It might not be good for America's waistline, but froufrou dining off petite plates is out. The recession has made us hungry for family-size piles of comfort food, skyscraping burgers, and all-you-can-eat fries.

Like other segments of the retail economy, the restaurant industry has struggled over the past two years as unemployment has soared and consumers have curtailed spending. The National Restaurant Association's performance index shows that the industry has been shrinking for 23 months in a row. High-end bistros have fared the worst, with sales at fancy restaurants like Ruth's Chris (RUTH) and Morton's Steakhouse (MRT) off by 20 percent or more, as corporate customers pare expenses and other diners trade down. Casual- and family-dining places have suffered too, as people eat out less, order more takeout, or cook at home. Even fast-food chains like McDonald's (MCD) and Burger King (BKC) have lost business, despite dollar meals and other deals meant to keep the fryers sizzling.

I closed my (small) position in Panera Bread (PNRA) yesterday.

This is an interesting story. The company is growing fast, has no debt (amazing for a restaurant chain) and has great management. The company had a great quarter, raising some prices when people moved from full service restaurants to discounters.

The Correction is at hand: Google (GOOG), Apple (AAPL), SPX (SPX), Panera Bread (PNRA), Colgate-Palmolve (CL), Walmart (WMT), Coca-Cola (KO)

Q3 2009 Earnings Call

October 28, 2009 8:30 am ET

• GMAC needs third lifeline. GMAC Financial Services and the Treasury are reportedly in advanced talks to prop up the auto-lender with its third helping of taxpayer money, making it the first of the stress-tested banks to need additional government capital. Treasury will likely inject another $2.8-5.6B into GMAC in exchange for preferred shares, bringing its total investment in GMAC thus far to $15.3-18.1B, for which it currently owns 35.4% of the firm. Sources say the FDIC has also agreed to backstop another $2.9B of GMAC's debt to facilitate day-to-day lending. The government's willingness to deepen taxpayer exposure to GMAC reflects the troubled lender's importance to the revival of the auto industry.
• Consumer confidence dips. A lower-than-expected consumer confidence reading sent a chill through markets Tuesday. Conference Board's index came in at 47.7, down from 53.4 a month ago, and lower than consensus estimates of 53.2. A plunge in expectations (65.7 vs. 73.3 in Sept.) led the way down. "Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment," the group said, noting its Present Situation Index is now at a 26-year low. Analysts struggled to find an obvious explanation for the decline, but noted the drop didn't bode well for recovery hopes.
• Risk appetite withers. State Street's investor confidence index fell 10 points to 108.4, the lowest since April, with the most pronounced decline seen among North American investors (-12.8 to 101.1). European investors were also much more subdued (-9.3 to 101.8), but confidence rose among Asian investors, albeit to a level that still trails the U.S. and Europe (+2.4 to 95.3). "Institutional investors have paused to take stock," index co-developer Ken Froot said. "While the U.S. earnings season has been relatively robust so far, the number of positive surprises that have been observed in employment, retail sales, manufacturing and trade figures has diminished considerably, and this may be influencing investor risk appetite."
• Easing Hilton's towering debt load. Sources say Blackstone (BX) is in talks with lenders to shave about $5B off Hilton Worldwide's $20B debt load. Specifically, Blackstone is considering coughing up another $800M in equity to buy back debt at a discount (on top of its $5.6B original investment), and would like to extend debt maturing in 2013 to 2016. With capital markets reopening over the past six months, private-equity firms are using a variety of schemes (exchange offers, repurchases, tender offers) to refinance and extend the maturities on highly-leveraged debt taken on during the heyday, staving off default.
