F1Q10 Earnings Call

September 3, 2009 10:00 am ET

• Dainippon buys U.S. drugmaker. Dainippon Sumitomo Pharma has agreed to buy U.S. drugmaker Sepracor (SEPR) for $2.6B in an all-cash deal marking a 28% premium to Sepracor's closing price on Tuesday. The acquisition will help Dainippon promote its experimental schizophrenia drug, which has performed well in late-stage trials, and will give the company access to Sepracor's insomnia, asthma and epilepsy drugs. The purchase is the latest in a trend of Japanese pharmaceutical firms buying U.S. rivals.
• Berkshire, Leucadia bet on real estate. Berkshire Hathaway (BRK.A) and Leucadia National (LUK) are jointly buying Capmark Financial Group's loan-servicing and mortgage business, paying up to $490M in a bet on the U.S. real estate market. In a separate statement, Capmark, which is one of the largest U.S. commercial real estate finance companies, said it may file for bankruptcy after its Q2 loss of about $1.6B. Private equity firm KKR has already written down its Capmark investment to zero. (Read Capmark's quarterly report (.pdf), including comments on the Berkshire deal and possible bankruptcy)
• Boeing expected to win WTO case. The World Trade Organization is reportedly set to rule in favor of the U.S. and Boeing (BA) in a case about $15B in European government loans to Airbus that Boeing argues are illegal subsidies. The ruling, expected tomorrow, concerns loans provided by the U.K., Spain, Germany and France over four decades, and is a preliminary ruling in a five-year dispute between Boeing and Airbus.
• JBS close to deal with Pilgrim's Pride. Brazilian beef giant JBS is reportedly in final stage negotiations to buy bankrupt poultry producer Pilgrim's Pride (PGPDQ.PK) for around $2.5B. The deal would shake up the global meat industry and create a new rival for Tyson Foods (TSN), the largest U.S. meat company producing beef, chicken and pork. A deal would be subject to scrutiny from U.S. antitrust regulators who have previously said they want to take a closer look at competition in the agricultural industry. In a bonus for banks and bondholders, however, Pilgrim's creditors would likely be paid in full.
• Ratings firms lose free speech case. A judge refused to dismiss a class-action lawsuit brought against Moody's Investors Service (MCO), Standard & Poor's (MHP) and Morgan Stanley (MS). The two ratings agencies had argued that investors couldn't sue over deceptive ratings of private-placement notes because those opinions are protected by free-speech rights. However, the judge said First Amendment rights don't apply in this case because the firm's comments were distributed to a select group of investors and not to the general public. The ruling could affect Fitch Group and other rating agencies that have made similar claims.
• Cisco, EMC mull tech services JV. Cisco Systems (CSCO) and EMC Corp. (EMC) are reportedly in discussions to create a joint venture, code-named Alpine, that would provide technology services for large businesses. The move is part of an effort by the companies to branch out in the increasingly competitive technology sector.
• Pfizer pays record pfine. Pfizer (PFE) agreed to pay a record $2.3B fine to settle civil and criminal charges over its marketing of Bextra and other drugs. Pfizer, which was deemed a repeat offender in marketing drugs for unapproved uses, will plead guilty to one felony for misbranding Bextra, which was removed from the market in 2005 over safety concerns. The settlement is the result of a four-year investigation prompted by six whistleblowers. (Read the complaint against Pfizer (.pdf))
• SEC blasted over Madoff failure. A scathing report from a federal watchdog faults the SEC for not catching Bernie Madoff's Ponzi scheme earlier. According to the report, the SEC fumbled five initial probes without ever conducting a 'thorough and competent' review; caught Madoff in lies and misrepresentations but didn't follow up; was 'confused' about some aspects of his operations; and failed to notice his statements included only average daily prices, not transaction prices. The SEC was also tipped off in March 2008 that Madoff was keeping two sets of records but chose not to investigate. SEC's Mary Schapiro said the agency is being overhauled and the handling of Madoff's case "is a failure that we continue to regret." (Read the executive summary of the report (.pdf))
• G-20 finance ministers prepare to meet. Ahead of a meeting of G-20 finance ministers this weekend, Geithner warned it's 'too early' for nations to begin exiting from stimulus programs, although it's not too early to discuss it. Geithner said the U.S. wants to build a new 'international capital accord' to limit the amount of leverage firms can take on. Other countries, including Germany, are in favor of unwinding stimulus measures sooner rather than later amid ballooning fiscal deficits and the possibility of inflation, while U.K. regulators are pushing for systemically important banks to draw up 'living wills,' or plans to wind themselves down in the event they fail.
• Cerberus bars fund withdrawals. After a wave of redemption requests, Cerberus is barring investors in two new funds from withdrawing money for three years. The multi-year lock-up is rare among hedge funds, but other companies may follow suit after the industry experienced over $500B of redemptions in the past year.
• FOMC is cautiously hopeful. In the recently released FOMC minutes, policy makers noted many of the risks to the U.S. economy had eased 'considerably' and expressed confidence that the country's downturn is ending. Members remained concerned that future growth will remain weak and could be vulnerable to shocks. Inflation is expected to remain subdued, and the minutes suggest the Federal Reserve is unlikely to raise interest rates anytime soon. (Read the FOMC minutes)
• YouTube in talks to stream movies. YouTube (GOOG) is said to be in preliminary discussions with Sony Pictures Entertainment (SNE), Lions Gate Entertainment (LGF) and Warner Bros. (TWX) to create an online rental service for streaming new movies. If plans move forward, YouTube's new service will compete with online movie rentals offered by Amazon (AMZN), Apple (AAPL) and Netflix (NFLX).
• SEC, CFTC meet for the first time ever. The SEC and the Commodity Futures Trading Commission enter their second day of joint meetings as the two try to work towards streamlining their regulatory oversight. This marks the first time the agencies have ever held a joint meeting. Though the steps toward harmonization have thus far been timid, any progress at all is welcome as industry insiders say turf wars between the SEC and CFTC are hampering innovation. (Read Schapiro's comments and Gensler's comments (.pdf), or watch the live broadcast at 9:00 ET)
• Jobs reports. The Challenger Job-Cut Report showed firing announcements were down 21% in August to 76,456, reversing last month's increase. Seasonal downsizing is expected for the next four months, but "if monthly job-cut levels remain near 100,000 or lower, it will be a strong indication that the economy and job market are improving." According to the ADP Jobs Report (.pdf), employment was down 298,000 in August vs. consensus of -250,000, the smallest decline since September 2008. July's losses were revised to -360,000. Employment "is still likely to decline for at least several more months, albeit at a diminishing rate."
• Productivity increases. Nonfarm Productivity increased 6.6% in the second quarter, an upward revision from preliminary estimates of +6.4% and the largest productivity increase since Q3 2003. Unit labor costs were down 5.9% vs. prior estimates of -5.8%. Manufacturing sector productivity rose 4.9% vs. prior estimates of +5.3%.
• Factory orders rise. Factory Orders rose 1.3% ($4.6B) in July to $355.5B vs. consensus of +2.2%. June's orders were revised to +0.9% from +0.4%. Shipments fell $0.2B. Inventories fell for the seventh straight month, dropping 0.9% to $313.7B.

