Pre-Market Snapshot

by: SA Editors
SA Editors
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

Wall St. Breakfast's Pre-Market Snapshot:

U.S. Futures

As of 9:00 AM ET

S&P 500: +7.75; 1,521.25
NASDAQ 100: +23.50; 2,195.25
Dow: +60; 13,670

International Indexes

NIKKEI 225: +0.07%; 16,450.58 (+12.11)
HANG SENG: +3.54%; 29,376.86 (+1,003.23)
SHANGHAI SE COMPOSITE: +1.87%; 5,773.39 (+106.06)
BSE SENSEX 30: +4.99%; 18,492.84 (+878.85)

FTSE 100: +1.50%; 6,556.30 (+97.00)
CAC 40: +1.03%; 5,719.33 (+58.06)
XETRA-DAX: +0.97%; 7,870.30 (+75.36)

Commodity Futures

(Reuters/Jefferies CRB)

Oil: +0.67%; $86.60 (+$0.58)
Gold: +0.51%; $763.90 (+$3.90)
Natural Gas: +0.49%; $6.925 (+$0.034)
Silver: +0.77%; $13.66 (+$0.105)

U.S. Breaking News

see today's Wall Street Breakfast for earlier news

AT&T Up 1.2% After In-Line Q3
Shares of number-one U.S. telecom provider AT&T were up 1.2% in pre-market trading Tuesday after it announced its adjusted earnings per share climbed 12.7% in Q3, coming in line with analyst estimates. Third-quarter net profit was $3.1 billion ($0.50/share), compared to $2.2 billion ($0.56/share) in Q3 2006. Net of one-time costs and acquisition charges, EPS rose to $0.71 from $0.63. Revenue almost doubled to $30.1 billion from $15.6 billion, largely due to AT&T's December 2006 acquisition of BellSouth. "Wireless subscriber gains stepped up dramatically," CEO Randall Stephenson said. "Our enterprise business has greatly improved momentum. Broadband growth is solid. And our AT&T U-verse TV install rate already approaches our year-end target of 10,000 per week," (full earnings call transcript later today). Wireless subscribers were up 2 million to 65.7 million, as wireless revenue gained 14.4%, and wireless data revenue jumped a hefty 63.9%. The company did not break down to what extent iPhone buyers added to its subscriber base and wireless revenue growth. AT&T shares gained more than 1% in extended trading Monday after Apple reported knock-out earnings (full story). AT&T is the exclusive U.S. wireless provider for the iPhone, a factor which at least one commentator sees as an "anchor" weighing down iPhone sales (full story). AT&T repurchased 50.5 million shares in Q3 for $2.0 billion; during the first three quarters of the year, AT&T repurchased 229.6 million of its shares for $8.9 billion, leaving 6.1 billion shares outstanding. Shares were trading at $41.67 (+1.2%) as of 8:17 am.

U.S. Bellwether UPS Posts Modest Earnings Beat
UPS said Tuesday Q3 profits were up 3.8% from a year ago due to strength in its global business, supply chain and freight units. Its U.S. package business posted modest growth in the face of a "sluggish" economy. The world's largest package deliverer said Q3 net income was $1.08 billion ($1.02/share), up from $1.04 billion ($0.96/share) year ago. Excluding charges, EPS of $1.05 was better than analyst consensus estimates of $1.02. Revenue grew 4.7% to $12.21 billion, in line with analyst estimates. U.S. package revenue was up 1.9% to $7.55 billion, while international package revenue climbed 12% to $2.53 billion. UPS and its key rival FedEx are seen as bellwethers of the U.S. economy, with package shipments rising and falling based on the degree of economic growth. For fiscal 2007, UPS said it expects EPS of $4.13-$4.19; analysts had been expecting $4.15. "UPS's balanced network around the globe produced solid results even in the face of a lackluster U.S. economy," CFO Scott Davis said (full earnings call transcript later today). Late last month, UPS reached a labor pact with the Teamsters union that included its withdrawal from the Central States Pension Fund for retired Teamsters, a move some analysts said would provide a long-term cost savings for the company. Last week UPS announced CEO Michael Eskew would step down at the end of 2007, to be replaced by D. Scott Davis, vice chairman and CFO, a move Standard & Poor's called "a mild surprise," while saying it expected a smooth transition and that Davis was a good choice. Shares are up 1.35% to $76.10 in pre-market>

