Wall Street Breakfast: Must-Know News

by: SA Eli Hoffmann
SA Eli Hoffmann
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.
  • Costco sees tough year-end. Costco (NASDAQ:COST) warned its Q4 EPS will be well below current consensus of $1.00 (report date Oct. 8). "Factors negatively affecting our 4Q earnings outlook arise largely from inflation, particularly as to energy costs." The warning is surprising, because discounters have been gaining market share as consumers hoard their cash. COST also revealed a $0.16 quarterly dividend, and authorized an additional $1B share buyback.
  • Senate mulls more stimulus. The Senate is beginning to work on a second economic stimulus package this week, an indication of just how serious it thinks the current downturn is. Officials gave little indication as to the package's details; some think it could be aimed at spurring infrastructure investment or alternative energy. Pelosi spokesman Brendan Daly said recent economic reports, particularly last week's jump in the Consumer Price Index, are disconcerting enough to motivate lawmakers to act again to shore up the economy. "We think the first instance was very effective in that it increased spending by consumers and I would suggest the economy would be worse off without that spending." [DJ]
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  • Yahoo comes up short, market yawns. Net income of $131.2M missed analyst estimates (see below). Shares gained 2% in extended trading as results weren't as bad as some had feared. "We knew they were going to miss, but it's not as bad as we feared. Their business is hanging in there, but it still all about Microsoft," Piper Jaffray's Gene Munster said. Still, Canaccord Adams' Colin Gillis called the report uninspiring, "a common theme resonating out of Yahoo these days."
  • WaMu swings to loss. The nation's largest thrift lost $3.33B (see below) as WM bolsters its loan-loss reserve in response to ongoing housing market stress. WaMu's provision soared to $5.91B from $372M last year and $3.51B last quarter. Still, it says it sees some settling in early-stage delinquencies, and expects 2008 will be a peak year for loss reserves. Moody's warned yesterday it may downgrade WM's credit rating to junk. Shares are down 57.2% YTD.
  • Japan's No. 1 insurer buys U.S. firm. Tokio Marine (OTCPK:TKOMY), Japan's largest insurer, is buying Philadelphia Consolidated (PHLY) for $61.50/share ($4.7B) - a 73% premium. "It's quite an aggressive move, but it is quite important for a Japanese financial firm to increase its presence in a major insurance market," a Tokyo-based analyst said.
  • Schwab moves on. Charles Schwab (NYSE:SCHW) named Walter W. Bettinger II as its new chief - the second attempt by the brokerage's founder and namesake (a.k.a. Charles Schwab) to pass the torch. SCHW also boosted its quarterly dividend by 20% to $0.06. Yesterday Morningstar said Schwab's YieldPlus fund has seen the greatest net outflow in the entire fund industry for H1 - deflating by $4.8B (73%).
  • Glaxo spreads its wings. GlaxoSmithKline (NYSE:GSK) will begin selling cheap generic medicines in emerging markets, amid difficult conditions for branded drugs in the U.S. and Europe. GSK is teaming up with South Africa's Aspen Pharmacare.
  • Crude slips some more. Crude oil futures fell $3 Tuesday, and are down another $2 to $126 in pre-market trading as it became clear Tropical Storm Dolly would avoid oil rigs and refineries. Tuesday, T. Boone Pickens unveiled his 'Pickens Plan' before the Senate's Homeland Security and Government Affairs Committee, stressing the threat posed by $700B spending on oil imports. Pickens wants more wind-power generated electricity and natural gas powered vehicles.
  • Pfizer's Viagra - for women too? A new study published in the Journal of the American Medical Association shows Pfizer's (NYSE:PFE) Viagra can reduce the effects women experience as a result of antidepressants. It could open up a new market for the drug, whose sales haven't grown for years.
  • Plosser pushes rate rise. Philly Fed governor Charles Plosser said Tuesday the Fed would likely need to hike interest rates sooner rather than later. "We will need to reverse course... [likely] before either the labor market or the financial markets have completely turned around."
  • Corn futures fell another 2.3% to $5.94/bushel - the lowest since Apr. 1.
  • Fed minutes released Tuesday reveal directors of two of the 12 Fed banks (KC and Dallas) wanted a 0.25% hike in the discount rate to 2.5% on June 23. Regional banks, torn between concerns over stunted growth and inflation, saw both upside and downside risks - and chose to stand pat.
  • The Richmond Fed's Manufacturing Index fell to -16 in July from -12. Among the index's components, shipments were -12 to -23, new orders -4 to -17, and jobs +7 to -5.
  • Ofheo's House Price Index fell 0.3% in May, bringing the 12-month total to -4.8%. Prices are down 4.9% from the peak in Apr. 2007.
  • ICSC's weekly retail sales index rose by 0.1%. Redbook's measure of U.S. retail saw sales climb 1.1% in the first two weeks of July vs. June, short of an expected 1.4%. Strong discount-store sales made up for a drop at department stores.

