Wall Street Breakfast: Must-Know News

• Despite €2.3B writedown, Deutsche Bank beats. Deutsche Bank (DB) reports a 63% decline in Q2 net profit on further asset write-downs, lower revenue, higher credit-risk provisions and trading losses. Despite all that, net profit of €649M was significantly better than the €426M consensus. DB posted a €2.3B markdown, following a €2.7B writedown in Q1. It has written down a total of €7.3B since the credit crisis began last summer. "Looking forward, we remain cautious for the remainder of 2008," CEO Josef Ackermann said. DB says it is it is well-capitalized: its core Tier 1 capital ratio is 9.3%, vs. 9.2% in Q1 and 8.4% last year - and "well above the target range" of 8-9%.
• Google VC? Google (GOOG) is working on plans to start a venture-capital arm, sources say. The group will be lead by SVP David Drummond.
• Amgen drugs get ominous label. The FDA ordered Amgen (AMGN) to relabel its anemia drugs Aranesp and Procrit in a way that is likely to further limit their use in treating cancer patients. The move marks the first time the FDA has used its new ability to force a change in a drug's prescription information; until 2007 it could only negotiate with manufacturers. Amgen says the new label is consistent with its expectations, and that it has already factored the impact of the label change into its most recent financial guidance. Citi Investment Research's Yaron Werber thinks the move could reduce Aranesp use for cancer patients by a further 40%, or $264M.
• Chrysler talks with Fiat, Tata. Sources say Chrysler is in talks to share retail distribution channels and lease U.S. production lines to Fiat. It is also in talkes with Tata (TTM) about selling its Jeep Wrangler SUV in India. "You could definitely see this evolve into something," an investment banker says. "It would make sense for Tata to buy Jeep if this partnership went through ... and Chrysler could really do with selling a brand and getting some cash."
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• Price cuts at Nokia could squeeze rivals. Nokia (NOK) slashed phone prices by as much as 10% in late July, sources say. The move could put pressure on smaller rivals like Sony Ericsson (SNE) (ERIC). A Nokia spokesman was coy: "If we would start to comment on prices there would be no end, they are changed so often."
• Visa charges ahead. Visa's (V) first full quarter as a public-traded company did not disappoint. The credit-card provider posted EPS and revenue that exceeded analyst expectations (see below). "Despite a challenging economic environment in the United States and a softening in traditional credit card spending, the strength of Visa's debit business drove solid growth in the region," it said. Looking ahead, Visa warned that it does see some softening in credit-card spending. Shares were up 30% over the quarter, but are down 6% over the past month.
• Monster Employment Index for July slips six points to 157, -14% from a year ago. The breadth and depth of July's contraction suggests ongoing soft labor demand.
• Europe inflation hits 16-year high. Eurozone inflation rose 10 bps to 4.1%, a 16-year high, and in-line with economist estimates. Surging inflation is restricting the ECB's ability to juice up the economy despite widespread weakness (see below). "The growth outlook has deteriorated," ING economist Martin van Vliet says. "But the ECB will keep open the possibility of one further rate hike because a wage-price spiral could be even more damaging than the economic downturn we're seeing now."
• U.K. housing tumbles, confidence falls. U.K. house prices plunged the most in almost 20 years in July, and consumer confidence fell to a record low, as the UK economy edges closer to recession. Average home prices fell 8.1% Y/Y. A confidence survey fell 5 points to -39 - the lowest since at least 1974.
• T. Boone goes recruiting. Energy tycoon T. Boone Pickens says he's looking for an 'army' of business leaders and everyday Americans to push his plan to shape future U.S. energy policy toward wind power and natural gas and away from increasingly expensive imported oil. "We have to put the pressure on" politicians, Pickens said. "They are going to have to, one, recognize the magnitude of the problem, and they are going to have to come up with some kind of solution."

