- Foreclosures soar. U.S. home foreclosure filings surged 65% in April vs. a year ago to more than 243K. One of every 519 U.S. households filed for foreclosure during the month. Nearly half of the filings were initial notices of default, suggesting many new properties entered the process. "What they've [the gov't] tried so far isn't working," RealtyTrac's Rick Sharga says. Economists think more than one million homes will be lost in 2008.
- Robust retail sales surprise. U.S. retail sales fell 0.2% in April, exactly offsetting March's rise. However, excluding auto sales, April sales were up 0.5% -- well ahead of economist estimates of 0.2%. Sales of building materials gained a robust 1.9%, more than reversing a 1.5% drop in March. Restaurants were up 0.9%. (Economist reactions)
- Sony trims PS3 losses. Sony (SNE) posted a ¥255B ($277M) net profit in Q1, reversing a year-ago loss. Sales were down 6.5% to $18.6B. Sony sold 9.24M PS3s during its fiscal year, and forecasts sales of another 10M during the coming fiscal year. Sony forecast a 21.5% drop in profits to $2.8B over the coming year. Sony sees a ¥100 dollar for the coming year, vs. an average of ¥114 over the past year.
- Can Icahn muscle merger? Shares of Yahoo! (YHOO) jumped 5.15% Tuesday on reports activist investor Carl Icahn may initiate a proxy war to replace Yahoo's board after its failure to come to terms with Microsoft (MSFT). Sources say Icahn has built a Yahoo stake over the last week, and would influence the board to try and get Microsoft back to the bargaining table.
- Freddie's loss less than expected. Freddie Mac (FRE) posted Q1 EPS of -$0.66, beating consensus estimates of -$0.93. "Market and credit conditions remained challenging during the first quarter of 2008," said Richard F. Syron. "However, Freddie Mac on the whole had a better first quarter than what we experienced in the third and fourth quarters of last year." Syron said FRE will raise $5.5B in new core capital, which it hopes to deploy in ways that take advantage of opportunistic market conditions. Freddie put aside $1.2B for credit losses. It said it does not anticiapte further dividend decreases. Shares are up 6.2% in early pre-market trading.
- All clear. The dispute over financing the Clear Channel Communications (CCU-OLD) LBO ended late Tuesday. The deal price was lowered to $17.9B from about $20B, or to $36/share from an original $39.20. Buyers THL Partners and Bain Capital are incidentally paying less than the $37.60/share a rival private-equity consortium of KKR, Blackstone Group (BX) and Providence bid. "It's a great company and the economics of the business are great," Clear Channel CEO said. The buyers and CCU agreed to drop their lawsuit against funding banks Citigroup (C), Morgan Stanley (MS), Credit Suisse Group (CS), Royal Bank of Scotland (RBS), Deutsche Bank (DB) and Wachovia (WB).
- BHP could raise bid; hits record high on talk of Chinese stake. BHP (BHP) CEO Marius Kloppers says he won't rule out boosting his $177B bid for Rio Tinto (RTP) with cash. He also noted soaring commodity prices have already enriched the bid: "Since we made our bid I think oil prices have moved up substantially, other commodity prices which we have in our portfolio moved up substantially and since we are paying with our scrip, this means that the value of our offer has effectively increased," he said. BHP shares were up as much as 5% in Australia on speculation Chinese interests may take a stake in the company.
- Arcelor posts strong quarter; Q2 looks even better. Global #1 steel-maker by volume ArcelorMittal (MT) said Q1 net profit grew 5.4% to $2.37B, short of expectations of $2.55B. Closely-watched Ebitda climbed 16.1% to $5.04B, slightly better than analyst estimates of $4.94B. Sales grew 21.8% to $29.81B amid rising steel prices. Looking ahead, MT expects Q2 Ebitda of more than $6.5B due to strong demand and supply constraints. Analysts said the earnings were solid, while Q2 expectations exceeded their forecasts.
- CEO-led group wants to take Usana private. A group of investors that controls 68% of Usana Health Sciences (USNA), including majority shareholder and CEO Myron Wentz, offered to pay $26/share to the remaining shareholders and take the firm private.
- Cash crunch at GM? General Motors (GM) CFO Ray Young now says the company may need additional financing to help it overcome the current economic crisis, worker strikes, problems with suppliers, and skyrocketing fuel prices. GM has $24B at its disposal, "But, if the current adverse economic conditions persist or deteriorate further we would consider a wide range of actions," inlcluding selling non-core assets, reprioritizing its capital spending, and tapping credit markets.
- Malone makes way for IAC splitup. Liberty Media (LCAPA) CEO John Malone, IAC/InterActiveCorp's (IACI) biggest shareholder, and IAC CEO Barry Diller came to terms yesterday. Diller largely got what he wanted: Malone dropped his appeal against an IAC splitup into five companies in exchange for board representation on each of the companies. IAC filed spinoff documents with the SEC yesterday.