Earnings: Wednesday Before Open

  • Dover (NYSE:DOV): EPS of $0.98 beats by $0.03. Revenue of $2B (+10.9%) in-line. [PR]
  • Praxair (NYSE:PX): EPS of $1.08 beats by $0.02. Revenue of $2.88B (+23.4%) vs. $2.72B. Approves new $1B share repurchase. [PR]
  • Radware (NASDAQ:RDWR): EPS of $0.25 misses by $0.07. Revenue of $24M (+11.9%) in-line. [PR]
  • Travellers (NYSE:TRV): EPS of $1.50 beats by $0.05. Revenue of $5.36B (+0.6%) vs. $6.61B. Sees full-year EPS of $5.55-5.85 vs. $5.93. [PR]
  • WellPoint Health Networks (WLP): EPS of $1.44 beats by $0.08. Revenue of $15.48B (+3.1%) vs. $15.61B. [PR]
  • Whirlpool (NYSE:WHR): EPS of $1.53 beats by $0.16. Revenue of $5.08B (+4.6%) in-line. Sees full-year EPS of $7.00-7.50 vs. $6.71. [PR]

Earnings: Tuesday After Close

  • ANADIGICS (NASDAQ:ANAD): EPS of $0.18 beats by $0.02. Revenue of $80.5M vs. $78.1M. [PR]
  • Boston Private Financial (NASDAQ:BPFH): EPS of $0.33 beats by $0.08. Revenue of $120M (+24%) vs. $109M. [PR]
  • Boston Properties (NYSE:BXP): EPS of $1.21 beats by $0.04. Revenue of $368.5M (-1%) in-line. [PR]
  • Broadcom (BRCM): EPS of $0.25 misses by $0.11. Revenue of $1.2B vs. $1.11B. Shares +1.3%. [PR]
  • Cemex (NYSE:CX): EPS of $0.59 misses by $0.14. Revenue of $6.35B (+29.2%) in-line. [PR]
  • E*TRADE Financial (NASDAQ:ETFC): EPS of -$0.19 misses by $0.05. Revenue of $343M (-15.9%) vs. $332M. "[T]he current economic environment may impede our expectations to return to profitability from continuing operations this year." [PR]
  • Illumina (NASDAQ:ILMN): EPS of $0.44 beats by $0.16. Revenue of $140M vs. $130M. Sees 2008 EPS of $1.64-1.75 vs. $1.21. Shares +8.2%. [PR]
  • Infinera (NASDAQ:INFN): EPS of $0.44. Revenue +31.7% to $91M vs. $89M. Shares +5.7%. [PR]
  • Intuitive Surgical (NASDAQ:ISRG): EPS of $1.28 beats by $0.10. Revenue of $219M (+56.3%) vs. $209M. Shares +13%. [PR]
  • Linear Technology (NASDAQ:LLTC): EPS of $0.46 beats by $0.01. Revenue of $307M (+3.1%) in-line. [PR]
  • O'Reilly Automotive (NASDAQ:ORLY): EPS of $0.48 in-line. Revenue of $704M (+9.5%) in-line. [PR]
  • Pactiv (PTV): EPS of $0.50 beats by $0.02. Revenue of $951M (+14.9%) vs. $931M. Sees Q3 EPS of $0.32-0.40 vs. $0.47. Shares -6.5%. [PR]
  • Panera Bread (NASDAQ:PNRA): EPS of $0.55 beats by $0.06. Revenue of $321M (+28.6%) in-line. Sees Q3 EPS of $0.42-0.44 vs. $0.41. [PR]
  • Parametric Technology (PMTC): EPS of $0.33 beats by $0.03. Revenue of $273M (+21.3%) vs. $265M. Shares +2%. [PR]
  • Plantronics (NYSE:PLT): EPS of $0.45 beats by $0.11. Revenue of $219M vs. $209M. [PR]
  • Raymond James Financial (NYSE:RJF): EPS of $0.59 beats by $0.04. Revenue of $809M (+1.7%) vs. $709M. Shares +1.8%. [Reuters]
  • ST Microelectronics (NYSE:STM): EPS of $0.18 beats by $0.06. Revenue of $2.39B (-1.1%) in-line. [PR]
  • USANA Health Sciences (NYSE:USNA): EPS of $0.62 beats by $0.01. Revenue of $109M in-line. Shares -1.7%. [PR]
  • VMware (NYSE:VMW): EPS of $0.23 in-line. Revenue of $456M in-line. Sees Q3 revenue of $462-468M vs. $497M. Operating margin 24.6% up from 24.3% and better than 24.4% consensus. Shares -9.2%. [PR]
  • Washington Mutual (NYSE:WM): EPS of -$3.34 misses by $2.29. Loan loss reserves jump by $3.74B to $8.46B. Says it has $40B+ in liquidity. Shares +11%. [PR]
  • Waste Connections (NYSE:WCN): EPS of $0.39 in-line. Revenue of $267M (+10.7%) in-line. [PR]
  • Yahoo! (NASDAQ:YHOO): EPS of $0.10 misses by $0.02. Revenue of $1.35B in-line. Shares +1%. [PR]
  • Zimmer (ZMH): EPS of $0.99 misses by $0.04. Revenue of $108M (+11.3%) in-line. Shares -8%. [PR]

Today's Markets

  • In Asia Wednesday, the Nikkei gained 0.97% to 13,313. Hang Seng +2.69% to 23,135. Shanghai -0.29% to 2,838. BSE +5.94% to 14,942 after India's PM won a parliamentary vote of confidence.
  • Europe is broadly higher at midday. London +1.4%. Paris +1.6%. Frankfurt +1.1%.
  • Futures indicate a higher open. Dow +0.6%. S&P +0.6%. Nasdaq +0.7%. Crude -1.9% to $126. Gold -1.6% to $934.

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