Earnings: Thursday Before Open

• Ciena (CIEN): FQ3 EPS of -$0.05 beats by $0.08. Revenue of $165M (-35%) vs. $153M. (PR)
• Del Monte Foods Company (DLM): FQ1 EPS of $0.30 beats by $0.26. Revenue of $814M (+12%) vs. $772M. Issues upside EPS guidance for FY '10 of $0.88-0.92 vs. $0.80 consensus, up from previous guidance of $0.76-0.80. Shares +12% premarket (8:10 ET). (PR)

Earnings: Wednesday After Close

• ABM Industries (ABM): FQ3 EPS of $0.36 beats by $0.01. Revenue of $871M (-6%) vs. $896M. (PR)
• Collective Brands (PSS): Q2 EPS of $0.29 misses by $0.04. Revenue of $836M (-8%) vs. $843M. (PR)
• Greif Inc. (GEF): FQ3 EPS of $0.88 beats by $0.02. Revenue of $718M (-31%) vs. $769M. (PR)
• Hovnanian (HOV): FQ3 EPS of -$2.16 misses by $0.64. Revenue of $387M (-46%) vs. $392M. (PR)
• SAIC (SAI): Q2 EPS of $0.31 beats by $0.01. Revenue of $2.8B (+8%) vs. $2.7B. (PR)

Today's Markets

Asian markets were mixed, European markets are range-bound, and U.S. futures are seeing mild gains.

