Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 9:00 AM ET
S&P 500: +7.75; 1,523.50
NASDAQ 100: +16.75; 2,232.25
Dow: +64; 13,672
NIKKEI 225: -2.09%; 16,517.48 (-352.92)
HANG SENG: -3.25%; 30,468.34 (-1,024.54)
SHANGHAI SE COMPOSITE: -2.31%; 5,777.81 (-136.48)
BSE SENSEX 30: +1.28%; 19,976.23 (+251.88)
FTSE 100: -0.63%; 6,544.50 (-41.60)
CAC 40: -0.31%; 5,712.97 (-17.95)
XETRA-DAX: -0.38%; 7,850.53 (-30.32)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +1.09%; $94.51 (+$1.02)
Gold: +0.33%; $796.30 (+$2.60)
Natural Gas: +0.28%; $8.66 (+$0.02)
Silver: +0.31%; $14.37 (+$0.045)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Chevron's Q3 Net Drops, Misses Estimates
Chevron reported third-quarter net income declined 26% to $3.7B, or $1.75/share, with EPS ex-items of $1.94 missing Street expectations of $2.07/share. This is Chevron's first Q3 profit drop since 2002, when U.S. gasoline prices averaged $1.34/gallon, says Bloomberg. Q3 revenues rose 1.8% to $55.17B. Chevron said downstream (refining, marketing and transportation of fuel) earnings dropped 74% to $377M, negatively impacting overall earnings due to "weak refining and marketing conditions in the U.S." (Earnings call transcript later today). On Thursday, rival Exxon Mobil said its Q3 profit fell 10% to $9.41B, also hurt by declining margins on higher oil prices. (Full story). In a pre-earnings note, Deutsche Bank analyst Paul Sankey told clients, "Upstream profitability is not keeping pace with crude price increases. Refining and marketing has been the victim of a merciless assault from those same rising crude prices...Because gasoline has not been THAT weak, marketing is also horrible." Shares of Chevron lost 2.7% to $89.04 on Thursday. Chevron was last trading lower by 0.5% to $88.56 in very thin pre-market activity.
Commentary: Refining Margins to Hurt Chevron Profits • Soaring Oil Prices, Shrinking Margins Hit Exxon • What's Up With Oil?
Stocks to watch: CVX. Competitors: XOM, RDS.A, BP, TOT, COP. ETFs: XLE, DIG, IGE, IYE, PRFE
'Transformers' Powers Viacom Q3 Beat
Viacom reported better-than-expected third-quarter results early Thursday. Net income surged 80% to $641.6 million, or $0.96/share, boosted by a $192M gain from the $370M sale of Famous Music LLC to Sony and strong sales of its "Transformers" movie. Excluding items, EPS were $0.65/share, beating analysts' average estimate of $0.59. Sales climbed 24% to $3.27B, versus analyst estimates of $2.99B. Revenue at its Filmed Entertainment division jumped 57% to $1.3B, while operating profit totaled $71.1M, compared to a loss of $7.8M last year. Viacom CEO Philippe Dauman called Transformers a "phenomenal success" and said the company is "very pleased with (its) 2008 movie slate." (Earnings call transcript later today). Its Media Networks division (including MTV and other cable channels) revenues rose 9% to $1.99B, with operating profit growth of 2% to $796.8M. Viacom said it repurchased 20.9M shares of its common stock for an aggregate price of $832M during the quarter. Shares of Viacom lost 2.3% to $40.41 on Thursday. In very thin pre-market trading Viacom was last up 7.6% to $43.50.
Commentary: Media, Tech Companies to Form Online Copyright Protection Body - WSJ • MTV, RealNetworks to Form JV to Challenge Apple iTunes • Seven Emmy Award-Winning Stocks for Your Portfolio
Stocks to watch: VIA. Competitors: DIS, GE, NWS, TWX. ETFs: FPX, XLY, PBS
ValueClick Profits Flat; In 'Active Negotiations' to Settle FTC Probe
ValueClick Inc. posted flat Q3 profits, while revenue rose 14% including sales from recently acquired Shopping.net and MeziMedia. The online marketing company had Q3 net income of $16.8 million ($0.17/share), same as 2006, on revenue of $156.9 million. Income was slightly ahead of analyst forecasts: analysts polled by Reuters expected EPS of $0.16 on revenue of $156.2M. For full-year 2007, ValueClick projected EPS of $0.70 to $0.71, down from its July forecast of $0.74 to $0.76. Analysts were expecting $0.71. It sees revenue of $635-640 million for the year; analysts were expecting $639.9 million. "While we continue to face challenges in lead generation, I’m encouraged by the growth in our other core businesses, including display advertising, affiliate marketing, technology, and comparison shopping," said CEO Tom Vadnais. "Our unique combination of diverse online marketing services, technologies and expertise in driving publisher and advertiser monetization places us in a strong position to benefit from the continued fragmentation of online consumers." ValueClick is currently under FTC probe for questionable marketing practices. It said it is in "active negotiations to settle the probe. "The softness in our lead-generation business is primarily from the segments that are the subject of the FTC investigation," Vadnais said on the company's earnings conference call (full transcript).