Earnings: Thursday Before Open

• Aetna (AET): Q2 EPS of $0.94 beats by $0.01. Revenue of $7.83B (+15.2%) in-line. [PR]
• Altria (MO): Q2 EPS of $0.46 beats by $0.01. Revenue of $5.05B (+4%) vs. $4.17B. Shares [PR]
• Assurant (AIZ): Q2 EPS of $1.55 misses by $0.08. Revenue of $2.25B (+8.9%) in-line. [PR]
• AstraZeneca (AZN): Q2 EPS of $1.25 beats by $0.17. Revenue of $7.96B (+9%) vs. $7.58B. Sees full-year EPS of $4.60-4.90 vs. $4.46. Shares +3% in London. [PR (.pdf)]
• Brookfield Properties (BPO): Q2 FFO of $0.40 beats by $0.03. Revenue of $719M (+1.8%) vs. $579M. [PR]
• CBS (CBS): Q2 EPS of $0.53 beats by $0.01. Revenue of $3.39B (+0.6%) in-line. [PR]
• Deutsche Bank (DB): Q2 net profit of €649M vs. €426M consensus. EPS of €1.27. DB posted a €2.3B markdown, following a €2.7B writedown in Q1. [FT]
• France Telecom (FTE): First-half profit of €2.7B. Revenue of €26.3B (+1.5%). Q2 revenue of €13.3B (+1.6%). Shares +2% in Paris. [PR]
• Hitachi (HIT): FQ1 EPS of $0.86. Net profit of 31.5B yen ($292M). Revenue of $24B (+2.7%) vs. $24.14B. [PR]
• International Paper (IP): Q2 EPS of $0.56 beats by $0.17. Revenue of $5.81B (+9.8%) in-line. Shares +2.7%. [PR]
• Motorola (MOT): Q2 EPS of $0.02 beats by $0.05. Revenue of $8.08B (-7.4%) vs. $7.69B. Shares +12.8%. [PR]
• Newell Rubbermaid (NWL): Q2 EPS of $0.49 beats by $0.01. Revenue of $1.83B (+7.8%) in-line. Sees Q3 EPS of $0.31-0.35 vs. $0.38. [PR]
• Nymex (NMX): Q2 EPS of $0.83 beats by $0.02. Revenue of $211M (+28.9%) vs. $206M. [PR]
• Sanofi-aventis (SNY): Q2 EPS of €1.34 in-line. Revenue of €6.69B (-3.6%). Shares -4.7%. [PR]
• Shell (RDS.A): Q2 EPS of $2.50 misses by $0.36. Revenue of $131.4B (+54.8%) vs. $114.61B. Shares +0.5% in London. [PR]
• Taiwan Semi (TSM): Q2 EPS of $0.18 in-line. Revenue of $2.9B (+28.1%) in-line. [PR]
• Telefonica SA (TEF): First-half EPS of €0.77 beats by €0.08. Net profit rose 29%. [PR]
• Tyco International (TYC): FQ3 EPS of $0.88 beats by $0.21. Revenue of $5.21B (+10.9%) vs. $5.15B. Sees full-year EPS of $2.97-2.99 vs. $2.76. [PR]

