JDfn Daily Digest - October 6, 2008
In The News
The Federal Reserve says it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks, fresh steps to help ease a painful credit crisis. Congress in the $700 billion bailout bill President Bush signed on Friday gave the Fed the power to pay interest on those reserves for the first time. The law accelerated the effective date to Oct. 1st of this year versus 2011.
Bank of America Corp. (BAC) and a number of U.S. states reached an $8.4 billion accord under which the banking giant will modify troubled mortgages and enable nearly 400,000 Countrywide Financial Corp. clients to keep their homes. Borrowers stuck with Countrywide Financial mortgages that they can't afford could see their interest rates reduced or have the loan principal cut. Some might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home.
Wells Fargo (WFC) appears to have the upper hand in its battle with Citigroup (C) for the chance to take over Wachovia Corp. (WB), thanks to two court rulings in its favor. Wells Fargo said that its takeover agreement with Wachovia will go forward, as an appellate court overturned an earlier decision to block its acquisition of Wachovia Corp.
A growing number of economists believe the country is on the brink of -- or already in -- its first recession since 2001 and that it will be longer lasting. That's part of the latest outlook from forecasters in a survey being released by the National Association for Business Economics. Nearly 69 percent of the economists think the economy has started or will enter a recession this year.
Verizon Wireless (VZ) says it is moving forward with plans to acquire Alltel Corp. for $28.1 billion. Verizon maintains that the deal, which would make it the largest wireless carrier in the United States, is still on track to close by the end of the year.
Eli Lilly & Co. (LLY) says it has agreed to buy Biotechnology Company ImClone Systems Inc. (IMCL) for more than $6 billion in a deal that would expand its pipeline of cancer treatments. Lilly said it will pay $70 per share for ImClone. With about 87 million shares outstanding as of Aug. 1st, that would amount to nearly $6.1 billion. Lilly said the transaction is worth $6.5 billion.
EBay Inc. (EBAY) says it will cut about 1,000 employees, reducing its work force by about 10 percent. The online auction site also says it will get rid of several hundred temporary workers and reduce open positions. EBay says the reductions are intended to streamline its organization. The Company says it expects restructuring charges of about $70 million to $80 million, mostly in the fourth quarter.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (Week of October 4th), Consumer Credit (Aug)
In Earnings News
Netflix (NFLX) said that earnings will be within its previous guidance for the third quarter of $16 million to $21 million with earnings per share of 26 cents to 34 cents. The company ended the third quarter with about 8.672 million subscribers, just under the low end of its guidance. For the fourth quarter, Netflix sees earnings per share of 30 cents to 40 cents on revenue of $353 million to $359 million.
Wyndham Worldwide (WYN) forecast third-quarter profit of 78 cents to 80 cents a share. Excluding costs, profit would be 80 cents to 82 cents a share. Analysts, on average, estimated Wyndham would earn 80 cents a share.
Scheduled Earnings Reports (Tuesday)
Third quarter earnings season begins tomorrow when Alcoa releases its quarterly numbers. Other earnings reports scheduled to be released are Acuity Brands, Safeway, Sealy Corp, Yum Brands
Stocks in the News
MasTec Inc. (MTZ) updated its earnings estimates and said it would pay $200 million for a wind-energy and natural-gas-plant construction firm.
Hartford Financial Services Group (HIG) said it's going to get a $2.5 billion investment from Allianz (AZ).
State Auto Financial Corp (STFC) third-quarter results will include around $55 million to $60 million in pretax catastrophe losses related to storms.
MetroPCS Communications Inc (PCS) finished the third quarter with around 4.8 million customers, including net additions of 249,000 subscribers.
United Community Banks (UCBI) said it would report a third-quarter loss of 84 cents a share after increasing its allowance for possible losses on bad loans to 1.91% of total loans from 1.53% at June 30th.
The Federal Reserve says it will begin paying interest on commercial banks' reserves and will expand its loan program to squeezed banks, fresh steps to help ease a painful credit crisis. Congress in the $700 billion bailout bill President Bush signed on Friday gave the Fed the power to pay interest on those reserves for the first time. The law accelerated the effective date to Oct. 1st of this year versus 2011.
Bank of America Corp. (BAC) and a number of U.S. states reached an $8.4 billion accord under which the banking giant will modify troubled mortgages and enable nearly 400,000 Countrywide Financial Corp. clients to keep their homes. Borrowers stuck with Countrywide Financial mortgages that they can't afford could see their interest rates reduced or have the loan principal cut. Some might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home.
Wells Fargo (WFC) appears to have the upper hand in its battle with Citigroup (C) for the chance to take over Wachovia Corp. (WB), thanks to two court rulings in its favor. Wells Fargo said that its takeover agreement with Wachovia will go forward, as an appellate court overturned an earlier decision to block its acquisition of Wachovia Corp.
A growing number of economists believe the country is on the brink of -- or already in -- its first recession since 2001 and that it will be longer lasting. That's part of the latest outlook from forecasters in a survey being released by the National Association for Business Economics. Nearly 69 percent of the economists think the economy has started or will enter a recession this year.
Verizon Wireless (VZ) says it is moving forward with plans to acquire Alltel Corp. for $28.1 billion. Verizon maintains that the deal, which would make it the largest wireless carrier in the United States, is still on track to close by the end of the year.
Eli Lilly & Co. (LLY) says it has agreed to buy Biotechnology Company ImClone Systems Inc. (IMCL) for more than $6 billion in a deal that would expand its pipeline of cancer treatments. Lilly said it will pay $70 per share for ImClone. With about 87 million shares outstanding as of Aug. 1st, that would amount to nearly $6.1 billion. Lilly said the transaction is worth $6.5 billion.
EBay Inc. (EBAY) says it will cut about 1,000 employees, reducing its work force by about 10 percent. The online auction site also says it will get rid of several hundred temporary workers and reduce open positions. EBay says the reductions are intended to streamline its organization. The Company says it expects restructuring charges of about $70 million to $80 million, mostly in the fourth quarter.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (Week of October 4th), Consumer Credit (Aug)
In Earnings News
Netflix (NFLX) said that earnings will be within its previous guidance for the third quarter of $16 million to $21 million with earnings per share of 26 cents to 34 cents. The company ended the third quarter with about 8.672 million subscribers, just under the low end of its guidance. For the fourth quarter, Netflix sees earnings per share of 30 cents to 40 cents on revenue of $353 million to $359 million.
Wyndham Worldwide (WYN) forecast third-quarter profit of 78 cents to 80 cents a share. Excluding costs, profit would be 80 cents to 82 cents a share. Analysts, on average, estimated Wyndham would earn 80 cents a share.
Scheduled Earnings Reports (Tuesday)
Third quarter earnings season begins tomorrow when Alcoa releases its quarterly numbers. Other earnings reports scheduled to be released are Acuity Brands, Safeway, Sealy Corp, Yum Brands
Stocks in the News
MasTec Inc. (MTZ) updated its earnings estimates and said it would pay $200 million for a wind-energy and natural-gas-plant construction firm.
Hartford Financial Services Group (HIG) said it's going to get a $2.5 billion investment from Allianz (AZ).
State Auto Financial Corp (STFC) third-quarter results will include around $55 million to $60 million in pretax catastrophe losses related to storms.
MetroPCS Communications Inc (PCS) finished the third quarter with around 4.8 million customers, including net additions of 249,000 subscribers.
United Community Banks (UCBI) said it would report a third-quarter loss of 84 cents a share after increasing its allowance for possible losses on bad loans to 1.91% of total loans from 1.53% at June 30th.
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