• Panel backs hedge-fund clampdown. The House Financial Services Committee overwhelmingly passed a bill that would require advisers to hedge funds, private equity and offshore funds to register with regulators, bringing some transparency to the loosely-policed industry. The bill, however, exempts venture capital funds and funds with less than $150M - which SEC chief Mary Schapiro warned "could come back to haunt investors in later years."
• Tackling too-big-to-fail. Rep. Barney Frank unveiled legislation to monitor and dissolve systemically critical financial institutions. Under the proposal, costs for taking over and euthanizing a failed bank would be paid for by shareholders and bondholders, with taxpayers temporarily covering the overflow until an assessment is rendered against the failed bank's surviving peers. A council of regulators - including the FDIC, Treasury, Fed and SEC - would be in charge of monitoring the conglomerates and invoking a wind-down if necessary.
• That's a good czar. While so-called pay czar Kenneth Feinberg's new rules for TARP backed firms cut compensation by about half, they also boosted base salaries by 14% to an average of $438K/year after executives complained, according to an analysis in today's WSJ. The move appears to contradict Feinberg's stated goal of tying pay to long-term performance, and "deepens the confusion and skepticism" surrounding the types of pay systems the government is promoting.
• Ford shows why it's #1. Consumer Reports' much-awaited yearly car reliability survey held few surprises, with foreign automakers dominating its top-10 list, and domestic brands prominently featured on its least-reliable tally. Scion took top spot, followed by Honda (HMC), Toyota (TM) and Infiniti (NSANY). Ford (F), at #10, was the only U.S. carmaker to make the grade. Least reliable brands were Chrysler, Cadillac, Dodge and Jeep. Media reports yesterday claimed Fiat models will drive Chrysler's turnaround efforts, but with new cars not due until 2012, it's unclear whether Chrysler has enough staying power in its balance sheet.
• Ruiz pegged as AMD insider. Sources say former AMD (AMD) CEO Hector Ruiz is the insider government officials have identified as providing nonpublic information to Galleon's insider trading scheme. Prosecutors released fragments of recorded conversations between an unnamed AMD executive and a Galleon employee in which they allegedly discuss the timing of the spinoff of AMD’s plants before the deal was announced in Sept. 2008. Ruiz hasn’t been charged, and prosecutors don’t say he profited from insider trading.
• Gloom on economy spreads. Americans are growing increasingly pessimistic about the economy after a mild upswing in September, according to WSJ/NBC's monthly poll released Wednesday. For the first time during the Obama presidency, a majority of those polled now see the country as being on the wrong track. Fifty-eight percent think the economic slide still has a ways to go, up from 52% in September, while only 29% think we've hit bottom, down from 35%.
• Mortgage apps drop for second straight week. Mortgage applications fell another 12.3% following a 13.7% drop last week, even as the average rate for 30-year mortgages inched down to 5.04% from 5.07% a week ago. Refinancing was 16.2% lower.
• Ford picks Geely. Ford (F) selected a group led by China's Geely as the preferred bidder for its Volvo unit, a senior Geely executive said. Geely and Ford will now enter into exclusive negotiations over Volvo.

