JDfn Daily Digest - September 3, 2008
National chain store sales fell 1.6% in the first four weeks of August versus the previous month. Sales in the week ended Aug. 30th were up 2.3% from the same week in 2007. Last minute back-to-school shopping and bargain hunting boosted sales for the week.
Businesses stepped up their demand for capital equipment in July. Core capital equipment orders rose 2.5. Overall new orders rose 1.3% in July, compared with 1% expected by economists. Orders for durable goods rose 1.3% in July, while orders for nondurable goods rose 1.2%.
The Mortgage Bankers Association reported mortgage application volume increased a seasonally adjusted 7.5% last week, driven mainly by an uptick in applications to purchase a home. Applications were still down 27.0% compared with the same week in 2007.
Employment consulting firm Challenger, Gray & Christmas Inc. said U.S. companies' announced layoffs in August fell from July, but were running above the level set a year ago, suggesting persistent weakness in the labor market. Downsizing at U.S. companies last month totaled almost 89,000, which is 14 percent lower than in July, but 12 percent higher than August of last year.
According to a letter the firm sent to investors, Ospraie Management LP is shutting its flagship commodity hedge fund after it lost almost 40% this year. Ospriae Fund Ltd., which had roughly $2.8 billion in assets at the start of August, is one of the largest commodity hedge funds in the world.
HSBC Holdings (HBC) and a Chinese bank are among the potential bidders for the Wall Street investment bank Lehman Brothers (LEH). Any bid by HSBC or another firm would place it in competition with Korean Development Bank, which has confirmed it is holding talks to buy a stake in Lehman as part of a consortium of South Korean banks.
The Coca-Cola Co. (KO) moved to expand its operations in the fast-growing Chinese market with a $2.5 billion bid for major juice maker China Huiyuan Juice Group Ltd. It is reportedly the largest-ever deal in China's food and beverage industry.
Boeing's (BA) largest union was heading to the voting polls to decide if almost 27,000 of their members will go on strike. Leaders of the union have recommended their members reject an offer from Boeing that includes an 11% wage hike, a 14% increase to monthly pension plans, bonus payments and other incentives in the three-year contract.
News reports reveal that General Motors (GM) will continue to offer employee discounts on many of its vehicles to customers through the end of September. The deal, which was announced in mid-August, was originally slated to run through Sept. 2nd. The discounts covered almost all of its 2008 model-year cars and trucks as well as some 2009 models.
Meantime, Automakers are expected to post a 10th consecutive month of U.S. sales declines as incentives on slow-selling trucks and SUVs and General Motors' employee pricing promotion failed to ignite demand from struggling consumers in August. Analysts see automakers posting double-digit declines in U.S. auto sales for August -- adding to the longest monthly losing streak for the industry since the domestic recession of 2001.
General Dynamics Corp. (GD) said that its Sistemas business received a $102 million contract from the Spanish government to supply mine protected vehicles for Spain's army. Work under the contract is expected to be completed by next year. The agreement includes an option for 80 additional vehicles.
Collective Brands Inc., parent of Payless ShoeSource (PSS), announced it signed a deal to help bring its brand of inexpensive footwear to the Middle East. The multiyear agreement calls for Payless stores to begin opening next year in areas including the United Arab Emirates, Egypt and Saudi Arabia.
Scheduled U.S. Economic Reports (Thursday)
ADP Employment Index (Aug), Initial Jobless Claims (Week of August 30th), Productivity (2Q), Unit Labor Costs (2Q), ISM Services Index (Aug), Crude Oil Inventories
In Earnings News
Kraft Foods (KFT) expects 2008 earnings of at least $1.88 a share. Wall Street analysts expect earnings of $1.90 a share, on average. Looking ahead, the company expects 2009 earnings of at least $2 per share, compared to the Wall Street target of $2.05 a share.
Staples (SPLS) said its net income fell to $150.2 million, or 21 cents per share, from $178.8 million, or 25 cents per share. Analysts expected profit of 21 cents per share.