Tuesday's Wall Street Journal had an article that asked the question "Can Rally Run without Revenue?" Is the revenue situation really that bad?

Let's take a quick look at some the data compiled through the Alert HQ process.

Many investors, including myself, feel that the market is due for a correction. Some predict with the increased national debt, weaker dollar and a Congress unwilling to grasp both, even worse things may occur that will effect our standard of living now and, especially, in the future.

One sector that may withstand a negative outlook are food processors. I used a computer screen to isolate those with anticipated growth of 10-25% next year. All appear stable and quite a few are international in scope. I must admit to having several obscure companies grace my computer screen. I did investigate all of them to a certain degree and without exception they look quite acceptable for investment consideration.

Food stocks have been on a tear lately. Attributes such as more predictable earnings, juicy dividends, lower volatility and more reasonable price multiples are at the forefront of the sector’s recent success. They aren’t highflyers, glamorous or exciting like the tech sector, but they will help you sleep better at night.

The Basic Food Fund (BFF) certainly lagged the overall market the past five weeks rising a mere 9% from $167.73 to $182.93 compared to a more robust rally in the DJIA's 14% hike from 8332 to 9506, but it also won’t fall like a rock when the major averages correct through profit taking in the near future.

The NYSE and Nasdaq publish their short interest figures twice a month, and each time the data is released, Bespoke Premium also publishes an in-depth report highlighting historical short interest trends for the entire market all the way down to individual stocks. To view a sample of the report, please click here (pdf).

Below we provide a list of the most and least heavily shorted stocks in the Russell 1,000 as of the end of July. This is based on each stock's short interest as a percentage of its overall equity float. Based on the most up-to-date numbers, Chipotle Mexican Grill (CMG) has the highest short interest as a percentage of float at 43.74%. AIG ranks second at 34.99%, although this number is likely to decrease in the next release after the massive short squeeze that has taken place in the stock this month.

We have all heard it: food stocks are defensive in nature so that when things are dreadful, they shouldn’t get beat up as bad, and when things are good, they don’t participate with the same rigor on the upside as other stocks. But in this market, it just hasn’t worked out that way. In fact, when the market dived earlier in the year, food stocks actually had poorer relative strength than other sectors, but then when the market bounced back, the food sector’s relative strength was superior. The moral of the story: Sometimes you just have to throw out all the rules and trade by the “seat of your pants” utilizing your own gut instincts as your guide.

Disclosure: Long all equites included in the BFF Index.

In 1985 I graduated from college and took my first job as a staff accountant with a $21,000 annual salary. Now I am over the same department that I was hired into and entry level staff accountants start with a base salary of $56,500 per year. That equates to a 4.2% annual increase. Just as employees expect an annual raise, so do dividend investors.

In this environment many income investors are happy to see any dividend increase. Not all companies are hiding behind the economic downturn and short-changing their dividend increases. To the contrary,

PetSmart

Several companies expressed their confidence in their future business prospects, by raising their dividends. One of them was Realty Income (O), which engages in the acquisition and ownership of commercial retail real estate properties in the United States. The monthly cash dividend was increased to $0.142375 per share from $0.1420625 per share. This represents the 6th increase for the past year. Tom A. Lewis, Chief Executive Officer of Realty Income, commented, "We are pleased that, despite challenging economic conditions, our operations allow us to once again increase the amount of the dividend we pay to our shareholders. With the payment of the July dividend we will have made 468 consecutive monthly dividend payments."

Realty Income calls itself The Monthly Dividend Company(R), since it has declared 468 consecutive common stock monthly dividends throughout its 40-year operating history and increased the dividend 54 times since Realty Income's listing on the New York Stock Exchange in 1994. The monthly dividend is supported by the cash flow from over 2,300 retail properties owned under long-term lease agreements with leading regional and national retail chains. Check my analysis of Realty Income. This dividend achiever currently yields 7.70%.

