- Fannie asks for cash after loss. Fannie Mae (FNM) posted a heavy Q2 loss of $14.8B (see details below), its eighth quarterly loss in a row, prompting the mortgage lender to ask the government for a $10.7B capital injection. Fannie's cumulative losses over the last two years now stand at $101.6B, and the company has drawn $44.9B from the Treasury since April. The company said "we do not expect to operate profitably in the foreseeable future. We expect that we will experience adverse financial effects" during the fight against foreclosures. Shares fell 12.7% in after hours trading. Shares -11.4% premarket (7:00 ET).
- Greenberg settles SEC charges. Hank Greenberg, former CEO and chairman of AIG (NYSE:AIG), agreed to pay $15M to settle SEC charges accusing him of improper accounting transactions between 2000 and 2005. The SEC also charged former CFO Howard Smith, saying the two men 'were responsible for material misstatements' that created a 'false impression' of AIG's financial results. Smith settled with the SEC for $1.5M. (Read the SEC's statement)
- Broker admits lying in fraud case. Julian Tzolov, a former Credit Suisse (NYSE:CS) broker, testified before a jury that he and former partner Eric Butler lied to clients and sent them inaccurate information to cover up risky investments. In one of the first criminal trials connected to the credit crunch, Tzolov said he and Butler told clients certain securities were backed by government-guaranteed student loans when this was not the case, and that they did so in part to receive higher commissions. Butler is on trial for fraud, and Tzolov was called as a witness after pleading guilty to securities fraud, wire fraud, conspiracy and bail jumping last month.
- NYT looking to sell Globe. The New York Times (NYSE:NYT) confirmed for the first time that it has hired Goldman Sachs to help sell its Boston Globe and Worcester Telegram & Gazette newspapers, as well as their websites. In a regulatory filing, the company said the possible sale is part of a strategic restructuring in response to a heavy downturn in advertising and the migration of readers to the internet.
- RBS posts loss on bad loans. Royal Bank of Scotland (NYSE:RBS) posted a loss of £1.04B in H1, falling far short of the £1.1B profit consensus, after setting aside £7.52B ($12.62B) to cover bad loans. The bank expects impairments to remain at 'elevated levels,' and "there is every sign that our financial performance over the next two years, at a group level, will be poor due to the severe economic downturn in 2008 and 2009 and consequent impact on impairments and funding costs." Shares -14% premarket (7:00 ET).
- FDIC chided for lax supervision. An agency watchdog found the FDIC failed to act in a timely manner to limit the commercial real estate losses that caused the collapse of two banks in Washington and Georgia. The watchdog's report said the FDIC could have exercised 'greater supervisory concern' after finding weaknesses in the banks' loan portfolios. (Read reports I and II (.pdf))
- Twitter falls silent. Twitter and Facebook suffered outages and delays yesterday after denial of service attacks, raising the possibility of 'a single, massively coordinated attack' on social networking sites. Both services have been restored. Google (NASDAQ:GOOG) managed to fend off a similar attack yesterday.
- Exchanges back away from flash. The Nasdaq stock exchange and BATS exchange announced separately that they're both voluntarily ending the flash trading they started this year, effective September 1. The moves come amid an SEC investigation into the practice and ahead of a likely ban. Direct Edge, a fast growing rival that has used flash trading since 2006, continues to defend the practice.
- Morgan leaves TARP behind. Morgan Stanley (NYSE:MS) paid $950M to repurchase the warrant it issued the government, bringing Morgan's total payment to the government, including dividends, to $1.268B. CEO John Mack struck a positive note, saying "we appreciate the critical role that the U.S. government played last fall in helping stabilize the banking industry and financial markets at a moment of unprecedented crisis."
