JDfn Daily Digest - August 22, 2008
Federal Reserve Chairman Ben Bernanke said recent developments in commodity prices and the dollar, combined with slow growth, should lead inflation to moderate this year and next year. Bernanke told policymakers and economists at the Fed's annual retreat in Jackson Hole, Wyoming that the recent decline in commodity prices and the increased stability of the dollar have been welcome trends.
Warren Buffett said the economy continues to be in a recession, by his definition, and will continue to be for at least several more months. During a live television appearance, Buffett said ripples of the credit crunch are continuing to cause problems in financial businesses and the economy.
Speculation has been building that a government investment to rescue Fannie Mae (FNM) and Freddie Mac (FRE) could come in the form of a cash infusion through the acquisition of preferred shares in the companies. Investors generally believe that stakes in Fannie and Freddie's debt would be protected under any government rescue plan. Congressional analysts estimate a government rescue of the mortgage giants could cost taxpayers $25 billion.
Boeing (BA) said it is inclined to bail out of its effort to win a $40 billion contract to build aerial refueling tankers for the U.S. Air Force unless the Pentagon agrees to give it a total of six months to submit a new bid.
Verizon Communications Inc (VZ) and Google (GOOG) are close to agreeing a wide-ranging partnership that would make Google the default search provider on Verizon devices.
Aon Corp. (AOC), the world's biggest insurance broker, announced an agreement to buy Britain's Benfield Group Ltd. for almost $1.6 billion in cash. Aon said combining Benfield with its existing reinsurance operations would create a global, diverse franchise.
King Pharmaceuticals Inc. (KG) said it offered Alpharma Inc. (ALO) $1.4 billion in cash as part of an unsolicited buyout bid in a move to create a large diverse specialty pharmaceutical company and expand its pain therapy products.
Eli Lilly & Co. (LLY) has announced its antidepressant drug Cymbalta received European regulatory approval as a treatment for generalized anxiety disorder. It is already approved in Europe as a treatment for major depressive disorder and neuropathic pain.
Scheduled U.S. Economic Reports (Next Week)
Existing Home Sales (July), Case-Schiller Home Prices (June), Consumer Confidence (Aug), New Home Sales (July), Durable Goods (July), Gross Domestic Product (Q2), Personal Income and Spending (July), Chicago Purchasing Managers Index (Aug)
In Earnings News
AnnTaylor Stores (ANN) reported earnings of $29.3 million, or 51 cents per share, for the three-month period ended Aug. 2nd compared with $31.7 million, or 50 cents per share, in the year-ago period. Analysts expected earnings per share of 49 cents.
Perry Ellis International (PERY) lost 36 cents per share. In the same period last year, the company earned $267,000, or 2 cents per share. The company said the quarter's per-share results were affected by one-time items worth 27 cents per share.
China Sunergy Company (CSUN) reported a second quarter net profit of $3.1 million, or 8 cents a share, from a loss of $3.8 million, or 14 cents a share, a year earlier. The company said its performance was helped by efficiency improvements that helped strengthen margins.
Gap Inc (GPS) reported second-quarter profit rose 51% from a year-earlier and backed its full-year profit forecast. For quarter, Gap posted net income of $229 million, or 32 cents a share, compared with net income of $152 million, or 19 cents a share, last year.
Scheduled Earnings Reports (Next Week)
Burlington Coat Factory, H&R Block, Dillard’s, Big Lots, American Eagle Outfitters, TiVo, DelMonte Foods, Novell, PetSmart, Sears Roebuck, Tiffany
Stocks in the News
Lehman Brothers (LEH) shares were boosted by discussion of a potential acquisition of the bank by Korea Development Bank.
Intuit Inc’s (INTU) fourth-quarter net loss widened to $61.9 million or 19 cents a share, from $13.6 million, or 4 cents a share in the same period a year earlier.
Merrill Lynch (MER), Goldman Sachs Group Inc (GS), and Deutsche Bank (DB) reached agreements with New York Attorney General Andrew Cuomo over the firms' dealings in auction-rate securities.
Pacific Sunwear (PSUN) warned that third-quarter results from continuing operations would be in a range of break even to 5 cents a share, well below Wall Street targets for the period.
Foot Locker (FL) said its annual profit may be as high as 85 cents a share excluding some charges, exceeding analysts’ forecasts.