Earnings: Wed. Before Open

• ArcelorMittal (MT): Q3 income of $1.59B vs. consensus of $1.78B. Sees Q4 income of $2-2.4B. "We have seen the first signs of recovery in Q3... We should continue to see further gradual improvement through 2010, although the operating environment remains challenging." Shares -0.8% premarket. (PR)
• Ashland (ASH): FQ4 EPS of $0.96 beats by $0.06. Revenue of $2.11B (-4.6%) in-line. "Demand appears to be showing some signs of growth in many end markets." (PR)
• BorgWarner (BWA): Q3 EPS of $0.15 beats by $0.05. Revenue of $1.03B (-22%) in-line. "We continue to be cautiously optimistic about Q4." (PR)
• ConocoPhillips (COP): Q3 EPS of $1.00 beats by $0.06. Shares -0.1% premarket. (PR)
• Enterprise Products Partners L.P. (EPD): Q3 EPS of $0.36 misses by $0.06. Revenue of $4.6B (-27%) vs. $4.73B. (PR)
• CenterPoint Energy (CNP): Q3 EPS of $0.31 misses by $0.01. Revenue of $1.58B (-37.3%) in-line. (PR)
• Coca-Cola Enterprises (CCE): Q3 EPS of $0.51 beats by $0.05. Revenue of $5.57B (-3%) vs. $5.71B. (PR)
• General Dynamics (GD): Q3 EPS of $1.48 beats by $0.08. Revenue of $7.72B (+8.1%) in-line. (PR)
• Goodyear Tire & Rubber (GT): Q3 EPS of $0.45 beats by $0.05. Revenue of $4.38B (-15.2%) in-line. Shares +1.8% premarket. (PR)
• Hess (HES): Q3 EPS of $1.05 vs. consensus of $0.55. Revenue of $7.27B vs. $7.75B. Shares +1.8% premarket. (PR)
• Jones Apparel Group (JNY): Q3 EPS of $0.46 beats by $0.19. Revenue of $856M (-11.3%) vs. $867M. "We are cautiously optimistic that the holiday season will generate better financial results across the industry." Shares -13.8% premarket. (PR)
• International Paper (IP): Q3 EPS of $0.37 beats by $0.13. Revenue of $5.92B (-13.1%) in-line. "At the end of Q3, we began to see some modest improvements in demand in some segments of our paper and packaging businesses." Shares +3.8% premarket. (PR)
• Lazard (LAZ): Q3 EPS of $0.41 beats by $0.04. Revenue of $431M (-1.3%) vs. $400M. Believes corporate defaults will remain at high levels, on a more global scale than during the last cycle, and therefore expects that its restructuring business will continue to be very active. (PR)
• Level 3 Communications (LVLT): Q3 EPS of -$0.10 in-line. Revenue of $916M (-14.4%) vs. $926M. Shares -4.4% premarket. (PR)
• MeadWestvaco (MWV): Q3 EPS of $0.50 beats by $0.23. Revenue of $1.63B (-10.2%) in-line. "Given continued global economic uncertainty, future results are difficult to predict." (PR)
• Newell Rubbermaid (NWL): Q3 EPS of $0.38 beats by $0.03. Revenue of $1.45B (-17.7%) in-line. (PR)
• New York Community Bancorp (NYB): Q3 EPS of $0.26 in-line. "Although certain economic data suggests that the recession has ended, the Metro New York region we serve continues to be under duress." (PR)
• Nexen (NXY): Q3 EPS of C$0.23 beats by C$0.08. Revenue of C$1.1B (-50.4%) vs. $924M. Shares -0.1% premarket. (PR)
• Nomura (NMR): Q2 net income of ¥27.7B ($303M) vs. consensus of ¥11.5B. Revenue of ¥355B vs. ¥258B last year. Resumes ¥4/share dividend. (Bloomberg)
• Owens Corning (OC): Q3 EPS of $0.61 beats by $0.22. Revenue of $1.35B (-17.2%) in-line. On track to surpass $160M in cost savings this year. Shares +1.5% premarket. (PR)
• Praxair (PX): Q3 EPS of $1.02 beats by $0.02. Revenue of $2.29B (-19.8%) in-line. "Business conditions stabilized globally during the quarter... The strongest pick-up was in Asia and South America, where government stimulus programs have increased domestic demand and industrial production." (PR)
• Qwest Communications International (Q): Q3 EPS of $0.09 beats by $0.02. Revenue of $3.05B (-9.6%) in-line. Shares +3.5% premarket. (PR)
• SAP AG (SAP): Q3 net income of €435M vs. consensus of €454M. Sales of €2.51B vs. €2.63B. "While we are seeing signs of stabilization in the general environment, the market remains difficult. Q3 software and software-related service revenues came in lower than we expected mainly because of a particularly challenging environment in the emerging markets and Japan." Shares -7.6% premarket. (PR)
• Southern Company (SO): Q3 EPS of $0.99 beats by $0.01. Revenue of $4.68B (-13.8%) vs. $5.5B. (PR)
• SPX Corp. (SPW): Q3 EPS of $ beats by $. Revenue of $1.17B (-20.8%) in line. Sees full-year EPS of $3.80-4.00 vs. $3.96 consensus. "The global economic environment remains difficult and continues to impact our performance. Although some macroeconomic trends appear to be pointing toward a recovery, we expect our recovery to lag the broader economy." (PR)
• United Microelectronics (UMC): Q3 EPS of $0.08 beats by $0.04. Revenue of $853M (+11.1%) vs. $809M. (PR)
• WellPoint (WLP): Q3 EPS of $1.78 beats by $0.40. Revenue of $15.21B (+784%) in-line. Medical enrollment fell 1.5M to 35.3M, primarily due to the recession and a rise in unemployment. Shares -14.3% premarket. (PR)
• Wyndham (WYN): Q3 EPS of $0.58 beats by $0.02. Revenue of $1.02B (-17.1%) in-line. Shares +1% premarket. (PR)

