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U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Motorola Beats and Raises; Posts First Profit in Three Quarters
Motorola said Thursday its Q3 net earnings plunged 94% year-over-year. Its shares are up 3.8% in pre-market trading after the company posted its first profit in three quarters, and revised its Q4 earnings estimates ahead of Street expectations. Net income for the $42.5 billion company was $60 million, or $0.02/share, down from $968 million ($0.39/share) a year earlier. Net of $0.04 charges from job cut and asset write-downs, EPS of $0.06 beat analysts estimates of $0.04. Revenue dropped 17% to $8.81 billion amid weak cellphone sales, matching estimates. Gross margin fell 3.4% to 28.4%. Motorola said it shipped 37.2 million handsets in the quarter, which gives it about a 13% global market share. Its mobile-device unit lost $248 million; Motorola said in July it doesn't expect the unit to turn profitable during 2007. Motorola launched nine new cellphones in October, including a high-end Razr2 which costs $250-300. Executives said in September new, innovative cellphones would help the company break out of its slump. Motorola said that for Q4, it expects EPS from continuing operations of $0.12 to $0.14. Street forecasts had been for EPS of $0.11. "We maintained our focus on increasing cash flow, enhancing profitability and driving growth," said CFO Tom Meredith. "We are beginning to see improvements in our cash conversion cycle and operating cash flow, which will lead to increased financial flexibility," (full earnings call transcript later today). One analyst agreed: "The turnaround is here," Lawrence Harris of Oppenheimer & Co. said in a Bloomberg interview. "The cost-cutting plan is taking hold."
Commentary: Goldman Sees Light At The End Of Motorola's Antenna • Icahn May Take Aim at Motorola, Again • Something's Not Right About Motorola
Stocks to watch: MOT. Competitors: NOK, ERIC, AAPL, RIMM, PALM. ETFs: BDH, WMH, IGN
Earnings call transcript: Motorola Q2 2007
Comcast Reports In-line, Falls on Diminished Cash Flow
Comcast Corp. shares were down 1.9% in pre-market trading Thursday (as of 7:50 AM ET) despite an in-line Q3 earnings report, on increasing competition which cut heavily into its consolidated free cash flow. The company had previously set a target of flat consolidated free cash flow for FY2007, but now sees that figure being down 10% y/y. Net income was $560 million, good for EPS of $0.18, versus EPS of $0.38 a year earlier. However, EPS was only $0.17 on an adjusted basis a year ago, with the majority of that quarter's profit coming from the company's acquisition of Adelphia Communications and related asset swaps. Revenue climbed 21% y/y to $7.78 billion. Consensus analyst estimates were for EPS of $0.18 on revenue of $7.75 billion. Comcast added 1.4 million subscribers in Q3, versus growth of 1.5 million new customers in Q2. The breakdown was as follows: it added 489,000 new digital cable subscribers (but lost 65,000 basic cable subscribers), 450,000 new high-speed internet customers and 662,000 new digital voice users. Comcast has come under increased pressure as a result of traditional telecom players like Verizon and AT&T offering full cable services to customers, in addition to telephone and high-speed internet services. The stiff competition forced Comcast to up its capital spending by 20% in the latest quarter, to $1.5 billion. As a result, the latest quarter's free cash flow was halved to just $524 million. Perhaps reflecting on its consolidated cash flow concerns, Comcast authorized the addition of $7 billion to its stock repurchase plan, due to what CEO Brian L. Roberts termed "our strong confidence in the cash flow generation of our business," (full transcript later today). Since 2003, Comcast has repurchased 444 million common shares for roughly $9.2 billion.