Sources: Press release, Reuters
Commentary: 23 Safe Dividend Stocks For Trying Times
Stocks to watch: UPS. Competitors: FDX. ETFs: IYT, XLI, PRFN

Lockheed Beats and Raises, But Street Expects More
Lockheed Martin reported third-quarter earnings growth above Street estimates and also upward revised its full-year EPS outlook, although analysts project even stronger growth ahead. Q3 net income increased 22% to $766 million, or $1.80/share, on 16% higher sales to $11.1B. Analysts had expected $1.64/share on sales of $10.4B, on average. CEO Bob Stevens highlighted Lockheed's double-digit sales and operating earnings growth across all of its business segments. A Citigroup analyst wrote in a note to clients earlier this month that "Lockheed Martin has more margin expansion potential than recognized." Operating margins improved to 11.1% in Q3 vs. 10.2% last year. Lockheed raised its full-year EPS forecast to $6.70 to $6.85, from $6.65 to $6.80 previously and still expects revenues between $41.0B to $41.75B. Analysts were forecasting $6.86/share on revenues of $41.69B. In 2008, Lockheed said it expects EPS between $6.95 to $7.15, on sales of $41.25B to $42.75B, compared to analyst estimates of $7.23/share and $42.85B. Shares of Lockheed Martin rose 1% to $107.24 on Monday and were last up 0.7% to $108 in very thin trading in Tuesday's pre-market.

Level 3 Tanks on Lowered Outlook
Level 3 Communications was last down nearly 13% to $3.77 in pre-market trading, following the company's "disappointing" third-quarter earnings release in which it also cut its full-year 2007 and 2008 EBITDA guidance. Level 3 reported a Q3 net loss of $174 million, or -$0.11/share, compared to a loss of $138M (-$0.12/share) last year. Analysts were expecting a loss of $0.12/share. Sales increased 21% to $1.06B, topping analysts' average estimate of $1.04B. CEO James Q. Crowe commented, "While we continued to grow Core Communications Services revenues and we did meet our guidance measures in the third quarter, the company had difficulties with provisioning orders for its services." (Full earnings call transcript later). Mr. Crowe said the problem was greater than anticipated (but the company is "focused on correcting this issue as quickly as possible") and consequently the company is lowering its 2007 EBITDA to the range of $813M to $833M, from $860M to $920M previously. 2008 EBITDA is now seen between $950M to $1.1B, from $1.15B to 1.3B previously. Ahead of the company's earnings release, Mr. Crowe issued a statement saying doctors told him there is no indication a benign pituitary tumor has recurred. Mr. Crowe said he "feels great" and is "fully engaged in (his) normal business schedule." Shares of Level 3 gained 2.9% to $4.32 on Monday.

Coach Tops Estimates; Shares Flop on Soft Guidance
Luxury retailer Coach Inc. reported strong gains in its net income and revenue in its recent quarter (F1Q08), driven by strong sales of its fall handbag line. The company topped consensus analyst estimates for both EPS and sales, but shares dropped 6.4% in pre-market trading (as of 7:48 AM ET) on soft forward guidance. By the numbers, net income rose 23% to $154.8 million, good for EPS of $0.41, versus $0.34 a year ago. Sales climbed 28% to $676.7 million, versus $529.4 million in the previous-year period. Consensus estimates were for EPS of $0.40 on sales of $658.6 million. U.S. same-store sales rose 19.3%; Coach opened 13 new North American retail locations, as well as three new factory stores. CEO Lew Frankfort was enthusiastic about his company's latest performance: "Our excellent quarterly performance against a weakening retail landscape reflects the strength of our brand and consumers' embrace of our new products." However, the company added it saw weak traffic in its U.S. retail stores during the last several weeks. Looking toward the holiday season, Frankfort expressed concern with "recent traffic trends in our North American retail stores reflecting the retail environment and the unusually difficult comparisons with last year." Thus, Coach has decided "it's prudent to be more conservative in our comparable store sales guidance for the balance of the fiscal year." To that end, Coach sees F2Q08 sales of $970 million on EPS of $0.68; Wall Street expects, on average, EPS of $0.70 on sales of $984 million during the current quarter. The earnings call is scheduled for 8:30 AM ET Tuesday (full transcript later today).