Earnings: Tue. After Close

• Ace (ACE): Q3 EPS of $2.07 beats by $0.10. Revenue of $3.39B (-6%) vs. $3.33B. Expects meaningfully stronger revenue growth in Q4. Shares +2.3% AH. (PR)
• Amkor Technology (AMKR): Q3 EPS of $0.12 misses by $0.07. Revenue of $616M (-14%) vs. $604M. Sees Q4 EPS of $0.17-0.23 vs. $0.16. Shares -1.5% AH. (PR)
• Apollo Group (APOL): FQ4 EPS of $1.06 beats by $0.02. Revenue of $1.08B (+30%) vs. $1.03B. Announces an informal SEC inquiry into revenue recognition practices. Shares -19.8% AH. (PR)
• Boston Properties (BXP): Q3 FFO of $1.13 beats by $0.03. Revenue of $359M (+6%) vs. $353M. Sees Q4 FFO of $1.04-1.06 vs. $1.09. (PR)
• Century Aluminum Company (CENX): Q3 EPS of $0.45. Revenue of $229M (-59%) vs. $225M. Results impacted by $55.6M net after-tax benefit related to contract replacement. Shares +3.8% AH. (PR)
• Cephalon (CEPH): Q3 EPS of $1.62 beats by $0.21. Revenue of $549M (+10%) vs. $559M. Sees full-year sales of $2.125B-2.175B vs. $2.22B. Shares +1.4% AH. (PR)
• Chicago Bridge & Iron (CBI): Q3 EPS of $0.42 beats by $0.03. Revenue of $1B (-38%) vs. $1.1B. Shares +5.4% AH. (PR)
• Dreamworks Animation (DWA): Q3 EPS of $0.23 beats by $0.07. Revenue of $135M (-10.6%) vs. $129M. Shares +0.4% AH. (PR)
• E*TRADE Financial (ETFC): Q3 EPS of -$0.05 beats by $0.01. At-risk delinquencies declined by 10% and provision for loan losses decreased by $57M to $347M. Shares +0.6% AH. (PR)
• Fiserv (FISV): Q3 EPS of $0.92 in-line. Revenue of $992M (-5%) vs. $1.05B. Shares -2.6% AH. (PR)
• Harris (HRS): FQ1 EPS of $0.83 beats by $0.06. Revenue of $1.2B (-3%) in-line. Shares +5.4% AH. (PR)
• Illumina (ILMN): Q3 EPS of $0.17 misses by $0.03. Revenue of $158M (+5%) vs. $167M. Shares -14.8% AH. (PR)
• Integrated Device Technology (IDTI): FQ2 EPS of $0.07 beats by $0.05. Revenue of $140M (-30%) vs. $131M. Shares +4.2% AH. (PR)
• Massey Energy Company (MEE): Q3 EPS of $0.19 beats by $0.01. Revenue of $642M (-16%) vs. $677M. Shares -7.4% AH. (PR)
• McKesson (MCK): FQ2 EPS of $1.11 beats by $0.09. Revenue of $27.1B (+1.9%) vs. $26.75B. Sees full-year EPS of $4.45-4.60 vs. consensus of $4.29. Shares +1.9% AH. (PR)
• Molex (MOLX): FQ1 EPS of $0.18 beats by $0.03. Revenue of $674M (-20%) vs. $661M. Sees Q2 EPS of $0.11-0.15 vs. $0.19, including pretax restructuring charge of about $0.07 after tax. Shares -1% AH. (PR)
• Nalco Company (NLC): Q3 EPS of $0.20 misses by $0.05. Revenue of $957M (-14%) vs. $961M. (PR)
• Norfolk Southern (NSC): Q3 EPS of $0.81 beats by $0.03. Revenue of $2.1B (-29%) in-line. Shares +1.8% AH. (PR)
• Panera Bread Company (PNRA): Q3 EPS of $0.61 beats by $0.03. Revenue of $335M (+6%) vs. $334M. Same-store sales increased 3.3%. Sees Q4 EPS of $0.85-0.87 vs. $0.85, and full-year EPS of $3.05-3.15 vs. $3.04. Shares +5.2% AH. (PR)
• Pharmaceutical Product Development (PPDI): Q3 EPS of $0.32 in-line. Revenue of $341M (-13%) vs. $334M. Sees full-year EPS of $1.38-1.40 vs. $1.34, on revenue of $1.29B-1.32B vs. $1.34B. Shares +0.2% AH. (PR)
• RF Micro Devices (RFMD): FQ2 EPS of $0.13 beats by $0.04. Revenue of $255M (-6%) vs. $234M. Shares +7.1% AH. (PR)
• ValueClick (VCLK): Q3 EPS of $0.15 beats by $0.01. Revenue of $130M (-12.1%) vs. $129M. Sees Q4 EPS of $0.15-0.16 vs. consensus of $0.17 on revenue of $128-138M vs. $142M. Shares +1.8% AH. (PR)
• Visa (V): FQ4 EPS of $0.74 beats by $0.02. Revenue of $1.9B (+10%) vs. $1.8B. Sees 2010 revenue growth at lower end of 11-15% range. Sees 2011 growth of more than 20%. Shares +1.9% AH. (PR)

Today's Markets

Overseas markets moved lower Wednesday and futures are under pressure.

The Burger King (BKC) $1 double cheeseburger campaign starts nationally on October 19. For Burger King, its high stakes. For the QSR sector, its a way to detect whether the $1 value focus will actually pay off.

In its August 25th earnings call, CEO John Chidsey indicated they were happy with the early $1 double results in about 40 markets. Earlier this year, Burger King and its franchisees failed twice to come to agreement to promote it, and these must be test markets or company markets.