The "BFF" index has replaced SCS, PBY and JBLU with the following food related equities: LUB, FLO and DLM. The reshuffling, which was clearly overdue will present an index much more representative of the food sector. The old index finished at $141.55, and the new index starts at $157.74. The new index will include 14 equities.

Component highlights

BRID: The snack food purveyor keeps making higher highs and higher lows as it approaches fresh four year highs. A challenge of the $10 area by midsummer seems plausible.

By Steven Ralston, CFA

Despite the S&P 500 rallying 36.2% from the low close on March 9th (676.53), the market is still down 41.1% fro the closing high on October 9, 2007 (1,565.15). The global economic slowdown is negatively impacting the earnings and cash flow of many companies.

Del Monte Foods (DLM) has just had an excellent fiscal fourth quarter spurred by rising prices and cost cutting. Wall Street analysts were expecting to see earnings of 26 cents on revenue of $957 million, but actual results easily exceeded those results with 35 cents of profit and revenue was $1.06 billion. The can food and pet food producer was able to raise prices in the face of rising input prices. The consumer products division increased revenues 20% and aggressive cost cutting boosted earnings a gaudy 55%. The pet food division was also an especially bright spot as revenue climbed 22% on that division and earnings were 7.5% higher. The stock is up about 8% in early afternoon trading on Thursday, benefiting from an upbeat earnings outlook for the year ahead.

“Watch the Del Monte, Thursday morning Del Monte trading higher after beating by nine cents on the bottom line on its quarterly earnings and boosting the outlook saying that they’ve got power.” CNBC’s Squawk on the Street 6/11/2009

Markets were down on Monday, and the CBOE Volatility Index (VIX) was back above the 30 level intra-day. You can see on the following Daily chart that the VIX has been in a down-trending channel since March, but recently has been waffling around the key 30 area. For the time being, the VIX looks constrained in the 27.5 to 32.5 area.

Bullish Calls:

Marathon Oil Corp (MRO): “The only refiner I like are the integrated refiners. That's why I like Marathon Oil Corp. and you get the dividend.”
Del Monte Foods (DLM), Dean Foods (DF): “The price is good. By the way, here's a twofer... I like Dean Foods Co. too, but it was easy to like DF, because they pre-announced a good number.”
Nucor (NUE), Allegheny Technologies (ATI): “I do like Nucor if it comes to the $20s. And, if Allegheny Technologies Inc. comes down a lot, I might like that one too.”
McDonald’s (MCD): “Is virtually in freefall at $52, with a great, great balance sheet and good dividend... Welcome aboard, MCD. Under $50 …That's my level to buy. That's where I'll pull the trigger.”
Alcoa (AA): “… at these levels, AA is really interesting... so I am no longer going to 'dis AA at $6 bucks. As a matter of fact, I'm going to endorse it as a speculative play. Buy, buy, buy..."
Smith International (SII): “Cheap! Cheap!... Buy, buy, buy!... That stock is down too much… there's going to be consolidation in that industry.”