- Recession in the cards: Greenspan. Alan Greenspan says U.S. economic data suggests a mild recession. "The risk is really on the housing side," he added. Housing market liquidation will come to an end in early 2009, but prices could stabilize before that, he said.
- eBay/Craigslist union on rocky grounds. Craigslist slashed back at eBay (EBAY) with a lawsuit of its own. After being accused by eBay of unfairly diluting its stake by more than 10%, Craigslist accuses eBay of, "Unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty." In a nutshell, Craigslist seems upset about eBay's promotion of Kijiji, a classified ads site that more-or-less goes head-to-head with Craigslist.
- Staples raised bid; Corporate Express rejects. Staples (SPLS) raised its offer to acquire Corporate Express to €8/share from €7.25, but got no more than a rebuff for its efforts. The Dutch Corporate Express said the revised bid still "significantly undervalues" the company. Staples CEO Ron Sargent said he will go directly to shareholders with his bid, due to a lack of responsiveness. He said he has received U.S. antitrust approval for the deal, and asked Dutch authorities to do likewise.
Earnings: Tuesday After Close
- Applied Materials (AMAT): FQ2 EPS of $0.26 beats consensus of $0.22. Revenue of $2.15B in-line. Sees FQ3 EPS of $0.10-0.14, short of consensus of $0.25. Sees Q3 orders down 15-25%. Shares: +0.15%.
- Electronic Arts (ERTS): FQ4 EPS of $0.09 beats consensus of $0.00. Revenue of $919M vs. consensus of $834.82M. Sees full-year 2009 EPS of $1.30-1.70, short of consensus of $1.73, and revenue of $4.9-5.15B vs. consensus of $4.59B. Shares: -2.8%.
- Phototronics (PLAB): FQ2 EPS of -$0.05 in-line. Revenue of $110M vs. consensus of $109M. Shares: +2.3%.
- Whole Foods (WFMI): FQ2 EPS of $0.29 just misses consensus of $0.30. Revenue of $1.9B in-line. Sees full-year total sales growth of 25-30%. Shares: -8.1%.
Earnings: Wednesday Before Open
- Arcelor Mittal (MT): Q1 EPS of $1.68 misses consensus of $1.82. Revenue of $29.81B in-line. Sees Q208 Ebitda to exceed $6.5B, up from $5.B0 this quarter and $5.3B Q207.
- Cellcom Israel (CEL): Q1 EPS of $0.78 beats consensus of $0.59. Revenue of $449M vs. $431M consensus.
- Dana Holding (DAN): Q1 EPS of -$0.29 misses consensus of $0.15. Revenue of $2.31B vs. consensus of $2.16B. Dana said its results were significantly impacted by vehicle production declines and high steel costs.
- Deere (DE): FQ2 EPS of $1.74 just misses consensus of $1.75. Revenue of $8.1B vs. consensus of $7.61B. Sees Q3 and full-year sales up about 20% Deere said soaring raw-material costs will impact operations for the balance of the year.
- Freddie Mac (FRE): Q1 EPS of -$0.66 beats consensus of -$0.93. Revenue of $1.53B vs. consensus of $1.44B.
- Goodrich (GR): Sees full-year EPS of $4.27-4.42, short of consensus of $4.50. Sees full-year revenue of $7.2-7.3B in-line.
- Jack in the Box (JBX): FQ2 EPS of $0.44 just beats consensus of $0.43. Revenue of $693.5M vs. consensus of $684M. Sees full-year EPS of $1.98-2.08, just short of consensus of $2.05.
- ING Group (ING): Q1 net profit fell 15.2% to €1.589B. EPS of €0.74.
- Sony Corp (SNE): Full-year EPS of $3.68 and revenue of $88.71B (at ¥100=$1). Q1 profit of $277M on sales of $18.6B. Sees full-year F2009 profit of $2.8B, down 21.5%.
- Telefonica (TEF): Revenues of €13.9B, up 1.1%. Organic revenue growth was 7%.
- The Nikkei rose 1.18% Wednesday, closing at a four-month high of 14,119. Elsewhere in Asia, Hang Seng -0.08% to 25,533. Shanghai +2.73% to 3,657. BSE Sensex +1.35% to 16,978.
- In Europe, markets are mixed at midday. FTSE -0.05% to 6,209. CAC +0.3% to 5,014. DAX -0.22% to 7,045.
- U.S. futures are down at 7:10 AM. Dow -0.11% to 12,811. S&P -0.18% to 1,402. Nasdaq -0.14% to 2,003.
- Gold -0.71% to $863.30. Oil -0.45% to $125.23.
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