Isle of Capri Casinos Inc. (ISLE) reported its fiscal first-quarter loss narrowed on cost control efforts and improved revenue, but the results missed analysts' estimates. For the quarter, the casino operator reported a loss of $3.6 million, or 12 cents per share. Analysts predicted a first-quarter loss of 4 cents per share.
United Natural Foods Inc. (UNFI) announced its fourth-quarter profit dipped 2 percent, mainly due to higher operating expenses. For the quarter, net income fell to $12.8 million, or 30 cents per share. Analysts expected profit of 30 cents per share.
Scheduled Earnings Reports (Thursday)
Toll Brothers, Cooper Companies, Joseph A. Bank, Smith & Wesson, Jackson Hewitt Tax Services, Seachange International, Ciena, Movado Group, Take Two Interactive
Stocks in the News
Continental Airlines (CAL) reported its August traffic rose 0.7% to 9.14 billion revenue passenger miles from 9.08 billion last year.
ConAgra Foods’ (CAG) fiscal first-quarter earnings should be slightly below its previous estimate of 26 cents to 28 cents a share as its consumer-foods segment underperformed.
H&R Block (HRB) agreed to acquire the operator of its franchise units in Texas, Oklahoma and Arkansas for $278 million in cash.
Dr. Pepper Snapple Group (DPS) said it will affirm its earnings estimates for 2008.
Nasdaq OMX (NDAQ) set a pricing structure for its pan-European trading platform due to launch later in September.
Johnson Controls (JCI) will cut workers and close plants to cut costs.
Costco Wholesale (COST) reported that for August, comparable-store sales rose 9%, and total sales rose 12% to $5.41 billion from $4.84 billion in the year-earlier period.
Magal Security Systems Ltd (MAGS) said its Senstar-Stellar subsidiary received a $20 million order from a large Latin American city for a municipal-surveillance security solution.
Pfizer Inc. (PFE) will pay up to $725 million for rights to market Dimebon, a drug for patients with Alzheimer's and Huntington's disease.
Businesses stepped up their demand for capital equipment in July. Core capital equipment orders rose 2.5. Overall new orders rose 1.3% in July, compared with 1% expected by economists. Orders for durable goods rose 1.3% in July, while orders for nondurable goods rose 1.2%.
The Mortgage Bankers Association reported mortgage application volume increased a seasonally adjusted 7.5% last week, driven mainly by an uptick in applications to purchase a home. Applications were still down 27.0% compared with the same week in 2007.
Employment consulting firm Challenger, Gray & Christmas Inc. said U.S. companies' announced layoffs in August fell from July, but were running above the level set a year ago, suggesting persistent weakness in the labor market. Downsizing at U.S. companies last month totaled almost 89,000, which is 14 percent lower than in July, but 12 percent higher than August of last year.
According to a letter the firm sent to investors, Ospraie Management LP is shutting its flagship commodity hedge fund after it lost almost 40% this year. Ospriae Fund Ltd., which had roughly $2.8 billion in assets at the start of August, is one of the largest commodity hedge funds in the world.
HSBC Holdings (HBC) and a Chinese bank are among the potential bidders for the Wall Street investment bank Lehman Brothers (LEH). Any bid by HSBC or another firm would place it in competition with Korean Development Bank, which has confirmed it is holding talks to buy a stake in Lehman as part of a consortium of South Korean banks.
The Coca-Cola Co. (KO) moved to expand its operations in the fast-growing Chinese market with a $2.5 billion bid for major juice maker China Huiyuan Juice Group Ltd. It is reportedly the largest-ever deal in China's food and beverage industry.
Boeing's (BA) largest union was heading to the voting polls to decide if almost 27,000 of their members will go on strike. Leaders of the union have recommended their members reject an offer from Boeing that includes an 11% wage hike, a 14% increase to monthly pension plans, bonus payments and other incentives in the three-year contract.