If you can keep your head when all about you

Are losing theirs and blaming it on you;

If you can trust yourself when all men doubt you

• MSFT, Yahoo reach search deal. At long last, sources say Microsoft (MSFT) and Yahoo (YHOO) have reached a search deal and will announce it within the next 24 hours. Yahoo will use Microsoft's Bing search-engine technology on its own sites, including the Bing brand, and will supply search text ads on its sites and some of Microsoft's. The deal appears to be structured as a revenue share with no upfront fee, with Yahoo taking 110% the first two years and 90% in the third. The deal is on a smaller scale than previously envisioned, but both Microsoft and Yahoo are hoping that a combined attack will be more effective against Google (GOOG). UPDATE: Microsoft, Yahoo officially announce the deal. Premarket: MSFT +0.8%, YHOO -5.8% (8:30 ET).
• Say-on-pay makes headway. A congressional committee approved a bill that would put new restrictions on executive pay, giving shareholders the right to cast non-binding annual votes on executive compensation and special pay packages, and enabling regulators to ban pay structures that incentivize inappropriate risk-taking. The House of Representatives is expected to vote on the measure on Friday.
• Santander plans bank IPO. Banco Santander (STD) will spin off its Brazilian unit in an initial public offering that could raise at least $3B, creating one of the biggest publicly listed banks in Latin America. The listing will likely occur in the next three months.
• Nasdaq backs flash trading ban. As the debate on flash trading heats up, Sen. Charles Schumer said the Nasdaq Stock Market supports a ban on the trading practice and only 'reluctantly' started offering flashes early last month. Meanwhile, the SEC was apparently investigating the practice even before Schumer's letter calling for action, and may move to ban flash trading 'within the next couple of weeks.'
• Sprint buys Virgin Mobile. Sprint (S) agreed to buy Virgin Mobile USA (VM) for $5.50/share ($483M) in an all-stock deal, and will retire $205M of Virgin's debt. Sprint already owns 13.1% of Virgin, which offers cheap prepaid wireless plans. Sprint is hoping the cheaper, non-contract service will help stem a tide of customer defections.
• IBM buys software maker. IBM (IBM) will buy SPSS for $1.2B, a 42% premium on SPSS' closing price on Monday. The deal, the latest in a series of IBM acquisitions, expands IBM's software portfolio and is a further sign of improvement in the technology sector deal market. The deal should be completed by year-end.
• NJ sues Merrill. New Jersey is suing Merrill Lynch, alleging the firm sold the state's investment division $300M in preferred stock based on misleading information. New Jersey officials said if the state's investment unit "had known Merrill’s true financial condition, it would not have participated in the January 2008 offering and would not have agreed to a conversion in July 2008."
• GM returns to car loans. After a year-long hiatus, General Motors plans to get back into the car-leasing business and is said to be eyeing August 1 as its re-entry date. GM has said credit availability is still hurting auto sales, and that its exit from the leasing business forced many customers to defect to other automakers. Rivals including Ford (F) and Toyota (TM) have scaled back their leasing but haven't pulled out of the business entirely.
• Apple bars Google Voice app. Apple (AAPL) banned two iPhone applications based on Google Voice (GOOG) as the rivalry between the two tech giants grows. An Apple representative said some of the applications offered functions too close to what the iPhone already provides.
• American Air expects alliance approval. American Airlines (AMR) said it expects to win approval by October to form an alliance with British Airways (BAIRY.PK) and Iberia. The airline is betting on intra-alliance competition and global partnerships to help it survive.
• KKR preps Dollar General IPO. Kohlberg Kravis Roberts is reportedly in advanced preparations for an initial public offering of Dollar General and will also serve as one of the lead underwriters of the deal. It marks the first time KKR will underwrite one of its own IPOs as it tries to strengthen its reputation ahead of its own planned listing.
• SEC files fraud charges. The SEC filed suit against four individuals, accusing them of fraud in connection to over $197M raised from at least 900 investors nationwide which was funnelled to a commercial real estate venture. The SEC contends the defendants made "material misrepresentations to investors," including false claims about the use of the funds and the safety of investments.
• Home prices improve (.pdf). The S&P/Case-Shiller 20-City Home Price Index was -17.1% in May vs. last year, narrower than last month's 18.1% drop, and the fourth monthly improvement in a row as "the pace of descent in home price values appears to be slowing." The 0.5% month-on-month increase was the first uptick in three years.
• Consumer confidence. Conference Board's July Consumer Confidence came in at 46.6 vs 49.0 consensus, down from 49.3 in June. The decline was aggravated by a worsening job market, as the percentage of consumers claiming jobs are hard to get rose sharply. According to ABC's poll, consumer confidence registered at -47, up from last week's -50 and breaking the -50 threshold for the first time since mid-June. Twenty-six percent of Americans say it's a good time to buy things, up from 22% last week, while 44% rate their personal finances positively.
• Retail sales. Chain store sales fell 1.6% in the first three weeks of July, Redbook said, worse than the -0.9% expected. According to ICSC, weekly sales were up 1%, but July sales will be off around 5.5% Y/Y with "leaner clearance than last year hurting the reported sales pace."