Commentary: Comcast Corp: Caveat Inspector • Comcast Interferes With Subscribers For Their - And Its - Own Good • Comcast, Time To Start Listening
Stocks to watch: CMCSA. Competitors: DISH, DTV, TWC, CVC, VZ, T. ETFs: XLY, PTE, VCR
Earnings call transcript: Comcast Q2 2007 Earnings Call Transcript
Bristol-Meyers Tops Street as Plavix Retakes Market
Bristol-Meyers posted third-quarter earnings and revenue that were slightly ahead of Street expectations, and boosted its full-year forecast, after sales of its top-selling anti-clotting drug Plavix grew due to an extension of its patent. Net income more than doubled to $858 million (adjusted EPS of $0.38/share) from $338 million ($0.17/share) last year. Last year's earnings took a hit after generic drugmaker Apotex made its Plavix imitation for three weeks prior to Bristol-Meyers's patent extension. Revenue rose 22% to $5.05 billion from $4.15 billion. Street estimates were for EPS of $0.37 on revenue of $5.02 billion. Plavix sales nearly doubled to $1.25 billion, boosting BMY's pharma unit sales 24%. Health-care sales were up 12% and nutritionals gained 16%. Sales of its cancer drug Erbitux, which it sells in partnership with ImClone, gained 6% to $185M. Newer drugs were a strong point: antipsychotic Abilify had $420 million in sales (+34%); HIV treatment Reyataz $273 million (+17%); and hypertension drugs Avapro and Avalide sold $309 million (+12%). Meanwhile cancer drug Taxol and cholesterol treatment Pravachol saw sales declines of 26% and 55% respectively, due to generic competition. For full-year 2007, Bristol upped its EPS forecast to $1.42-1.47 from a previous $1.35-1.45. "We remain focused on developing breakthrough medicines for patients worldwide, while also delivering shareholder value," CEO James Cornelius said (full earnings call transcript later today). "Bristol-Myers benefits now from the depletion of generic Plavix, and that is still the biggest contributor to earnings," Miller Tabak analyst Les Funtleyder told Bloomberg in an interview. Apotex's generic drug has "worked its way out of the channel," he said. Shares are up 1.9% in pre-market trading.
Commentary: The Bill Cara Global 100 Best Companies Explained • Baby Stocks: 10 Ways to Grow Your Portfolio
Stocks to watch: BMY. Competitors: PFE, MRK, NVS, GSK, SNY. ETFs: IHE, PPH, PRFH
Earnings call transcript: Bristol-Myers Squibb Q2 2007
Taiwan Semi Q3 Profit Down on Pricing and Capex
Taiwan Semiconductor Manufacturing Co. [TSMC] reported a 6.5% decline in third-quarter earnings to NT$30.37 billion ($936.2M), or NT$1.15/share (US$0.17/ADR unit), missing analyst expectations of net income of NT$31.73B. Revenues rose 8% to NT$88.96B, topping the company's internal forecast. Gross margins fell to 45.8%, compared to 49.9% last year, while operating margins declined to 36.4% (vs. 40.8%) and net margins totaled 34.1% (vs. 39.4%). TSMC's margins were negatively impacted by lower prices and higher R&D spending. "Third quarter set a record for our business in terms of revenues and wafer shipment, where all our three major market segments (communication, computer, and consumer) saw double-digit growth sequentially," commented VP and CFO Lora Ho. Ms. Ho added that Q4 demand from computer related applications is expected to grow the strongest, followed by communications, but consumer applications will decline due to seasonality. For Q4, TSMC expects revenues between NT$92B to NT$94B, with gross margins in a range of 46% to 48% and operating margins between 37% to 39%. CEO Rick Tsai said capex in 2008 will be "significantly less" than the estimated US$2.6B earmarked for 2007, since this year's budget covers "some of 2008's needs." Ordinary shares of Taiwan Semi rose 0.5% to NT$61.10 on Thursday ahead of its earnings release. TSMC ADRs lost 2.5% to $9.77 on Wednesday and were last up about 1% to $9.87 in thin pre-market trading.
Commentary: Taiwan Semiconductor: Uncertainty is Priced In • Taiwan Semiconductor and Micron: After Hard Hits, Potential Upside • Eight Ways to Invest in Taiwan
Stocks to watch: TSM. Competitors: UMC, SMI, CHRT. ETFs: EWT, ADRA, ADRE
EMC Net Jumps 74%; Doubles Repurchase Program to $2B
Data storage maker EMC Corp. said Thursday Q3 profits surged almost 74%, in line with Street estimates, while revenue growth of 17% topped expectations. EMC also doubled its stock repurchase program to $2 billion, sending shares 6.4% higher in pre-market trading. Third-quarter net income rose to $492.9 ($0.23/share) million from $283.7 million ($0.13/share) last year. Adjusted EPS of $0.17/share matched analyst expectations. Revenue climbed to $3.3 billion from last year's $2.81 billion, better than the $3.19 billion analysts polled by Reuters expected. EMC owns 86% of virtualization software maker VMware Inc., which accounts for about $34.4 billion of EMC's $49 billion market cap. VMware reported Q3 earnings Wednesday night, beating analyst estimates with a $65 million profit, and sending its shares up 4.6% in extended trading (full story). In a recent Barron's feature, editor Tiernan Ray said EMC shares offer investors a piece of VMware at a much more reasonable valuation (full story). "Customers around the world are benefiting from the breadth and quality of our information infrastructure product and services portfolio, which provides them with the most cost-effective way to store, protect, optimize, and leverage their vast and growing quantities of strategic information. We see broad opportunities in the global marketplace," CEO Joe Tucci said (full earnings call transcript later today).
