Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:47 AM EST
S&P 500: -7.80; 1,472.50
NASDAQ 100: -10.75; 1,837.50
Dow: -63.00; 12,795.00
NIKKEI 225: -1.67%; 17,371.97 (-295.36)
HANG SENG: -2.30%; 20,299.71 (-477.38)
S&P/ASX 200: -1.15%; 6,165.10 (-71.80)
BSE SENSEX 30: -0.38%; 13,619.70 (-52.49)
FTSE 100: -0.40%; 6,423.80 (-25.60)
CAC 40: -0.80%; 5,789.42 (-46.53)
XETRA-DAX: -0.99%; 7,209.94 (-72.40)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.51%; $62.81 (-$0.32)
Gold: -0.53%; $689.60 (-$3.70)
Natural Gas: +0.40%; $7.53 (+$0.03)
Silver: -1.04%; $13.83 (-$0.145)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Altria: Q1 Earnings Miss; '07 EPS Forecast Raised
Altria reported this morning its Q1 net income from continuing operations (ex-Kraft) fell 18% to $2.13 billion, or $1.01/share, due to a tax benefit in the year prior. It missed analysts' average estimates of $1.04 (Bloomberg) to $1.05 (Thomson) per share [excluding all items, EPS rose 5.1% to $1.03]. Revenues rose 8.2% to $17.6b, or excluding excise taxes +4% to $9.04b, short of analysts' consensus estimate of $9.17b (Thomson). Altria raised full-year EPS guidance by a nickel to $4.20 - $4.25, compared to analysts' estimates of $4.24 (Bloomberg) to $4.27 (Thomson). Sales and profits at Philip Morris International were helped by price increases in certain markets and a weaker U.S. dollar. Sales volume increased 1.5%, offsetting weakness in the U.S., where sales volume fell 6.2%. Shares of Altria gained 0.7% to $70.08 yesterday, and are trading down about 1.1% to $69.30 on thin volume in pre-market activity.
Sources: Associated Press, Bloomberg, MarketWatch
Commentary: From Vice to Virtue: Study Indicates Sin Stocks Outperform the Market • Altria Considering Rival Bid for Altadis • Jim Cramer's Take on Altria
Stocks/ETFs to watch: Altria Group, Inc. (NYSE:MO). Competitors: British American Tobacco plc (NYSEMKT:BTI), Reynolds American Inc. (NYSE:RAI), Altadis, S.A. [MCE:ALT]. ETFs: DIAMONDS Trust, Series 1 (NYSEARCA:DIA), iShares Dow Jones US Consumer Goods (NYSEARCA:IYK), First Trust Morningstar Div Leaders Idx (NYSEARCA:FDL)
Bank of America Posts In-line Earnings and Revenue
Bank of America, the #2 bank in the U.S. by market cap, posted in-line earnings this morning on a 5% rise in net income and a 2.6% gain in revenue. Bank of America said it earned $1.16/share ($5.26 billion), up from $1.07/share ($4.99 billion) last year. Before items, EPS was $1.17/share, slightly ahead of analyst estimates $1.15. Revenue was $18.42 billion, slightly below forecasts of $18.45 billion. CEO Kenneth D. Lewis called 2007 "a challenging operating environment," saying that gains in customer growth helped offset the affects of a flat yield curve and normalizing credit costs. Net new retail checking accounts grew by 487,000, loans to small businesses increased 30% to $14 billion. It said its $0 Online Equity Trades, introduced in late 2006, helped generate 35% growth in self-directed brokerage accounts to $28 billion. Shares are down 2.9% this year vs. a 0.5% drop in the 24-member KBW Bank Index. In pre-market trading, shares are down 0.6% to $51.50.