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Additional Earnings

• Shares of rail transport company Burlington Northern Santa Fe Corp. (BNI) jumped 4.4% in pre-market trading (as of 8:20 AM ET) Tuesday following a strong earnings report. Net rose 8.4% to $530 million, good for EPS of $1.48, vs. EPS of $1.33 a year ago. Revenue climbed 3.3% to $4.07 billion, on freight revenue growth of 4%. Consensus analyst estimates were predicting EPS of $1.37 on revenue of $4.04 billion. In a statement, Burlington Northern said although it has "concerns near-term about the economy, housing markets, high fuel prices and general consumer softness, we continue to be optimistic about the long-term future of BNSF." (source: Dow Jones Newswires)

• Oil and gas producer XTO Energy Inc. (XTO) saw its net gain 12% on added production, but slightly missed consensus analyst estimates. Net income was $412 million, good for adjusted EPS of $1.06, just below consensus estimates of $1.07 a share on an adjusted basis. Revenue climbed 30% to $1.42 billion. (source: Reuters)

• Biopharma company Biogen Idec Inc. (NASDAQ:BIIB) reported its net fall 24% on a $50 million one-time payment to a drug-development partner. Excluding special items, EPS was $0.58, well below consensus analyst EPS estimates of $0.64. Revenue rose 12% to $789 million. Sales of MS drug Avonex, the company's top seller rose 2.2% to $455 million. Shares fell 1.4% in pre-market action (as of 8:38 AM ET) on the miss. (source: Bloomberg)

Today's Market

(via Sam Collins,

Recap of Yesterday's Action

Even though Monday turned out to be a volatile affair, it followed the "sell big on Friday, open lower on Monday, and rally to a plus by the close" pattern. The Dow Jones Industrial Average made its daily low at about 11 a.m., but it opened down almost a 100 points before an ill-fated rally failed, followed by the intraday low of 13,407.

After a shaky opening for stocks, crude oil and other commodities weakened, too, but that meant an increase of equities buyers. Then, talk of possible big earnings to come after the close pushed Apple Inc. (NASDAQ:AAPL) up $3.94, and Texas Instruments (NYSE:TXN) up 35 cents. Strong earnings from Check Point (NASDAQ:CHKP) early in the day also helped the tech group to lead the charge to a gain.

So despite some weakness in the big energy stocks, like Exxon Mobil (NYSE:XOM) which was off $1.23, the major indices rallied sharply, overcame the early losses, and closed in the plus column for a dramatic reversal.

Following the close, both AAPL and TXN lived up to expectations, beating estimates and setting the stage for a tech rally today. AAPL reported blowout earnings of $1.01 versus an expected 86 cents and TXN brought in 52 cents, which was 2 cents above estimates.

At the close, the Dow Industrials gained 45 points to close at 13,557, and the S&P 500 was up six points at 1,506. The Nasdaq gained 29 points to close at 2,754, up over 1%, which was almost three times better than the other two major indices. The Big Board traded 1.4 billion shares and the Nasdaq crossed just under 2 billion with advancers ahead of decliners on both exchanges by about 3-to-2.

What the Markets Are Saying

Yesterday's sell-off and reversal rally are much like the six others that we've seen since late March. All were accompanied by higher volume on the declines and lower volume on the recoveries, and five of them defined the trading zones that I've outlined before.

As for the current action, until we see a follow-through, we can't say that the recovery has been a success, but all of the characteristics are there for a successful run to the top of the trading zone, which I've repeated for months -- S&P 500 1,490 to 1,540. (Yesterday's reversal low turned out to be 1,490.40.)

But there is a change to the current outlook and it is this: Because of the failure to confirm the Oct. 11 new high, it is likely that stocks will have to spend several months bouncing from support to resistance and back again. Volatility should continue to be very high, which provides the opportunity to buy stocks cheaply. If the pattern holds, we could see a breakout to new highs sometime in January.