Earnings: Wednesday After Close

• Akamai Technologies (AKAM): Q2 EPS of $0.41 in-line. Revenue of $194M (+27%) vs. $197M. Shares -17%. [PR]
• Allegheny Energy (AYE): Q2 EPS of $0.45 beats by $0.03. Revenue of $953.5M (+15.4%) vs. $904M. [PR]
• Allied Waste (AW): Q2 EPS of $0.27 beats by $0.03. Revenue of $1.58B (+2.2%) in-line. Shares -0.85%. [PR]
• Andersons (ANDE): Sees full-year EPS of $5.00-5.40 vs $4.61.
• Arris Group (ARRS): Q2 EPS of $0.15 beats by $0.01. Revenue of $281M (+11.2%) in-line. Shares +11%. [PR]
• Atmel (ATML): Q2 EPS of $0.04 beats by $0.03. Revenue of $421M (+4.1%) in-line. Shares +1.4%. [PR]
• AvalonBay Communities (AVB): Q2 FFO of $1.26 beats by $0.02. Revenue of $222M (+9%) vs. $213M. [PR]
• Bare Escentuals (BARE): Q2 EPS of $0.26 beats by $0.01. Revenue of $138.5M (+11.6%) vs. $145M. Sees full-year EPS of $1.13-1.18 vs. $1.19. Shares -20%. [PR]
• Callaway Golf Company (ELY): Q2 EPS of $0.63 beats by $0.01. Revenue of $366M (-3.7%) in-line. [PR]
• Cleveland-Cliffs (CLF): Q2 EPS of $2.57 beats by $0.58. Revenue of $1.01B (+84.2%) in-line. [PR]
• Digital River (DRIV): Q2 EPS of $0.37 beats by $0.04. Revenue of $98.4M (+25.8%) vs. $91M. Sees Q3 EPS of $0.47 vs. $0.45 and full-year EPS of $2.00 vs. $1.90. Shares +5.9%. [PR]
• Disney (DIS): Q2 EPS of $0.62 beats by $0.01. Revenue of $9.24B vs. $9.14B. Shares -2.4%. [PR]
• Express Scripts (ESRX): Q2 EPS of $0.76 beats by $0.04. Revenue of $4.71B (+2.9%) in-line. Sees full-year EPS of $3.03-3.10 vs. $3.00. Will buy back another 15M shares. Shares +3.5%. [PR]
• First Solar (FSLR): Q2 EPS of $0.85 beats by $0.27. Revenue of $267M (+57.2%) vs. $217M. Shares +6.8%. [PR]
• Genco Shipping & Trading (GNK): Q2 EPS of $1.95 beats by $0.17. Revenue of $105M (+183.5%) vs. $98M. Shares +2.5%. [PR]
• Helix Energy Solutions Group (HLX): Q2 EPS of $0.86 misses by $0.01. Revenue of $540.5M (+31.6%) vs. $550M. Shares +3.3%. [PR]
• Hologic (HOLX): FQ3 EPS of $0.33 beats by $0.04. Revenue of $429.5M (+124.3%) vs. $436M. Shares -3.7%. [PR]
• Itron (ITRI): Q2 EPS of $1.02 beats by $0.20. Revenue of $514M (+27.9%) vs. $478M. Shares +5%. [PR]
• Las Vegas Sands (LVS): Q2 EPS of $0.09 misses by $0.03. Revenue of $1.11B in-line. Shares -3.8%. [PR]
• Murphy Oil (MUR): Q2 EPS of $2.92 beats by $0.73. Revenue of $8.36B (+81.3%) vs. $7.77B. Shares +3.05%. [PR]
• Oceaneering International (OII): Q2 EPS of $0.93 beats by $0.03. Revenue of $500M (+15.8%) vs. $483.5M. Shares -8.5%. [PR]
• Owens-Illinois (OI): Q2 EPS of $1.35 in-line. Revenue of $2.2B (+10.7%) in-line. Shares +7.85%. [PR]
• Prudential Financial (PRU): Q2 EPS of $2.02 beats by $0.17. Revenue of $6.89B (+3.4%) in-line. Shares +2.7%. [PR]
• Southwestern Energy Company (SWN): Q2 EPS of $0.39 beats by $0.02. Revenue of $604M (+123.8%) vs. $472M. Shares -0.6%. [PR]
• Starbucks (SBUX): FQ3 EPS of $0.16 misses by $0.02. Revenue of $2.57B (+9%) vs. $2.61B. Sees full-year EPS of mid-$0.70s vs. $0.81. Shares +4.4%. [PR]
• Symantec (SYMC): FQ1 EPS of $0.40 beats by $0.05. Revenue of $1.66B (+16.3%) vs. $1.58B. Shares +5.4%. [PR]
• Tesoro (TSO): Q2 EPS of $0.03 beats by $0.09. Revenue of $8.75B (+52.6%) vs. $5.91B. Shares +3.6%. [PR]
• Trinity Industries (TRN): Q2 EPS of $1.06 beats by $0.20. Revenue of $945.5M (+6.9%) vs. $958M. Sees full-year EPS of $3.45-3.55 vs. $3.26. Shares +6.7%. [PR]
• UnumProvident (UNM): Q2 EPS of $0.65 beats by $0.05. Revenue of $2.68B (+0.4%) in-line. [PR]THQ (THQI): FQ1 EPS of -$0.38 in-line. Revenue of $138M (+31.7%) vs. $121M. Sees full-year EPS of $0.80-0.90 vs. $0.99. Shares -1.3%. [PR]
• Visa (V): FQ3 EPS of $0.59 beats by $0.11. Revenue of $1.61B (+18.2%) vs. $1.55B. Shares +2.5%. [PR]
• Willis Group (WSH): Q2 EPS of $0.59 beats by $0.01. Revenue of $661M vs. $649M. [PR]

