JDfn Daily Digest - August 13, 2008
U.S. import prices rose by 1.7% in July, mostly on prices for imported petroleum and natural gas. Prices were up 21.6% over the past 12 months, the largest 12-month increase in the history of the index. Excluding all fuels, import prices rose by 0.7% in July.
U.S. retail sales dropped 0.1% in July, as falling auto sales offset an increase in gasoline sales sparked by higher prices. Excluding the 2.4% decline in vehicle sales, seasonally adjusted retail sales rose 0.4% in July, the smallest gain since February. Excluding autos and gas, sales rose 0.3%.
Motor gasoline supplies fell by 6.4 million barrels to 202.8 million for the week ended August 8th. Crude supplies fell 400,000 barrels to 296.5 million barrels. Distillate stocks were down 1.7 million barrels at 131.6 million barrels. Refinery utilization was at 85.9% compared with 87% of capacity a week earlier.
The Mortgage Bankers Association's survey said mortgage application volume fell 1.5% during the week ended Aug. 8th as fixed interest rates hovered near annual highs. The MBA's application index fell to 425.9 from 432.6 a week earlier. Application volume declined as fixed interest rates rose.
Business inventories increased 0.7% in June, the largest gain since January. Economists were expecting inventories to rise just 0.5% in June. Over the last year, business inventories rose 5.6%, the highest yearly gain since February 2007.
CVS Caremark Corp. (CVS), looking to build its West Coast presence, said it would buy Longs Drug Stores Corp. (LDG) in a deal valued at $2.7 billion. Including the assumption of the chain's roughly $200 million in debt, the deal is valued at about $2.9 billion.
General Motors Corp. (GM) has announced it will invest $445 million to build a diesel engine plant in Thailand and upgrade its existing assembly operations. The new plant, which will start production in 2010, will produce engines for small pickup trucks and will have a capacity of over 100,000 units annually.
Ford Motor Co.'s (F) top American executive said he is confident the company has enough cash to weather losses and make a profit again. Mark Fields, Ford's president of the Americas, said that there will be a lag time before the company can start making profits on the small cars U.S. drivers are now craving. The company is planning to make money on new global models it will bring to the U.S. from Europe starting in 2010.
Chrysler LLC will invest $1.8 billion in a Detroit assembly plant, retooling it to make a new car-based sport utility vehicle. The money reportedly will go for tooling and a flexible body shop at the plant. That plant now makes the Jeep Grand Cherokee.
Toll Brothers Inc. (TOL) announced that home-building revenue fell 34 percent in the fiscal third quarter, amid a prolonged housing slump. The company also said it expects $100 million to $200 million in write-downs during the quarter, related to operating communities, land and land options and joint ventures.
Ameriprise Financial Inc. (AMP) will buy H&R Block Inc.'s (HRB) securities brokerage business for $315 million cash. The deal for H&R Block Financial Advisors is expected to close within four to six months.
American Airlines (AMR) reportedly will purchase six additional Boeing 737-800 aircraft, raising the airline's total 737 deliveries between 2009 and 2010 to 76. The company said the deal will help hasten the replacement of its older MD-80 fleet.
Best Buy Co. (BBY) will begin selling the iPhone on Sept. 7th, becoming first U.S. chain to do so outside of Apple Inc.'s and AT&T Inc.'s own stores. The announcement by Best Buy expands the availability of Apple's vaunted phone to 970 full-size stores and 16 smaller Best Buy Mobile stores.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of August 9th), Consumer Price Index (July)
In Earnings News
JPMorgan Chase & Co. (JPM) shares dropped nearly 10 percent as the bank's disclosure about escalating losses in its mortgage portfolio set off new concerns about the health of the overall financial sector. An analyst's lowering of the bank's earnings estimates and price target contributed to the decline.
Macy's Inc. (M) earned $73 million, or 17 cents per share in the quarter ended Aug. 2nd. Analysts expected 19 cents per share on revenue of $5.75 billion.
Deere & Co.'s (DE) third-quarter profit rose 7 percent, but earnings from the world's largest maker of farm machinery missed Wall Street expectations despite a boom in global agricultural. The company earned $575.2 million, or $1.32 per share, for the quarter. Analysts forecast profit of $1.36 per share.
Bob Evans Farms Inc. (BOBE) reported its fiscal first-quarter profit and sales grew even in a challenging economic environment. The company earned $13.8 million, or 45 cents per share. Analysts, on average, were expecting a profit of 44 cents per share.
Liz Claiborne (LIZ) said it lost $23.16 million, or 25 cents per share, in the quarter. Analysts had expected $1.39 per share for the year and 58 cents per share in the quarter.
ING Groep NV (ING), the Dutch insurer and bank, reported its second quarter earnings fell 25 percent, mostly due to smaller gains on investments. Net profit was euro1.92 billion ($2.86 billion), from euro2.56 billion in the same period a year ago.
Scheduled Earnings Reports (Thursday)
Wal-Mart, Briggs & Stratton, Flowers Foods, Nordstrom, Elizabeth Arden, Urban Outfitters, Open Solutions, J.M. Smucker
Stocks in the News
Brocade Communications (BRCD) said its third-quarter profit rose to $20.3 million or 5 cents a share.
Endocare Inc (ENDO) said it has rejected a $2.28 a share proposal from HealthTronics Inc (HTRN).
Applied Materials (AMAT) said its third-quarter net income fell to $164.5 million or 12 cents a share.
Dr. Pepper Snapple (DPS) reported second-quarter net income fell to $108 million or 42 cents a share.
Nvidia Corp (NVDA) reported a second-quarter net loss of $120.9 million or 22 cents a share.