Today's Trading Landscape

Today look for earnings from the following: Ace Ltd., Aflac, Altera,, Ameritrade Holding Corp., Anadigics, Applied Industrial Technologies, Arlington Tankers, Arrow Electronics, Avery Dennison, Bancorpsouth, Bard, BP Plc, Brasil Telecom, Brinker International, Broadcom, Burlington Northern Santa Fe, Business Objects, Carter, Cavalier Homes, CEC Entertainment, Centex Corp., Cheesecake Factory, Chubb, Coach, Computer Task Group, Cooper Industries, CTS Corp., Delphi Financial Group, Echelon, Electronics For Imaging, Flextronics International, Freescale Semiconductor, Gallagher Arthur J & Co., Harmonic, Healthstream, Ihop, Illumina, Iteris, Jetblue Airways, Juniper Networks, Level 3 Communications, Lexmark International, Lockheed Martin, Metalink, Microchip Technology, Nabors Industries, New York Times, Novellus Systems, O'Reilly Automotive, Omnicom, Pan era Bread, Pentair, Plantronics, Price T Rowe Group, Prudential, Qlogic Corp., Raymond James Financial, Rayonier, Rohm & Haas, SBC Communications, Sherwin Williams, Smith International, Tellabs, Tennant, Tradestation Group, Tupperware, USG Corp., Unisys, Waddell & Reed Financial, Western Union, XL Capital, XTO Energy and many more.

There are no significant economic reports due today, but early this morning giant chemical maker E.I. DuPont (DD) reported that Q3 exceeded estimates of 53 by 6 cents; Whirlpool (NYSE:WHR) also beat estimates by 9 cents.

Asian Headlines


Asian Shares Rally; China Mobile, Hon Hai Gain; SembCorp Marine Slides Asian stocks rose the most in three weeks, after record customer growth boosted profit at China Mobile Ltd. and Citic Securities Co. agreed to buy a stake in Bear Stearns Cos.

SembCorp Marine Shares Drop on Foreign Exchange Loss, Dismissal of Manager SembCorp Marine Ltd., the world's second-largest maker of oil rigs, fell the most in five years in Singapore after firing a former chief financial officer for foreign-exchange trades that may cost the company $248 million.

CLP's Nine-Month Sales Rise by 19 Percent to $5.1 Billion; Dividend Rises CLP Holdings Ltd., the larger of Hong Kong's two power suppliers, posted a 19 percent gain in nine-month sales, boosted by contributions from Australia and Southeast Asia.

Malaysia May Scrap Ban on Offshore Ringgit Trade, Ending Capital Controls Malaysia central bank Governor Zeti Akhtar Aziz said the country may scrap its remaining capital controls and allow offshore trading of the ringgit, making the economy more attractive to investors.

Satyam Computer Boosts Full-Year Profit Forecast After Raising Prices Satyam Computer Services Ltd., India's fourth-largest software exporter, raised its profit forecast after posting earnings that beat analysts' estimates because of higher prices for managing computer networks.

European Headlines


Stocks in Europe, Asia, U.S. Futures Advance; Schneider, China Mobile Rise Global stocks and U.S. index futures advanced after better-than-expected earnings and forecasts from Schneider Electric SA, Apple Inc. and China Mobile Ltd. eased concern profit growth is slowing.

Volkswagen Takeover Law Overturned by Court, Allowing Control by Porsche The European Union's highest court overturned a 47-year-old law protecting Volkswagen AG from a takeover, allowing Porsche AG to take control of the region's largest carmaker.

Schneider Jumps by Most Since 2003 After Raising Full-Year Sales Forecast Schneider Electric SA, the world's biggest maker of circuit breakers, jumped the most in more than 4 1/2 years in Paris trading after reporting a 28 percent gain in third-quarter revenue and raising its full-year forecast.

BNP Paribas Investment Reduced Holdings in PPR, Wolters Kluwer, Rojat Says BNP Paribas Investment Partners, which oversees $514 billion, sold shares in PPR SA, Wolters Kluwer NV and other consumer-related shares on concern the rising cost of credit in the region will hurt spending.