F3Q09 Earnings Call

February 26, 2009 10:00 am ET

• Obama sees opportunity in crisis. In his first address to a joint session of Congress, Obama framed the economic crisis as an opportunity to solve some of the nation's problems, including overhauling the banking and health care systems. Though he acknowledged the heavy costs the country is paying during the current recession, Obama tried to change the tone of his message, reassuring listeners that "we will rebuild, we will recover, and the United States of America will emerge stronger than before." All the rebuilding and recovery carries a price tag, however, and Obama signalled more taxpayer money will be needed to pull the country out of the credit crisis. (Read Obama's remarks)
• Banks bounce on Bernanke comments. Bernanke helped give bank stocks a boost yesterday after making the strongest comments yet against nationalizing U.S. banks. Speaking to the Senate Banking Committee, Bernanke said he doesn't "see any reason to destroy the franchise value or to create the huge legal uncertainties of trying to formally nationalize a bank when that just isn't necessary." Looking forward, Bernanke held out hope for an economic recovery by 2010 but said recovery depends on whether policymakers can break the 'destructive power' of the interconnected crises in banking and the broader economy.
• Merrill's larger-than-expected loss. Merrill Lynch reported a Q4 loss of $15.84B, around $533M more than estimated by Bank of America (BAC). Merrill also revealed material weaknesses in its controls over financial reporting as of the end of its fiscal year in December 2008. The larger-than-expected loss is unwelcome news for Bank of America as it tries to integrate Merrill and prepares for a government 'stress test' set to begin this week.
• AIG asset sales unworkable. Sources say Edward Liddy, CEO of AIG (AIG), has concluded that selling assets to repay government loans is not a viable plan. AIG has lost more than 85% of its market value in the last five months, the price it can fetch for many of its units has fallen dramatically and fewer companies are in a strong enough position to bid on AIG's assets. In addition to an earlier idea of converting the government's preferred shares into common stock holdings, one alternative under discussion is for AIG to hand over some of its non-U.S. life insurance businesses to the government in return for forgiveness of part of the loans.
• Ballmer reaches out to Yahoo. Microsoft (MSFT) CEO Steve Ballmer defended the company's investments in research and development, despite a gloomy financial outlook. Expected to total $9B during the current fiscal year, Microsoft's R&D spending is a sore point among some investors who would like to see a quicker payoff, especially from money-losing units like Microsoft's internet search business. Ballmer also reiterated that he's interested in speaking to new Yahoo (YHOO) CEO Carol Bartz about how the two can become stronger competition for Google (GOOG) by reaching an internet search deal. Shares fell 2.7% after hours when Ballmer failed to announce any acceleration in cost cutting.
• SF Chronicle joins the endangered list. In a further sign of the deterioration of the news industry, Hearst Corp. has said it will close or sell the San Francisco Chronicle unless it can rapidly cut costs. Hearst will dramatically reduce the Chronicle's work force of 1,500 but if its cost-saving target isn't reached 'within weeks,' it will try to sell the paper. Since few investors are willing to make such purchases in the current economic crisis, Hearst said it will close the paper if it can't find a buyer. The Chronicle is the 12th largest paper in the U.S. and the largest daily in Northern California.
• Biogen sets sights on new MS drug. Biogen Idec (BIIB) is reportedly in talks to buy Acorda Therapeutics (ACOR) in order to gain access to an experimental pill for people with multiple sclerosis. Acorda announced that the drug, Fampridine, helped MS patients walk and Biogen, the world's largest maker of MS medicines, is in talks to buy the marketing rights to Fampridine as well. MS is currently managed by injecting medicines, so Biogen faces competition from firms like Merck (MRK) and Novartis (NVS) to produce the first MS pill.
• U.K. economy shrinks... The U.K. economy contracted the most since 1980 in Q4 as corporate and consumer spending plunged. GDP fell 1.5% from Q3, with consumer spending -0.7% and fixed investment -2.3%.
• ...while falling pound causes trouble. EU officials are concerned the pound's slide to a record low against the euro could destabilize the British economy. According to a document prepared last month by officials of the European Commission and EU finance ministries, the pound's 'very rapid' drop 'raises questions about the financial stability of the British economy,' and is a 'source of concern for the euro area.' The report also contradicts a claim by U.K. Prime Minister Gordon Brown that a weaker currency helps the economy more than it hurts it.
• Retail sales rise. Retail chain store sales rose 0.6% from a week ago, ICSC said, and declined 0.8% Y/Y. "Sales improved again this past week and extended its non-negative trend to four weeks - a welcome sign for retailers." According to Redbook, national chain store sales rose 0.9% in the first three weeks of February, better than the expected 0.5% bump. Sales -1.5% Y/Y.
• Home prices at new lows. Home prices closed out 2008 at record lows, S&P/Case-Shiller reported, with its 20-city composite index dropping 18.5% vs. a year ago in December. "There are very few, if any, pockets of turnaround that one can see in the data," index chairman David Blitzer said.
• Mtg. apps decrease. Mortgage applications fell 15.1% from a week ago, MBA reports, while 30-year fixed mortgage rates increased to 5.07% from 4.99%.
• Consumer confidence falls. Conference Board's Consumer Confidence Index fell to a new all-time low of 25.0 from January's 37.4. Expectations dropped to 27.5 from 42.5. "Not only do consumers feel overall economic conditions have grown more dire, but... they anticipate no improvement in conditions over the next six months."