- AmEx sees loan loss improvement. American Express (NYSE:AXP) said write-offs tied to bad credit-card debt fell sharply for the second straight month, to 9.2% in July from 9.7% in June, and CEO Kenneth Chenault said he's seeing internal credit metrics improve for the first time in 18 months. Despite the positive improvements, analysts warned it's too soon to call a sector recovery, with many attributing the drop in charge-offs to a seasonal trend. In the specific case of American Express, Chenault was very clear that the improvements of the last two months are 'not seasonality.'
- Clunkers gets new funds. As expected, the Senate approved an additional $2B for the 'Cash for Clunkers' program. The measure passed 60-37.
- Jobless claims drop. Initial jobless claims came in at 550K, down 38K from a week ago (revised), and better than the 575K consensus. Continuing claims rose 69K to 6.31M.
- Same-store sales slide. Retailers reported monthly same-store sales yesterday, with most falling short of consensus estimates. July sales were hurt by the continued trend of shoppers cutting back and waiting for discounts, and by a later start to the back-to-school shopping season.
Earnings: Friday Before Open
- AIG (AIG): Q2 EPS of $2.57 vs. consensus of $1.67 (may not be comparable). Revenue of $29.5B (+48%) vs. $26B. Shares +3.6% premarket (7:10 ET). (PR)
- American Oriental Bioengineering (AOB): Q2 EPS of $0.17 misses by $0.01. Revenue of $71M (+21%) vs. $75M. (PR)
- ATP Oil & Gas (ATPG): Q2 EPS of -$0.10 beats by $0.09. Revenue of $81M (-58%) vs. $83M. (PR)
- Cimarex Energy Co (NYSE:XEC): Q2 EPS of $0.46 vs. $0.41 consensus (may not be comparable). Revenue of $223M (-64%) vs. $219M. (PR)
- Magna International (NYSE:MGA): Q2 EPS of -$1.29 misses by $0.28. Revenue of $3.7B (-45%) vs. $4.1M. (PR)
- Mirant Corp. (MIR): Q2 EPS of $1.12 vs. consensus of $0.49 (may not be comparable). Revenue of $496M vs. $546M.
- Senior Housing Properties Trust (NYSE:SNH): Q2 FFO of $0.44 in-line. Revenue of $69M (+32%) vs. $68M. (PR)
- Warner Chilcott (NASDAQ:WCRX): Q2 EPS of $0.44 beats by $0.04. Revenue of $251M (+7%) vs. $252M. (PR)
Earnings: Thursday After Close
- Alkermes (NASDAQ:ALKS): FQ1 EPS of $0.01 beats by $0.09. Revenue of $47.5M (-41%) vs. $46.4M. (PR)
- Assured Guaranty (NYSE:AGO): Q2 EPS of $0.46 beats by $0.10. Revenue of $115M (-3%). (PR)
- Beazer (NYSE:BZH): FQ3 EPS of -$0.72 beats by $0.81. Revenue of $225M (-51%) vs. $226M. (PR)
- CBS (NYSE:CBS): Q2 EPS of $0.08 beats by $0.01. Revenue of $3B (-11%) in-line. (PR)
- Chiquita (NYSE:CQB): Q2 EPS of $1.95 beats by $1.13. Revenue of $955M (-4%) vs. $873M. (PR)
- Computer Sciences (CSC): FQ1 EPS of $0.85 beats by $0.34. Revenue of $3.9B (-12%) in-line. Raises full-year EPS guidance to $4.80-5.00 from $4.20-4.30, vs. $4.18. (PR)