Earnings: Wednesday Before Open

• American Tower (AMT): Q2 EPS of $0.14 misses by $0.03. Revenue of $423M (+7.5%) vs. $414M. (PR)
• ArcelorMittal (MT): Q2 net loss of $792M ($0.57/share) vs. +$5.84B a year ago and vs. consensus of +$336M. Sales of $15.2B (-60%). Sees Q3 Ebitda of $1.4-1.8B. Says it achieved annualized fixed-cost cuts of $8.4B by the end of Q2. Shares -4.2% in Amsterdam. (Bloomberg)
• Arrow Electronics (ARW): Q2 EPS of $0.31 beats by $0.02. Revenue of $3.4B (-22%) in-line. (PR)
• Brookfield Properties (BPO): Q2 FFO of $0.38 beats by $0.03. Revenue of $619M (-13.5%) vs. $527M. (PR)
• Coca-Cola Enterprises (CCE): Q2 EPS of $0.67 beats by $0.16. Revenue of $5.9B (-0.4%) vs. $6B. Issues upside EPS guidance for FY '09 of $1.44-1.49 vs. $1.33 consensus. Shares +5.9% premarket (8:00 ET). (PR)
• EQT Corp. (EQT): Q2 EPS of $0.20 misses by $0.03. Revenue of $238M (-29%) vs. $236M. (PR)
• General Dynamics (GD): Q2 EPS of $1.61 beats by $0.04. Revenue of $8.1B (+11%) in-line. Shares +2% premarket (8:00 ET). (PR)
• Hecla Mining (HL): Q2 EPS of $0.00 beats by $0.02. Revenue of $75M (+10.5%) vs. $53M. Shares +2% premarket (8:20 ET). (PR)
• Hess (HES): Q2 EPS of $0.31 beats by $0.30. Revenue of $6.8B (-42%) vs. $7.4B. Shares +1.6% premarket (8:00 ET).(PR)
• Honda (HMC): FQ1 net profit fell 96% to ¥7.56B ($79.9M), vs. consensus of -¥56.4B, and vs. a FQ4 net loss of ¥186.1B. Sees full-year earnings of ¥55B, down 60% from last year, but 38% higher than its previous outlook of ¥40B. Revenue of ¥2T (-30%). (WSJ)
• Hospira (HSP): Q2 EPS of $0.73 beats by $0.13. Revenue of $957M (+6.1%) vs. $878M. (PR)
• IAC/InterActiveCorp (IACI): Q2 EPS of $0.02 misses by $0.07. Revenue of $340M (-4%) vs. $335M. Shares +0.5% premarket (8:10 ET). (PR)
• Jones Apparel Group (JNY): Q2 EPS of $0.29 beats by $0.22. Revenue of $804M (-3%) vs. $777M. Shares +9.5% premarket (8:10 ET). (PR)
• MeadWestvaco (MWV): Q2 EPS of $0.22 vs. consensus of $0.01 (may not be comparable). Revenue of $1.4B (-16%) vs. $1.5B. (PR)
• Medco Health Solutions (MHS): Q2 EPS of $0.69 beats by $0.04. Revenue of $14.9B (+17%) vs. $14.5B. (PR)
• Moody's (MCO): Q2 EPS of $0.43 beats by $0.03. Revenue of $451M (-7.6%) vs. $427M. (PR)
• New York Community Bancorp (NYB): Q2 EPS of $0.16 vs. consensus of $0.25 (may not be comparable). Non-performing assets of $341.6M at the end of June, representing 1.04% of total assets, vs. $176.8M, or 0.55% of total assets, at the end of March. (PR)
• Nissan (NSANY): FQ1 net loss of ¥16.5B vs. a net profit of ¥52.8B a year ago, and vs. consensus of -¥108.5B. Last quarter Nissan posted a ¥276.9B loss. Sales of ¥1.51T (-36%). Still sees full-year loss of ¥170B. Sources say Nissan will announce today a new China plant capable of producing 240,000 vehicles/year. (WSJ)
• Penske Automotive Group (PAG): Q2 EPS of $0.22 beats by $0.07. Revenue of $2.3B (-30%) vs. $2.4B. (PR)
• Praxair (PX): Q2 EPS of $0.96 misses by $0.03. Revenue of $2.3B (-26%) vs. $2.1B. (PR)
• Qwest Communications International (Q): Q2 EPS of $0.13 beats by $0.03. Revenue of $3.1B (-9%) in-line. (PR)
• SAP AG (SAP): Q2 net profit of €423M vs. €408M a year ago and consensus of €385M. Revenue of €2.58B (-10%) vs. €2.64B. Software revenue of €543M (-40%) vs. consensus of €556M. Operating margin 27.7%. Sees full-year operating margin of 25.5-27%, up from previous guidance of 24.5-25.5%. Shares +1.8% in Frankfurt. (DJ)
• Sealed Air (SEE): Q2 EPS of $0.34 in-line. Revenue of $1B (-20%) vs. $1.1B. (PR)
• Scotts Miracle-Gro Company (SMG): FQ3 EPS of $2.32 beats by $0.07. Revenue of $1.3B (+9%) in-line. (PR)
• Sprint Nextel (S): Q2 EPS of -$0.13 misses by $0.11. Revenue of $8.1B (-10%) in-line. (PR)
• Wyndham (WYN): Q2 EPS of $0.41 beats by $0.04. Revenue of $920M (-19%) vs. $917M. Issues downside Q3 EPS guidance of $0.53-0.57 vs. $0.58 consensus. Issues in-line guidance for FY '09, sees FY '09 revenue of $3.5-3.9B vs. $3.6B consensus.