Commentary: ValueClick: Richly Valued, But Well Positioned • ValueClick Projected Buyout Value • Online Ad Revenues: Display vs. Search Going Forward
Stocks to watch: VCLK. Competitors: GOOG, YHOO, MSFT, TWX, MIVA, APTM
Earnings call transcript: ValueClick Q3 2007
Sprint Considering WiMax Spinoff and Merger with Clearwire - WSJ
The Wall Street Journal reports sources say Sprint is weighing its options for its plans to roll out 4G high-speed wireless Internet service using WiMax technology, including a possible spinoff and merger with Clearwire Corp. The sources said Sprint's board will be reviewing its WiMax plans and the company's CEO search at a retreat this weekend. Acting CEO Paul Saleh declined to name any CEO candidates, but sources say Sprint spinoff Embarq Co. CEO Dan Hesse is a front-runner. Separately, Sprint is reportedly close to reaching an agreement with Google to offer mobile devices based on Google's new mobile operating platform. In its (Q3 earnings) conference call Thursday, Sprint said it spent $73 million on WiMax in Q3, as it is "continuing to prepare for soft launches of WiMax in the Baltimore, Washington and Chicago markets, late this year." (Full transcript). However, Sprint said it will likely spend less than its 2007 budget for WiMax. Sprint has a three-year $5B WiMax budget. Over the summer, Sprint and Clearwire reached a tentative agreement to collaborate on a national WiMax network, but a definitive agreement has yet to be signed. The sources told the WSJ any WiMax restructuring for Sprint would have to wait for a new CEO to be hired. Shares of Sprint fell to a new 52-week low, losing 3% to $16.58 on Thursday. Clearwire gained 4.9% to $21.53.
Commentary: A Sprint Merger With Clearwire • Four Suggestions To Save Sprint • Sprint's Q3 Net Tumbles on More Subscriber Losses
Stocks to watch: S, CLWR, INTC, MOT, GOOG. Competitors: ALVR, T, VZ, DT
Earnings call transcript: Sprint Nextel Q3 2007
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• Shares of electric utility Duke Energy (NYSE:DUK) rose 2.5% in pre-market action (as of 8:04 AM ET) as the company topped earnings forecasts and predicted it would eclipse its FY earnings target. Net income was $607 million, good for EPS of $0.48, vs. EPS of $0.60 a year ago, before the company had spun off its natural gas unit. Revenue climbed 16% to $3.82 billion. Consensus estimates were for EPS of $0.39 on revenue of $3.43 billion. CEO James Rogers expects Duke's FY2007 earnings to "finish well above" the company's target of $1.15 per share. Consensus analyst estimates had been for FY2007 EPS of $1.18. (source: AFX News)
• National HMO Cigna Corp. (NYSE:CI) reported a 22% rise in Q3 income, topping consensus analyst expectations. Shares were higher by 0.48% in pre-market trading (as of 8:30 AM ET). Net income climbed to $365 million, good for EPS of $1.28 per share, vs. EPS of $0.92 a year ago. Adjusted EPS was $1.14, while total revenue was $4.41 billion. Consensus analyst estimates were for adjusted EPS of $0.94 on revenue of $4.41 billion. Health insurance margins fell to 5.7% from 6.1% a year ago, but were offset by strong performance in disability and life insurance as well as international life, accident and supplemental health insurance. (source: AP)
Asian Headlines (via Bloomberg.com)
Asian Stocks Slide on Renewed Subprime Concern; Banks, Exporters Lead Drop Asian stocks fell the most in more than two months, led by financial shares, on concern Citigroup Inc. may be short of capital, renewing speculation losses from U.S. subprime loans will reduce profits.
ChemChina Offers $2.7 Billion for Nufarm, Bids with Blackstone, People Say China National Chemical Corp. offered A$2.96 billion ($2.7 billion) for Australian farm-chemical maker Nufarm Ltd., inviting two U.S. buyout firms to join, three people familiar with the matter said.
Kwon Says Won Rally Won't Hurt South Korean Exports, Slow Economic Growth South Korean Finance Minister Kwon Okyu said the nation's exporters will cope with the won's surge against the dollar, helping economic growth accelerate next year.
Mitsui's Earnings Surge as Record Oil Price Boosts Overseas Energy Revenue Mitsui & Co., Japan's second-largest trading company, said first-half profit surged 63 percent as gains in crude oil prices bolstered revenue from overseas fields, including those in Australia.
Mazda's Second-Quarter Profit Rises 29 Percent as Weak Yen Boosts Exports Mazda Motor Corp., a third owned by Ford Motor Co., boosted net income 29 percent in the second quarter, helped by demand in the U.S. and a weak yen.
Indonesia's Government Hires Banks for $2 Billion Bond Sale, People Say Indonesia's government hired Barclays Capital, HSBC Holdings Plc and Lehman Brothers Holdings Inc. to help sell as much as $2 billion of dollar bonds, according to two people with direct knowledge of the plan.
European Headlines (via Bloomberg.com)
Stocks in Europe, Asia Drop; Barclays, Mitsubishi UFJ, Fortis Pace Decline Stocks in Europe and Asia declined, led by financial companies, on concern losses from the U.S. subprime-mortgage collapse will deepen.
British Airways Misses Earnings Target, Cuts Revenue Forecast on Dollar British Airways Plc reported first- half profit growth that trailed analyst estimates and lowered its sales forecast because of the dollar's decline.
BSkyB Profit Falls 28 Percent on Cost of Attracting Broadband Customers British Sky Broadcasting Group Plc, the U.K.'s biggest pay-television broadcaster, said first-quarter profit dropped 28 percent, the sixth straight decline, on costs to win broadband subscribers from Virgin Media Inc.
Dollar Falls Against Euro, Heading for Weekly Decline, Before Jobs Report The dollar fell, headed for a fourth weekly loss against the euro, on speculation a U.S. government report will show slower employment growth and increase pressure on the Federal Reserve to cut interest rates.
Barclays Drops on Speculation It Asked Bank of England for Emergency Funds Barclays Plc fell the most in almost three months in London trading on speculation that it approached the Bank of England for emergency funding.
Corporate Bond Risk Rises to Seven-Week High in Europe on Subprime Concern The risk of owning European corporate bonds rose to a seven-week high as credit-default swap traders bet U.S. jobs data today will show the subprime mortgage collapse is weighing on the economy.