- Crocs (NASDAQ:CROX): Q2 EPS of -$0.06 beats by $0.15. Revenue of $198M (-11%) vs. $150M. Sees Q3 EPS of -$0.14 to -$0.16 vs. -$0.20. Sees Q3 sales of $150M-160M vs. $141M. (PR)
- DCT Industrial Trust (NYSE:DCT): Q2 EPS of $0.12 misses by $0.01. Revenue of $60M (-3%) vs. $61M. (PR)
- Emulex (NYSE:ELX): FQ4 EPS of $0.09 beats by $0.05. Revenue of $79M (-30%) vs. $78M. (PR)
- EOG Resources (NYSE:EOG): Q2 EPS of $0.73 beats by $0.31. Revenue of $861M (-21%) vs. $966M. PR)
- Fannie Mae (FNM): Q2 EPS of -$2.67. Revenue of $5.6B (+41%). (.pdf)
- Hansen Natural (HANS): Q2 EPS of $0.60 in-line. Revenue of $300M (+6%) vs. $309M. (PR)
- Intrepid Potash (NYSE:IPI): Q2 EPS of $0.19 misses by $0.04. Revenue of $73M (-30%) vs. $72M. (PR)
- Leap Wireless International (LEAP): Q2 EPS of -$0.89 misses by $0.59. Revenue of $597M (+26%) vs. $636M. Net customer additions of 203,000 (+19%). Churn of 4.4%. Reduces guidance on full-year net customer addition to 1.5M. (PR)
- Maxim Integrated Products (NASDAQ:MXIM): FQ4 EPS of $0.11 beats by $0.10. Revenue of $395M (-21%) vs. $368M. Sees Q1 revenue of $415M-445M vs. $388M. (PR)
- Microchip Technology (NASDAQ:MCHP): FQ1 EPS of $0.15 beats by $0.02. Revenue of $193M (-28%) vs. $190M. Gross margin in Q1 of 51.4%. Sees Q2 EPS of $0.18-0.20 vs. $0.17. Sees Q3 revenue of $206M-214M vs. $200M. (PR)
- Nvidia (NASDAQ:NVDA): Q2 EPS of $0.07 beats by $0.09. Revenue of $777M (-13%) vs. $710M. Sees Q3 revenue up 5-7% over Q2. (PR)
- Pepco Holdings (NYSE:POM): Q2 EPS of $0.11 misses by $0.13. Revenue of $2.1B (-18%) vs. $2.7B. (PR)
- Public Storage (NYSE:PSA): Q2 FFO of $1.25 beats by $0.04. Revenue of $347M (-4%) vs. $394M. (PR)
- Rovi Corp. (NASDAQ:ROVI): Q2 EPS of $0.38 beats by $0.10. Revenue of $120M (+64%) vs. $110M. (PR)
- Sapient (NASDAQ:SAPE): Q2 EPS of $0.10 beats by $0.04. Revenue of $148M (-11%) vs. $144M. (PR)
- SandRidge Energy (NYSE:SD): Q2 EPS of $0.25 beats by $0.12. EBITDA of $144M (-18%). (PR)
- Sequenom (NASDAQ:SQNM): Q2 EPS of -$0.33 misses by $0.06. Revenue of $9M (-28%) vs. $8M. (PR)
- VeriSign (NASDAQ:VRSN): Q2 EPS of $0.31 misses by $0.01. Revenue of $257M (+6%) vs. $255M. (PR)
- Westar Energy (NYSE:WR): Q2 EPS of $0.35 in-line. Revenue of $468M (+4%) vs. $501M. (PR)
Asian markets closed mostly down. European markets and U.S. futures are trending down too.
- In Asia, Nikkei +0.2% to 10,412. Hang Seng -2.5% to 20,375. Shanghai -2.85% to 3,261. BSE -2.3% to 15,160.
- In Europe at midday, London -1.1%. Paris -0.9%. Frankfurt -0.7%.
- Futures: Dow -0.4%. S&P -0.4%. Nasdaq -0.2%. Crude -0.9% to $71.29. Gold flat.
Friday's Economic Calendar
8:30 Non-farm payrolls
3:00 PM Consumer Credit
- Notable earnings before Friday's open: ABK, AIG, AOB, ATPG, BAM, EIX, MGA, MIR, SNH, WCRX, XEC
Seeking Alpha editor Eli Hoffmann contributed to this post.
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