Earnings: Tuesday After Close

• American Financial Group (AFG): Q2 EPS of $1.09 beats by $0.16. Revenue of $1.1B (+8%) vs. $815M. (PR)
• Brandywine Realty Trust (BDN): Q2 FFO of $0.56 beats by $0.10. Revenue of $146M (-3%) in-line. Raises full-year FFO to $1.75-1.80 from $1.60-$1.74, vs. $1.71. (PR)
• Carter's (CRI): Q2 EPS of $0.23 beats by $0.17. Revenue of $318M (+5%) vs. $300M. Sees Q3 EPS growth in mid to high single digits. (PR)
• Chicago Bridge & Iron (CBI): Q2 EPS of $0.45 beats by $0.05. Revenue of $1.2B (-14%) in-line. (PR)
• Dreamworks Animation SKG (DWA): Q2 EPS of $0.30 beats by $0.14. Revenue of $132M (-7%) vs. $117M. (PR)
• Fidelity National Information Services (FIS): Q2 EPS of $0.42 beats by $0.06. Revenue of $835M (-4%) vs. $832M. Raises full-year EPS view to $1.71-1.75 vs. $1.62. (PR)
• FMC Technologies (FTI): Q2 EPS of $0.84 beats by $0.23. Revenue of $1.1B (-6%) in-line. Sees full-year EPS of $2.55-2.65 vs. $2.36. (PR)
• Hertz Global Holdings (HTZ): Q2 EPS of $0.12 beats by $0.06. Revenue of $1.8B (-23%) in-line. (PR)
• Integrated Device Technology (IDTI): FQ1 EPS of $0.02 beats by $0.02. Revenue of $116M (-38%) vs. $113M. (PR)
• Life Technologies (LIFE): Q2 EPS of $0.79 beats by $0.13. Revenue of $833M (+126%) vs. $803M. Sees full-year EPS of $2.70-2.80 vs. $2.63. (PR)
• Massey Energy Company (MEE): Q2 EPS of $0.24 beats by $0.08. Revenue of $698M (-16%) vs. $661M. (PR)
• McKesson (MCK): FQ1 EPS of $1.06 beats by $0.20. Revenue of $27B (flat) in-line. (PR)
• Nalco Company (NLC): Q2 EPS of $0.11 misses by $0.13. Revenue of $913M (-14%) vs. $950M. (PR)
• Norfolk Southern (NSC): Q2 EPS of $0.66 beats by $0.02. Revenue of $1.9B (-33%) vs. $2.1B. (PR)
• Panera Bread Company (PNRA): Q2 EPS of $0.65 beats by $0.01. Revenue of $331M (+3%) in-line. Company targets 15-20 new unit openings in Q3. (PR)
• Parametric Technology (PMTC): FQ3 EPS of $0.03 misses by $0.13. Revenue of $226M (-17%) vs. $223M. Sees Q4 EPS of $0.25-0.30 vs. $0.31. (PR)
• Psychiatric Solutions (PSYS): Q2 EPS of $0.63 beats by $0.07. Revenue of $471M (+6%) vs. $469M. Reaffirms full-year EPS of $2.24-$2.32 vs. $2.23. (PR)
• Questar (STR): Q2 EPS of $0.54 in-line. Revenue of $613M (-26%) vs. $525M. (PR)
• SBA Communications (SBAC): Q2 EPS of $0.25 beats by $0.42. Revenue of $136M (+22%) vs. $137M. (PR)
• STMicroelectronics (STM): Q2 EPS of -$0.36 misses by $0.04. Revenue of $2B (-16%) vs. $1.8B. Sees Q3 revenue of $2.07B-2.27B vs. $2.02B. (PR)
• Superior Energy Services (SPN): Q2 EPS of $0.35 misses by $0.09. Revenue of $361M (-21%) vs. $392M. (PR)
• TECO Energy (TE): Q2 EPS of $0.29 beats by $0.04. Revenue of $825M (-7%) vs. $864M. (PR)
• THQ (THQI): FQ1 EPS of $0.10 beats by $0.18. Revenue of $244M (+77%) vs. $203M. Sees Q2 revenue of $85M-95M vs. $123M. (PR)
• Total System Services (TSS): Q2 EPS of $0.27 in-line. Revenue of $415M (-4%) vs. $401M. Sees full-year decline in revenues of 3-5% and in net income of 11-13%. (PR)
• Trimble Navigation (TRMB): Q2 EPS of $0.31 misses by $0.01. Revenue of $290M (-23%) vs. $300M. Sees Q3 EPS of $0.25 vs. $0.27. (PR)
• Western Digital (WDC): FQ4 EPS of $0.76 beats by $0.48. Revenue of $1.9B (-5%) vs. $1.6B. (PR)
• XL Capital (XL): Q2 EPS of $0.96 beats by $0.34. Revenue of $1.73B (-19%) vs. $1.71B. (PR)