Aeropostale (ARO) said third-quarter earnings may be as low as 59 cents a share, below analysts’ forecasts.
First Marblehead Corp (FMD) reported a fiscal fourth-quarter loss because it was unable to complete any transactions in the past three quarters.
Warren Buffett said the economy continues to be in a recession, by his definition, and will continue to be for at least several more months. During a live television appearance, Buffett said ripples of the credit crunch are continuing to cause problems in financial businesses and the economy.
Speculation has been building that a government investment to rescue Fannie Mae (FNM) and Freddie Mac (FRE) could come in the form of a cash infusion through the acquisition of preferred shares in the companies. Investors generally believe that stakes in Fannie and Freddie's debt would be protected under any government rescue plan. Congressional analysts estimate a government rescue of the mortgage giants could cost taxpayers $25 billion.
Boeing (BA) said it is inclined to bail out of its effort to win a $40 billion contract to build aerial refueling tankers for the U.S. Air Force unless the Pentagon agrees to give it a total of six months to submit a new bid.
Verizon Communications Inc (VZ) and Google (GOOG) are close to agreeing a wide-ranging partnership that would make Google the default search provider on Verizon devices.
Aon Corp. (AOC), the world's biggest insurance broker, announced an agreement to buy Britain's Benfield Group Ltd. for almost $1.6 billion in cash. Aon said combining Benfield with its existing reinsurance operations would create a global, diverse franchise.
King Pharmaceuticals Inc. (KG) said it offered Alpharma Inc. (ALO) $1.4 billion in cash as part of an unsolicited buyout bid in a move to create a large diverse specialty pharmaceutical company and expand its pain therapy products.
Eli Lilly & Co. (LLY) has announced its antidepressant drug Cymbalta received European regulatory approval as a treatment for generalized anxiety disorder. It is already approved in Europe as a treatment for major depressive disorder and neuropathic pain.
Scheduled U.S. Economic Reports (Next Week)
Existing Home Sales (July), Case-Schiller Home Prices (June), Consumer Confidence (Aug), New Home Sales (July), Durable Goods (July), Gross Domestic Product (Q2), Personal Income and Spending (July), Chicago Purchasing Managers Index (Aug)
In Earnings News
AnnTaylor Stores (ANN) reported earnings of $29.3 million, or 51 cents per share, for the three-month period ended Aug. 2nd compared with $31.7 million, or 50 cents per share, in the year-ago period. Analysts expected earnings per share of 49 cents.
Perry Ellis International (PERY) lost 36 cents per share. In the same period last year, the company earned $267,000, or 2 cents per share. The company said the quarter's per-share results were affected by one-time items worth 27 cents per share.
China Sunergy Company (CSUN) reported a second quarter net profit of $3.1 million, or 8 cents a share, from a loss of $3.8 million, or 14 cents a share, a year earlier. The company said its performance was helped by efficiency improvements that helped strengthen margins.
Gap Inc (GPS) reported second-quarter profit rose 51% from a year-earlier and backed its full-year profit forecast. For quarter, Gap posted net income of $229 million, or 32 cents a share, compared with net income of $152 million, or 19 cents a share, last year.
Scheduled Earnings Reports (Next Week)
Burlington Coat Factory, H&R Block, Dillard’s, Big Lots, American Eagle Outfitters, TiVo, DelMonte Foods, Novell, PetSmart, Sears Roebuck, Tiffany
Stocks in the News
Lehman Brothers (LEH) shares were boosted by discussion of a potential acquisition of the bank by Korea Development Bank.
Intuit Inc’s (INTU) fourth-quarter net loss widened to $61.9 million or 19 cents a share, from $13.6 million, or 4 cents a share in the same period a year earlier.
Merrill Lynch (MER), Goldman Sachs Group Inc (GS), and Deutsche Bank (DB) reached agreements with New York Attorney General Andrew Cuomo over the firms' dealings in auction-rate securities.
Pacific Sunwear (PSUN) warned that third-quarter results from continuing operations would be in a range of break even to 5 cents a share, well below Wall Street targets for the period.
Foot Locker (FL) said its annual profit may be as high as 85 cents a share excluding some charges, exceeding analysts’ forecasts.
Aeropostale (ARO) said third-quarter earnings may be as low as 59 cents a share, below analysts’ forecasts.
First Marblehead Corp (FMD) reported a fiscal fourth-quarter loss because it was unable to complete any transactions in the past three quarters.
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