RadioShack Corp. (RSH) said it priced its public offering of $325 million of convertible senior notes due in 2013.
U.S. retail sales dropped 0.1% in July, as falling auto sales offset an increase in gasoline sales sparked by higher prices. Excluding the 2.4% decline in vehicle sales, seasonally adjusted retail sales rose 0.4% in July, the smallest gain since February. Excluding autos and gas, sales rose 0.3%.
Motor gasoline supplies fell by 6.4 million barrels to 202.8 million for the week ended August 8th. Crude supplies fell 400,000 barrels to 296.5 million barrels. Distillate stocks were down 1.7 million barrels at 131.6 million barrels. Refinery utilization was at 85.9% compared with 87% of capacity a week earlier.
The Mortgage Bankers Association's survey said mortgage application volume fell 1.5% during the week ended Aug. 8th as fixed interest rates hovered near annual highs. The MBA's application index fell to 425.9 from 432.6 a week earlier. Application volume declined as fixed interest rates rose.
Business inventories increased 0.7% in June, the largest gain since January. Economists were expecting inventories to rise just 0.5% in June. Over the last year, business inventories rose 5.6%, the highest yearly gain since February 2007.
CVS Caremark Corp. (CVS), looking to build its West Coast presence, said it would buy Longs Drug Stores Corp. (LDG) in a deal valued at $2.7 billion. Including the assumption of the chain's roughly $200 million in debt, the deal is valued at about $2.9 billion.
General Motors Corp. (GM) has announced it will invest $445 million to build a diesel engine plant in Thailand and upgrade its existing assembly operations. The new plant, which will start production in 2010, will produce engines for small pickup trucks and will have a capacity of over 100,000 units annually.
Ford Motor Co.'s (F) top American executive said he is confident the company has enough cash to weather losses and make a profit again. Mark Fields, Ford's president of the Americas, said that there will be a lag time before the company can start making profits on the small cars U.S. drivers are now craving. The company is planning to make money on new global models it will bring to the U.S. from Europe starting in 2010.
Chrysler LLC will invest $1.8 billion in a Detroit assembly plant, retooling it to make a new car-based sport utility vehicle. The money reportedly will go for tooling and a flexible body shop at the plant. That plant now makes the Jeep Grand Cherokee.
Toll Brothers Inc. (TOL) announced that home-building revenue fell 34 percent in the fiscal third quarter, amid a prolonged housing slump. The company also said it expects $100 million to $200 million in write-downs during the quarter, related to operating communities, land and land options and joint ventures.
Ameriprise Financial Inc. (AMP) will buy H&R Block Inc.'s (HRB) securities brokerage business for $315 million cash. The deal for H&R Block Financial Advisors is expected to close within four to six months.
American Airlines (AMR) reportedly will purchase six additional Boeing 737-800 aircraft, raising the airline's total 737 deliveries between 2009 and 2010 to 76. The company said the deal will help hasten the replacement of its older MD-80 fleet.
Best Buy Co. (BBY) will begin selling the iPhone on Sept. 7th, becoming first U.S. chain to do so outside of Apple Inc.'s and AT&T Inc.'s own stores. The announcement by Best Buy expands the availability of Apple's vaunted phone to 970 full-size stores and 16 smaller Best Buy Mobile stores.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of August 9th), Consumer Price Index (July)
In Earnings News
JPMorgan Chase & Co. (JPM) shares dropped nearly 10 percent as the bank's disclosure about escalating losses in its mortgage portfolio set off new concerns about the health of the overall financial sector. An analyst's lowering of the bank's earnings estimates and price target contributed to the decline.
Macy's Inc. (M) earned $73 million, or 17 cents per share in the quarter ended Aug. 2nd. Analysts expected 19 cents per share on revenue of $5.75 billion.
Deere & Co.'s (DE) third-quarter profit rose 7 percent, but earnings from the world's largest maker of farm machinery missed Wall Street expectations despite a boom in global agricultural. The company earned $575.2 million, or $1.32 per share, for the quarter. Analysts forecast profit of $1.36 per share.
Bob Evans Farms Inc. (BOBE) reported its fiscal first-quarter profit and sales grew even in a challenging economic environment. The company earned $13.8 million, or 45 cents per share. Analysts, on average, were expecting a profit of 44 cents per share.
Liz Claiborne (LIZ) said it lost $23.16 million, or 25 cents per share, in the quarter. Analysts had expected $1.39 per share for the year and 58 cents per share in the quarter.
ING Groep NV (ING), the Dutch insurer and bank, reported its second quarter earnings fell 25 percent, mostly due to smaller gains on investments. Net profit was euro1.92 billion ($2.86 billion), from euro2.56 billion in the same period a year ago.
Scheduled Earnings Reports (Thursday)
Wal-Mart, Briggs & Stratton, Flowers Foods, Nordstrom, Elizabeth Arden, Urban Outfitters, Open Solutions, J.M. Smucker
Stocks in the News
Brocade Communications (BRCD) said its third-quarter profit rose to $20.3 million or 5 cents a share.
Endocare Inc (ENDO) said it has rejected a $2.28 a share proposal from HealthTronics Inc (HTRN).
Applied Materials (AMAT) said its third-quarter net income fell to $164.5 million or 12 cents a share.
Dr. Pepper Snapple (DPS) reported second-quarter net income fell to $108 million or 42 cents a share.
Nvidia Corp (NVDA) reported a second-quarter net loss of $120.9 million or 22 cents a share.
RadioShack Corp. (RSH) said it priced its public offering of $325 million of convertible senior notes due in 2013.
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