Today's Markets

Asian markets were broadly down, but Europe is off to a strong start. U.S. futures have dipped into negative territory.

Vulcan Materials (VMC), U.S. Steel (X), Anadarko Petroleum (APA), Boeing (BA), Jones Apparel (JNY), Wal-Mart (WMT), Panera Bread (PNRA), Salesforce.com (CRM), Microsoft (MSFT), Oracle (ORCL)

Sell-Side Stays Bullish for 13^th Week in a Row…but Still Continues Frugal Ways!

For investors looking for potential short squeeze plays on a market rally or stocks disliked the most by investors on a market decline, below we provide a list of the 25 stocks in the Russell 1,00 with the highest short interest as a percentage of float. As shown, Chipotle Mexican Grill ranks highest with 41.7% of its float sold short. Macerich (MAC) ranks second at 35.92%, followed by ADS, PNRA, SOHU, and SPWRA. Other notables on the list include SHLD, PCLN, Citi, ISRG, WYNN, and LVS. As mentioned earlier in this post, these stocks should outperform if the overall market resumes its rally due to short covering. If the market heads decidedly lower, however, the shorts will probably just pile on more.

Subscribe to Bespoke Premium to receive our twice monthly Short Interest report.

Bullish Calls:

Panera Bread (PNRA): "I see the restaurants making a come back here... I want to double down Panera… I know that the chart looks bad."

It’s been 3 weeks (April 19th) since I advocated selling and/or shorting a whole slew of restaurant stocks on the basis that the entire sector had climbed much too far too fast, and there were several names that were ripe for the picking.

Since that recommendation, my average pick is beating the market by 11% vs. shorting the Russell 2000, which is the benchmark I use because these stocks are all small caps.

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

CEO Interview: Ronald Shaich, Panera Bread (PNRA)

Q1 2009 Earnings Call

April 29, 2009 8:30 am ET

Even after rallying more than 25% off of the March lows, the S&P 1500 is still 39% below its 52-week high. The average stock in the index is even further below its 52-week high at -44%.

But there are stocks that have been doing extremely well lately, and below we highlight the 30 names in the index that are the closest to their 52-week highs. Carter's Inc (CRI), 3Com (COMS), Hansen Natural (HANS), J&J Snack Foods (JJSF), Macrovision (MVSN), and MAXIMUS (MMS) are all less than 1% from their 52-week highs. As shown, the majority of the stocks on the list are in the consumer sectors. There are no Financials, Industrials, Telecom, or Utilities on the list.

I've been reading my annual reports and wanted to share the items I found interesting:

CME Group, Inc. (CME): this company generates revenues primarily from its clearing and transaction fees. (10K: page 31). In other words, it's a clearinghouse. "Many clearing firms [CME's major customers] have expressed the view that...clearing houses should be operated as utilities rather than part of for-profit enterprises." (10K: page 41). Read that again--CME's customers are trying to lower their costs and will pressure CME on its margins.

The longer you are around the market, the more you begin to see things you'd never imagine: the largest banks in the country trading like penny stocks, fertilizer stocks trading like internet IPOs circa 1999, and now the hottest momentum sector in America - casual dining restaurants. This was a group I was negative on back in 2007 [Sep 19, 2007: Tough Times Ahead: Restaurants?] before it was cool to be a bear.

Middle class consumer squeezed along with skyrocketing inputs for their food doesn't bode well for profit margins in this group as a whole. We have the cheese inflation, the dairy inflation, the corn inflation and now the wheat inflation.