Earnings: Wednesday Before Open

• Ambac (ABK): Q4 EPS of -$6.97 misses by $6.79. "Our financial results continue to be affected by the disappointing housing market and other economic conditions... We continue to place significant emphasis on de-risking our portfolio." (PR)
• CenterPoint Energy (CNP): Q4 EPS of $0.25 misses by $0.02. Revenue of $2.77B (+6.6%) vs. $2.71B. Sees 2009 EPS of $1.05-1.15 vs. $1.29. (PR)
• CMS Energy (CMS): Q4 EPS of $0.30 beats by $0.06. Revenue of $1.84B in-line. (PR)
• Del Monte Foods (DLM): FQ3 EPS of $0.30 beats by $0.088. Revenue of $942M (+8.4%) vs. $956M. Sees 2009 EPS of $0.64-0.68 vs. $0.59 and sales up 9-11% vs. a previous 8-10%. (PR)
• Denbury Resources (DNR): Q4 EPS of $0.18 beats by $0.05. Revenue of $224M (-30.7%) vs. $240M. (PR)
• Discovery Co (DISCA): Q4 EPS of $0.25 misses by $0.05. Revenue of $904M (+0.1%) vs. $935M. (PR)
• Dollar Tree Stores (DLTR): Q4 EPS of $1.15 beats by $0.02. Revenue of $1.4B (+6.8%) in-line. (PR)
• Frontier Communications (FTR): Q4 EPS of $0.11 misses by $0.04. Revenue of $547M (-5.2%) vs. $555M. (PR)
• J.M. Smucker Company (SJM): FQ3 EPS of $0.88 beats by $0.01. Revenue of $1.2B (+77.7%) in-line. (PR)
• KBR Inc. (KBR): Q4 EPS of $0.54 beats by $0.14. Revenue of $3.4B (+41.7%) vs. $3.0B. (PR)
• Lexington Realty Trust (LXP): Q4 FFO of $0.37 misses by $0.03. Revenue of $105M (-11.9%) vs. $101M. (PR)
• Pennsylvania REIT (PEI): Q4 FFO of $1.08 beats by $0.06. Revenue of $130M vs. $79M. Sees 2009 FFO of $2.75-2.95 vs. $3.34. (PR)
• Petrohawk Energy (HK): Q4 EPS of -$0.04 misses by $0.07. Revenue of $271M (+19.1%) vs. $226M. (PR)
• Quicksilver Resources (KWK): Q4 EPS of $0.23 beats by $0.02. Revenue of $209M (+40.1%) vs. $222M. (PR)
• R.R. Donnelley & Sons Company (RRD): Q4 EPS of $0.63 beats by $0.07. Revenue of $2.8B (-9.5%) vs. $2.7B. (PR)
• Saks (SKS): Q4 EPS of -$0.60 misses by $0.30. Revenue of $835M (-14.9%) vs. $859M. Comps fell 15.3%. "It remains impossible to predict future sales and gross margin performance with any degree of certainty." (PR)
• SPX (SPW): Q4 EPS of $2.06 beats by $0.19. Revenue of $1.5B (+17.1%) in-line. (PR)
• TJX Companies (TJX): Q4 EPS of $0.55 beats by $0.04. Revenue of $5.4B (-0.2%) in-line. (PR)
• Zale (ZLC): FQ2 EPS of $0.16 misses by $0.32. Revenue of $679M (-18%) vs. $693M. (PR)