Sources: Press release, MarketWatch, Bloomberg
Commentary: What Would Happen if Bank of America Acquired Countrywide Financial? • Bank of America's Mildly Deteriorating Credit Quality • Bank of America: Banking Outside the Box
Stocks/ETFs to watch: Bank of America Corp. (NYSE:BAC). Competitors: Wachovia Corp. (NASDAQ:WB), Citigroup Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC), JPMorgan & Chase Co. (NYSE:JPM), Royal Bank Of Canada (NYSE:RY), Toronto Dominion Bank (NYSE:TD). ETFs: iShares Dow Jones U.S. Financial Services (NYSEARCA:IYG), streetTRACKS KBW Bank (NYSEARCA:KBE), HOLDRS Regional Bank (NYSEARCA:RKH), Financial Select Sector SPDR ETF (NYSEARCA:XLF)
Merck's Profit Rises 12% On Strong Sales of New Drugs
Strong sales of new medications helped Merck & Co.'s first quarter profit rise 12%, while the company reaffirmed its full year guidance in its earnings release this morning. Powering Merck's results were a range of new drugs including diabetes pill Januvia, cervical-cancer vaccine Gardasil, asthma medication Singulair, and cholesterol meds Vytorin and Zetiamade, helping Merck offset the loss of $800 million in revenue from cholesterol drug Zocor after patent protection ended last year. By the numbers, net earnings climbed to $1.7 billion, good for EPS of $0.78, up from $1.52 billion (EPS of $0.69) in the year earlier period. Excluding non-recurring costs from plant closings and job cuts, EPS was $0.84 cents, in-line with Merck's earnings preview of April 13. Revenue climbed 6.7% to $5.77 billion. Thomson Financial consensus estimates were for EPS of $0.84 on revenue of just $5.36 billion. The company confirmed its full year guidance range of EPS of $2.75-$2.85 excluding restructuring charges, or EPS of $2.60-$2.75 on a reported basis. Merck is projecting second quarter profit of $0.67-$0.71, excluding charges.
Sources: Press Release, Bloomberg, MarketWatch, Reuters. [check back later today for Merck's conference call transcript]
Commentary: Merck: Looking Out for Investors • Merck Prevails in Significant Patent Extension Case vs. Hi-Tech Pharmacal • FDA Panel Nixes Merck's Arcoxia; Shares Climb on Raised Guidance
Stocks/ETFs to watch: Merck & Co. (NYSE:MRK). Competitors: Pfizer Inc. (NYSE:PFE), Wyeth (WYE), Schering-Plough Corp. (SGP), Novartis AG (NYSE:NVS), Teva (NYSE:TEVA), AstraZeneca plc (NYSE:AZN), GlaxoSmithKline plc (NYSE:GSK), Sanofi-Aventis (NYSE:SNY), Eli Lilly & Co. (NYSE:LLY), Abbott Laboratories (NYSE:ABT), Amgen (NASDAQ:AMGN). ETFs: iShares Dow Jones US Pharmaceuticals (NYSEARCA:IHE), Pharmaceutical HOLDRs (NYSEARCA:PPH)
Merrill Lynch Beats Forecasts on Record IPO and Trading Revenues
Merrill Lynch, the biggest brokerage firm in the world, said this morning its profits more than quadrupled from a year-ago (a quarter that included a heavy charge); revenue rose 24%. Q1 2007 earnings were $2.26/share ($2.2 billion) vs. $0.44 ($475 million) in Q1 2006, when it took a $1.2 billion compensation charge -- well ahead of analyst consensus estimates of $1.97. Revenue was up 24% to $9.85 billion, and return on equity was 23.3%. Total Q1 net profit for the five biggest U.S. securities firms was a record $9.7 billion. Merrill investment banking fees jumped 47% to $1.4 billion; revenue from fixed-income and equity trading also rose to record highs. Merrill is the #1 IPO manager; this quarter it helped arrange $173 billion in takeovers including Equity Office's LBO. Merrill Lynch shares have fallen more than 2% this year, compared with a 3% rise in the Amex Securities Broker-Dealer index, and are down 7% from January highs. In pre-market trading, shares are up 0.6% to $91.20.
Sources: Press release, MarketWatch, Bloomberg, Reuters
Commentary: Earnings Preview: Four Companies That Could Surprise • Expecting Merrill To Jump On Bullish Goldman Note • I-Banks At Risk From Hedge Fund Over-Exposure?