Commentary: EMC Gets Two Upgrades; Acquires Online Backup Co. Mozy • Despite VMware Stake, EMC is Undervalued • Analysts Expect Narrowing of VMware, EMC Valuation Gap
Stocks to watch: EMC, VMW. Competitors: HPQ, IBM, STX, CSCO. ETFs: IAH, MTK, FXL
Earnings call transcript: EMC Q2 2007
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Asian Headlines (via Bloomberg.com)
China Economy Grows 11.5 Percent, Adding Pressure on Yuan, Interest Rates China's economy, the biggest contributor to global growth, grew 11.5 percent in the third quarter, adding pressure for faster currency appreciation and higher borrowing costs to curb inflation and asset bubbles.
ICBC to Buy 20 Percent Stake in Africa's Standard Bank for $5.6 Billion Industrial & Commercial Bank of China Ltd. agreed to buy 20 percent of Standard Bank Group Ltd., Africa's largest bank, for 36.7 billion rand ($5.6 billion) in the biggest overseas investment by a Chinese company.
Bank of Japan May Lower Forecasts for Economic Growth, Inflation Next Week The Bank of Japan may have to cut its forecasts for economic growth and inflation in its twice- yearly outlook report next week, economists say, making it harder to justify an interest-rate increase soon.
Canon Net Falls 8.9 Percent on Foreign-Exchange Loss; Sales Forecast Cut Canon Inc., Japan's most profitable office equipment maker, reported its first quarterly profit decline in two years because of a foreign-currency loss. The company cut its full-year sales forecast, citing a stronger yen.
Hyundai Motor Profit Rises 45 Percent After Labor Pact Boosts Production Hyundai Motor Co., South Korea's largest automaker, reported third-quarter profit rose 45 percent, beating estimates, after a labor accord reduced disruptions from striking workers.
Citic Securities Profit Jumps Eightfold as Stock Rally Boosts Trading Fees Citic Securities Co., Asia's largest brokerage firm by value, said third-quarter profit soared more than eightfold as a surging Chinese stock market fueled growth in trading commissions and underwriting fees.
European Headlines (via Bloomberg.com)
European Stocks Climb on Earnings; France Telecom, Shell, ABB Shares Rise European stocks rose the most in more than a month after France Telecom SA and ABB Ltd., the world's largest builder of electricity networks, reassured investors that earnings in the region will keep growing.
Rexel Offers $4.29 Billion to Buy Hagemeyer, Will Sell Assets to Sonepar Rexel SA, the world's biggest distributor of electrical equipment, made a 3 billion-euro ($4.29 billion) hostile bid for Hagemeyer NV and said it will split the Dutch company's assets with Sonepar SA.
Daimler Posts Third-Quarter Loss on Writedown of Costs Related to Chrysler Daimler AG, the world's second-largest maker of luxury cars, reported its first quarterly loss in four years as higher earnings from Mercedes were wiped out by 2.6 billion euros ($3.7 billion) in costs from the sale of Chrysler.
German Business Confidence Dropped to 20-Month Low in October on Euro, Oil German business confidence dropped to a 20-month low in October after the euro's advance to a record and rising oil prices threatened to curb economic growth.
Standard Life Bids for Resolution With Stock, Cash Offer, Vying With Pearl Standard Life Plc, vying with Pearl Group Ltd., made an offer to buy Resolution Plc, the U.K.'s largest manager of closed life-insurance funds.
Ericsson Names Vestberg as Chief Financial Officer to Replace Sundstroem Ericsson AB, the world's largest maker of wireless networks, named Hans Vestberg chief financial officer to replace Karl-Henrik Sundstroem, nine days after saying profit and sales trailed its forecasts.