Earnings: Tuesday After Close

• Chicago Bridge & Iron (CBI): Q4 EPS of $0.72 beats by $0.06. Revenue of $1.51B (++14.4%) vs. $1.55B. Sees 2009 EPS of $1.30-2.00 vs. $2.15 and revenue of $4.4-4.8B vs. $5.91B. Shares +9% AH. (PR)
• Crown Castle International (CCI): Q4 EPS of -$0.24 misses by $0.20. Revenue of $392M (+4.5%) vs. $385M. Shares -6.3% AH. (PR)
• Dreamworks Animation SKG (DWA): Q4 EPS of $0.58 misses by $0.02. Revenue of $200M (-31.2%) vs. $232M. Shares -5.8% AH. (PR, earnings call transcript)
• Exco Resources (XCO): Q4 EPS of $0.13 misses by $0.05. Revenue of $272M (+0.8%) vs. $304M. Shares -12.5% AH. (PR)
• First Solar (FSLR): Q4 EPS of $1.61 beats by $0.31. Revenue of $434M (+116%) vs. $410M. Shares -13.4% AH. (PR, earnings call transcript)
• Health Care REIT (HCN): Q4 EPS of $0.83 in-line. Revenue of $147M (+17.4%) in-line. Sees 2009 EPS of $3.20-3.30 vs. $3.42. Shares -2.5% AH. (PR)
• Helix Energy Solutions (HLX): Q4 EPS of $0.02 misses by $0.34. Revenue of $541M (+8.1%) vs. $565M. Shares -10.5% AH. (PR)
• Nabors Industries (NBR): Q4 EPS of $0.83 beats by $0.01. Revenue of $1.48B (+11.9%) in-line. "Q4 was not as bad as it could have been and the future is probably going to be better than the price of our stock seems to indicate." Shares +1.2% AH. (PR)
• Range Resources (RRC): Q4 EPS of $0.33 beats by $0.11. Revenue of $345M (+54.4%) vs. $263M. Targeting 10% production growth in 2009. Shares flat AH. (PR)
• Wynn Resorts (WYNN): Q4 EPS of $0.07 misses by $0.37. Revenue of $614M (-13.6%) vs. $703M. "Starting in October, we experienced a dramatic deceleration in business from the casino and non-gaming departments." Shares -15.1% AH. (PR, earnings call transcript)

Today's Markets

• Asia markets got a lift from Tuesday's strong U.S. session. Nikkei +2.65% to 7,461. Hang Seng +1.61% to 13,005. Shanghai +0.27% to 2,207. BSE +0.91% to 8,903.
• Europe stocks opened higher and spent the morning trading in a tight range. At midday: London +1.2%. Paris +1.1%. Frankfurt +1.2%.
• U.S. stock futures drifted lower overnight. Dow -0.6% to 7261. S&P -0.7% to 763.50. Nasdaq -0.5%. Crude +1% to $40.35. Gold -1% to $961. Treasurys are essentially flat.

Wednesday's Economic Calendar

• 7:00 MBA Mortgage Applications
  10:00 Existing Home Sales
  10:00 Bernanke speaks to the House Committee on Financial Services
  10:30 EIA Petroleum Status
• Notable earnings before Wednesday's open: ABK, CMS, CNP, DISCA, DLM, DLTR, DNR, FTR, HK, KBR, KWK, LXP, PEI, RRD, SJM, SKS, SPW, TJX, ZLC
• Notable earnings after Wednesday's close: AGO, CLF, CRM, ESRX, FLR, FLS, GDP, GNK, KEG, LTD, MEDX, MRX, PDGI, PXP, SCI, SVNT, TS, USU

Seeking Alpha editor Eli Hoffmann contributed to this post.

The negative outlook for the US food industry has worsened in the past six months and may lead to more bankruptcy filings, according to Moody’s. The global economic downturn may reduce demand for certain brand-name foods and slow U.S. meat exports to emerging markets, Moody’s says in U.S. Food Industry: Six-Month Update.

The Update expresses Moody’s expectations for the fundamental credit conditions for the food industry over the next 12 to 18 months.

Investors occasionally use a stock trading technique called 'Buying Dividends,' which is the technique of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend. This technique generally works only in bull markets.

If you are interested in buying dividends, there are many stocks in many different industries to choose from. In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can't sell the stock until after the ex date. The actual dividend may not be paid for another few weeks.

Markets may have rallied yesterday due to a feeling of hope and change that the automotive industry may finally come to a bailout agreement with congress. It appears that this will be nothing more than a short-term fix for another ailing industry. Unfortunately, we still have several enormous economic problems to face beyond this.

In particular, while the government has been there to help with seemingly unlimited reach, we can not simply continue with bailouts forever without increasing taxes or some other extraordinary measure to increase revenues for Uncle Sam.