Stocks/ETFs to watch: Merrill Lynch & Co. Inc. (MER). Competitors: Goldman Sachs Group Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), Bear Stearns Companies Inc. (NYSE:BSC), Lehman Brothers Holdings Inc. (LEH), TD Ameritrade Holding Corp. (NASDAQ:AMTD). ETFs: iShares Dow Jones US Broker-Dealers Index Fund ETF (NYSEARCA:IAI)
Hershey's: Q1 EPS Down on Restructuring Charges, Revenues Flat
Hershey's reported Q1 net income fell 24% to $93.5 million, or $0.40/share, on a 1.2% increase in sales to $1.15b. Excluding restructuring costs of $40.4m, Hershey earned $0.51/share, in-line with analysts' average estimate. Hershey's revenues came up just short of analysts' consensus $1.17b estimate. CEO Richard H. Lenny said, "Results for the first quarter were essentially in-line with our expectations." Hershey's reaffirmed its 2007 outlook, saying it expects full year net sales growth of 3% -4% and diluted EPS from operations to increase in 7% - 9%. Hershey's traded slightly lower yesterday, -0.02% to $54.52, and is down 1.9% to $53.50 in thin pre-market trading of 1,000 shares. Its shares have traded between a range of $48.20 - $57.65 over the past year.
Sources: Press release, Associated Press
Commentary: Ooompa Loompa: Why Chocolate is the Golden Ticket • Hershey Hurts in Move Away from Core Chocolate • Hershey Leaves a Bad Taste For Shareholders
Stocks/ETFs to watch: The Hershey Company (NYSE:HSY). Competitors: Cadbury Schweppes plc (NYSE:CSG), Nestle (OTCPK:NSRGY). ETFs: Rydex S&P Equal Weight Consumer Staples (NYSEARCA:RHS)
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Asian Headlines (via Bloomberg.com)
• Asian Shares Fall From Record on China Interest Rate Concern, Weak Dollar Asian stocks fell the most in a month as Chinese reports showing faster-than-expected economic growth and inflation fueled concern interest rates will rise in the region's second-largest economy. China Mobile Ltd. (NYSE:CHL) dropped.
• Yen Climbs on Bank of Japan Rate Increase Speculation, Asian Stock Decline The yen rose as Japanese service industries expanded more than forecast, prompting speculation the Bank of Japan will increase interest rates.
• Macquarie Funds Agree to Purchase Telefonica's Airwave O2 for $3.8 Billion Macquarie Bank Ltd. agreed to buy the U.K.'s police and emergency services radio network from Telefonica SA (NYSE:TEF) for 1.9 billion pounds ($3.8 billion), gaining a business that's forecast to increase sales by as much as 30 percent this year.
• Japan's Demand for Services Climbed Unexpectedly to a Record in February Demand for services in Japan unexpectedly rose to a record in February, driven by higher sales at the nation's shops and wholesalers.
European Headlines (via Bloomberg.com)
• European Stocks Fall on China Interest-Rate Rise Concern; Rio Tinto Drops European stocks headed for the biggest drop in three weeks after China's economy grew faster than economists expected, fueling concern the country is preparing to raise interest rates.
• Sacyr Offers $8.8 Billion for Eiffage to Enter French Construction Market Sacyr Vallehermoso SA, Spain's second-biggest construction company, offered 6.5 billion euros ($8.8 billion) for the two-thirds of Eiffage SA it doesn't own after the French company refused to give it seats on the board.
• Swatch Has `Booming' First Quarter, Says Sales Growth Won't Slow This Year Swatch Group AG, the world's biggest watchmaker, expects sales to maintain last year's pace in 2007 as it continues to benefit from strong demand, Chief Executive Officer Nick Hayek Jr. said.
• Husqvarna First-Quarter Profit Advances 12 Percent on Sales of Lawn Mowers Husqvarna AB, the world's largest maker of chainsaws and lawnmowers, said first-quarter profit rose 12 percent on rising lawn mower orders in the U.S. and Europe.