Today's Markets

• Asia Thursday: Nikkei +0.07% to 13,377. Hang Seng +0.18% to 22,731. Shanghai -2.15% to 2,776. BSE +0.48% to 14,356.
• Europe at midday: London +0.2%. Paris +0.5%. Frankfurt +0.6%.
• Futures: Dow -0.01%. S&P +0.06%. Nasdaq +0.23%. Crude -0.69% to $125.89. Gold +0.72% to $909.40.
• Thursday's economic calendar:
  4:00 Monster Employment Index
  8:30 Employment Cost Index
  8:30 GDP Q2 Advance
  8:30 Jobless Claims
  8:30 Personal Consumption
  9:00 NAPM NY Report on Business
  9:45 NAPM Chicago Business Barometer
  10:35 EIA Natural Gas
  11:00 KC Fed Manufacturing
  3:00 PM USDA Ag. Prices I, II
  4:30 PM Money Supply

• Notable earnings before the open: ABX, ADP, AEP, AET, AIZ, APA, AZN, BCO, BPO, BWA, CBB, CBS, CEG, CLI, CNX, COT, CTL, CVC, CVS, D, DSX, EK, EXPE, FAF, FPL, FTE, GG, GT, HP, IP, K, KSU, LIZ, MA, MBI, MO, MOT, MRO, NMX, NWL, OCR, PH, PTEN, RDS.A, SFI, SIRI, SPR, TE, TEF, TSCM, TSM, TYC, WYN, XEL, XOM
• Notable earnings after the close: AOC, AVR, CA, CEM, CHK, CQB, CTSH, DCT, ERJ, EXTR, GFIG, GW, KLAC, MEE, MFE, MNST, OIS, PWAV, RNWK, SGMS, SYNA, TMA, VCLK, VPRT, VRTX

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Comments

[mrbill for V:]

Eli, great to see you i was wondering who the editor was, let's
hear from you more often.

2008 Jul 31 07:25 AM

[bbowen7:]

Eli keeps getting better. Between the headline news, the overnight foreign markets, the earnings reports, and the day's economic calendar, what more material could a reader want? One hopes that Eli doesn't get dragged into the trap of doing a lot of analysis.

2008 Jul 31 09:06 AM

[heartdoc:]

One of the best sources for financial information.
I love it
fss

2008 Jul 31 09:19 AM

[JennH1310:]

ALKS does not report today after the close as you have listed.... They report on 8-6-08... Scared me...

2008 Jul 31 12:42 PM

[SA Editor E...:]

JennH1310,

Our bad. Thanks - it's been corrected.

2008 Jul 31 12:55 PM

[tjschoenlein:]

user155010.. and other folks who think Jim Rodgers is great?
He has called for Frannie & Freddy to fail-uh should fail.., complaining that everyone has committed theft, fraud,etc. When ask by the interviewer if he was short these stocks he said of course. He stated yes he was making money being short but who cared if he was making money?? After all he said, "I have to pay taxes on it".. right!!
He spends his TV time bad mouthing the stocks so he can make his money short..a nice ethical guy.
just my view..

2008 Aug 01 03:17 AM