day in the Delta during Q2.
Sources: Wall Street Journal, Reuters, Bloomberg
Commentary: Royal Dutch Shell Planning Cuts in NigeriaRoyal Dutch Shell Cuts Investment in NigeriaBP and Shell in Merger Talks -- Times of London
Stocks/ETFs to watch: RDS.A. Competitors: BP, XOM, TOT. ETFs: DIG, PRFE, EWU

FINANCIAL

E*Trade's Growth Slows On Fewer Transactions and New Accounts

Discount online broker E*Trade Financial Corp.'s second-quarter net income rose just 1.6%, but shares rose 2.6% in after-hours trading Wednesday. Fewer transactions and new accounts were to blame for the company's slow growth. EPS came in at $0.37 on a GAAP basis versus last year's total of $0.36.etfc On a non-GAAP basis, EPS was $0.42 due to a $0.05/share charge for legal and regulatory fees. The company again revised its full-year forecast (it had already trimmed its outlook during its Q1 report) to $1.58-1.72 a share (the midpoint was unchanged at $1.65). Revenue jumped 8.5% to $664 million on strength from institutional investors. Analysts were expecting EPS of $0.40 on revenue of $664 million. Net income after provisions for loan losses climbed 15%. The number of new retail accounts opened during the recent quarter fell 15% to 100,676, while total client assets were up 6.1% y/y to $213 billion. Mitchell Caplan: "Our second quarter performance speaks to the progress we have made as a company in executing against our strategic plan." (See full conference call transcript.)
Sources: Press Release, Wall Street Journal, TheStreet.com, Reuters, MarketWatch, Dow Jones Newswires
Commentary: E*Trade Total Client Asset Gain Trails S&P500 In AprilSuitors For TheStreet.com: Financial Media and Online Brokers?Cramer's Take on ETFC
Stocks/ETFs to watch: ETFC. Competitors: AMTD, SCHW. ETFs: FDN, HHH
Earnings call transcripts: E*TRADE Financial Q2 2007 Earnings Call Transcript

MUST-READS ON SEEKING ALPHA TODAY

U.S. Market: S&P 500 Loses Key Support; Dow Holds On
Housing: Weak Home Sales, Tightening Credit Standards = Multiple Mortgage Apps
Long Idea: GE is on the Ball: Set to Gain From a Nuclear Resurgence
Short Idea: Time For Investors To Put Cash In The Bank?
Internet: Seven Reasons Why Amazon and eBay Should Merge
Telecom: AT & T Poised for Substantial Rise
Networking: Houston Wire and Cable: Not a Typical Distributor
Hardware: Syntax-Brillian: Short Interest Up, Stock Price Down
Chips: Lam Expects Slower Second Half, Maintains Full Year Forecast
Software: On-Demand Software: SuccessFactors Files For IPO, Target for Salesforce.com?
Media: Merrill Lynch Supports XM's Proposed "A La Carte Pricing"; Jaco More Hesitant
Healthcare: Mentor Corp. Executive 'Pay To Performance' Links Lack Transparency
Retail: NutriSystem Investors Sell Off Shares Like a Binge Dieter Shedding Pounds
Transport: A Look At O'Reilly Automotive's 2Q Productivity Metrics
Gold: Gold Shines in a Murky Environment
Energy: GlobalSantaFe/Transocean Merger Should Be Trouble-Free
Financial: Financial Sector Trails S&P 500 16% Year To Date
Asia: Asian Hedge Funds: 'There's No Substitute For Local Knowledge'
ETFs: Investing in Taiwan via ETF
Hedge Funds: Safety Net of Hedge Fund Regulation Encourages Perverse Risk-Taking
IPO Analysis: WuXi PharmaTech Expected To Make Timely U.S. IPO
Sound Money Tips: Backup your files
Jim Cramer: Latest stock picks
Earnings Transcripts: Apple F3Q07ConocoPhillips Q2 2007Symantec F1Q08Corning Q2 2007Boeing Q2 2007Anheuser-Busch Q2 2007QUALCOMM F3Q07Cirrus Logic F1Q08Rockwell Automation F3Q07The New York Times Q2 2007STMicroelectronics Q2 2007GlaxoSmithKline Q2 2007Xcel Energy Q2 2007DaimlerChrysler Q2 2007Centex F1Q08Business Objects Q2 2007Convergys Q2 2007Silicon Laboratories Q2 2007Xerox Q2 2007Reynolds American Q2 2007Hess Q2 2007Telecom Italia Q2 2007Colgate-Palmolive Q2 2007Zebra Technologies Q2 2007Linear Technology F4Q07PepsiAmericas Q2 2007Arrow Electronics Q2 2007Exelon Q2 2007Genzyme Q2 2007Nabors Industries Q2 2007Travelzoo Q2 2007O'Reilly Automotive Q2 2007Allegheny Technologies Q2 2007E*TRADE Financial Q2 2007MEMC Electronic Materials Q2 2007Cadence Design Systems Q2 2007GSI Commerce Q2 2007Akamai Technologies Q2 2007Fiserv Q2 2007EnCana Q2 2007Equinix Q2 2007LSI Logic Q2 2007Sybase Q2 2007AsiaInfo Q2 2007FormFactor Q2 2007Parametric Technology F3Q07Fidelity National Information Services Q2 2007Baidu.com Q2 2007

Have Wall Street Breakfast emailed to you every morning before the market opens.

Source: Wall Street Breakfast