News reports reveal that General Motors (GM) will continue to offer employee discounts on many of its vehicles to customers through the end of September. The deal, which was announced in mid-August, was originally slated to run through Sept. 2nd. The discounts covered almost all of its 2008 model-year cars and trucks as well as some 2009 models.
Meantime, Automakers are expected to post a 10th consecutive month of U.S. sales declines as incentives on slow-selling trucks and SUVs and General Motors' employee pricing promotion failed to ignite demand from struggling consumers in August. Analysts see automakers posting double-digit declines in U.S. auto sales for August -- adding to the longest monthly losing streak for the industry since the domestic recession of 2001.
General Dynamics Corp. (GD) said that its Sistemas business received a $102 million contract from the Spanish government to supply mine protected vehicles for Spain's army. Work under the contract is expected to be completed by next year. The agreement includes an option for 80 additional vehicles.
Collective Brands Inc., parent of Payless ShoeSource (PSS), announced it signed a deal to help bring its brand of inexpensive footwear to the Middle East. The multiyear agreement calls for Payless stores to begin opening next year in areas including the United Arab Emirates, Egypt and Saudi Arabia.
Scheduled U.S. Economic Reports (Thursday)
ADP Employment Index (Aug), Initial Jobless Claims (Week of August 30th), Productivity (2Q), Unit Labor Costs (2Q), ISM Services Index (Aug), Crude Oil Inventories
In Earnings News
Kraft Foods (KFT) expects 2008 earnings of at least $1.88 a share. Wall Street analysts expect earnings of $1.90 a share, on average. Looking ahead, the company expects 2009 earnings of at least $2 per share, compared to the Wall Street target of $2.05 a share.
Staples (SPLS) said its net income fell to $150.2 million, or 21 cents per share, from $178.8 million, or 25 cents per share. Analysts expected profit of 21 cents per share.
Isle of Capri Casinos Inc. (ISLE) reported its fiscal first-quarter loss narrowed on cost control efforts and improved revenue, but the results missed analysts' estimates. For the quarter, the casino operator reported a loss of $3.6 million, or 12 cents per share. Analysts predicted a first-quarter loss of 4 cents per share.
United Natural Foods Inc. (UNFI) announced its fourth-quarter profit dipped 2 percent, mainly due to higher operating expenses. For the quarter, net income fell to $12.8 million, or 30 cents per share. Analysts expected profit of 30 cents per share.
Scheduled Earnings Reports (Thursday)
Toll Brothers, Cooper Companies, Joseph A. Bank, Smith & Wesson, Jackson Hewitt Tax Services, Seachange International, Ciena, Movado Group, Take Two Interactive
Stocks in the News
Continental Airlines (CAL) reported its August traffic rose 0.7% to 9.14 billion revenue passenger miles from 9.08 billion last year.
ConAgra Foods’ (CAG) fiscal first-quarter earnings should be slightly below its previous estimate of 26 cents to 28 cents a share as its consumer-foods segment underperformed.
H&R Block (HRB) agreed to acquire the operator of its franchise units in Texas, Oklahoma and Arkansas for $278 million in cash.
Dr. Pepper Snapple Group (DPS) said it will affirm its earnings estimates for 2008.
Nasdaq OMX (NDAQ) set a pricing structure for its pan-European trading platform due to launch later in September.
Johnson Controls (JCI) will cut workers and close plants to cut costs.
Costco Wholesale (COST) reported that for August, comparable-store sales rose 9%, and total sales rose 12% to $5.41 billion from $4.84 billion in the year-earlier period.
Magal Security Systems Ltd (MAGS) said its Senstar-Stellar subsidiary received a $20 million order from a large Latin American city for a municipal-surveillance security solution.
Pfizer Inc. (PFE) will pay up to $725 million for rights to market Dimebon, a drug for patients with Alzheimer's and Huntington's disease.
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