JDfn Daily Digest - October 27, 2008
As a result of the current volatile economic situation, the Federal Reserve is reportedly prepared to cut interest rates -- perhaps to their lowest point in more than four years -- with the hope of relieving some of the pain felt by many Americans. The FOMC will announce their decision after their two day meeting, Wednesday afternoon at 2:15 pm (Eastern Time).
The government will begin doling out $125 billion to nine major banks this week as part of its effort to contain a growing financial crisis. An assistant Treasury Secretary said the deals with the nine banks were signed last night and the government will make the stock purchases this week. The deals are designed to bolster the banks' balance sheets so they will begin more normal lending.
Sales of new homes rose an estimated 2.7% in September to a seasonally adjusted annual rate of 464,000 in September, close to the 460,000 pace expected by economists. Sales surged 23% in the West, bouncing back from a similar decline in August.
The Lundberg Survey shows gas prices continue to decline, tumbling nearly 53 cents a gallon in the last two weeks. The average price of a gallon of regular gasoline at self-serve stations was $2.78 Friday. Mid-grade was at $2.93 and premium was at $3.05.
CenturyTel Inc (CTL), plans to buy Embarq Corp (EQ) for $11.6 billion in an effort to cut costs and stay competitive amid a decline in the traditional phone business. CenturyTel paid about 7.9 times projected 2009 earnings for Embarq, the former traditional wire line telephone business of Sprint Nextel.
Toyota Motor Corp. (TM) said its global sales in the July-September quarter fell for the first time in seven years due to faltering demand in the U.S. Japan's top automaker sold 2.24 million vehicles worldwide during the quarter, down 4 percent from the same period last year. It marked the first year-on-year decline in the July-September period since 2001.
The financial ministers and central bank presidents of the Group of Seven major industrial countries issued a joint statement in which they expressed their concern about the recent volatility of the Japanese yen. The yen rose to a 13-year high against the dollar last week, raising concerns in Japan that it could harm its exports of cars and other products because they will now cost more in U.S. markets.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (week of Oct 24th), Case-Shiller Index (Aug), Consumer Confidence (Oct)
In Earnings News
Verizon Communications Inc. (VZ) reported earnings rose 31 percent in the third quarter as wireless did better than expected, while its traditional phone business continued to decline. The country's second largest telecommunications company, after AT&T Inc., earned $1.67 billion, or 59 cents per share, up from $1.27 billion, or 44 cents a share, a year ago.
Humana Inc. (HUM) said its third-quarter profit tumbled nearly 40 percent, dragged down by a bitter dose of investment losses and an expected decline in premiums from its Medicare prescription drug plans. Humana earned $183 million, or $1.09 per share, down from $302.4 million, or $1.78 per share, in the year-ago period.
Lorillard Inc (LO) earned $237 million, or $1.38 per share, in the quarter. It earned $244 million, or $1.40 per share, in the same period a year ago. Total wholesale shipment volume was up 4.5 percent compared with the same quarter a year ago. Analysts expected profit of $1.35 per share.
B/E Aerospace Inc. (BEAV) said growth in the corporate-jet business helped drive third-quarter profit up more than 16 percent. The company reported net income of $51.8 million, or 54 cents per share, up from $44.5 million, or 48 cents per share, a year ago.
Scheduled Earnings Reports (Tuesday)
Occidental Petroleum, DreamWorks Animation, Martha Stewart Living Omnimedia, Entergy, Taser International, Centex, Schnitzer Steel, Fresh Del Monte, Estee Lauder, McGraw Hill, Royal Caribbean, Valero Energy, Whirlpool
Stocks in the News
Volkswagen (VLKAY) shares traded more than 200% higher in Europe after Porsche said it had options on 31.5% of VW, in addition to the 42.6% of the Wolfsburg automaker it already owns.
Pilgrim’s Pride Corp’s (PPC) lenders have agreed to extend the temporary waiver under its credit facilities through Nov. 26th and to provide continued liquidity.
SanDisk Corp (SNDK) was upgraded to neutral from underperform at Cowen & Co.
Penn National Gaming (PENN) third-quarter earnings tripled to $147 million or $1.69 a share.
Alberto Culver (ACV) fiscal fourth-quarter net income quadrupled to $147.1 million or $1.48 a share.
Sohu.com (SOHU), the Beijing online-media company, reported third-quarter net income quadrupled to $40.3 million or $1.02 a share.
Comerica Inc (CMA) said it would get $2.25 billion from the Treasury Department as part of the government's capital purchase program.
SunTrust Banks (STI) said it has received preliminary approval to sell $3.5 billion in preferred stock and related warrants to the Treasury Department under a program designed to provide capital support to financial institutions.
The government will begin doling out $125 billion to nine major banks this week as part of its effort to contain a growing financial crisis. An assistant Treasury Secretary said the deals with the nine banks were signed last night and the government will make the stock purchases this week. The deals are designed to bolster the banks' balance sheets so they will begin more normal lending.
Sales of new homes rose an estimated 2.7% in September to a seasonally adjusted annual rate of 464,000 in September, close to the 460,000 pace expected by economists. Sales surged 23% in the West, bouncing back from a similar decline in August.
The Lundberg Survey shows gas prices continue to decline, tumbling nearly 53 cents a gallon in the last two weeks. The average price of a gallon of regular gasoline at self-serve stations was $2.78 Friday. Mid-grade was at $2.93 and premium was at $3.05.
CenturyTel Inc (CTL), plans to buy Embarq Corp (EQ) for $11.6 billion in an effort to cut costs and stay competitive amid a decline in the traditional phone business. CenturyTel paid about 7.9 times projected 2009 earnings for Embarq, the former traditional wire line telephone business of Sprint Nextel.
Toyota Motor Corp. (TM) said its global sales in the July-September quarter fell for the first time in seven years due to faltering demand in the U.S. Japan's top automaker sold 2.24 million vehicles worldwide during the quarter, down 4 percent from the same period last year. It marked the first year-on-year decline in the July-September period since 2001.
The financial ministers and central bank presidents of the Group of Seven major industrial countries issued a joint statement in which they expressed their concern about the recent volatility of the Japanese yen. The yen rose to a 13-year high against the dollar last week, raising concerns in Japan that it could harm its exports of cars and other products because they will now cost more in U.S. markets.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (week of Oct 24th), Case-Shiller Index (Aug), Consumer Confidence (Oct)
In Earnings News
Verizon Communications Inc. (VZ) reported earnings rose 31 percent in the third quarter as wireless did better than expected, while its traditional phone business continued to decline. The country's second largest telecommunications company, after AT&T Inc., earned $1.67 billion, or 59 cents per share, up from $1.27 billion, or 44 cents a share, a year ago.
Humana Inc. (HUM) said its third-quarter profit tumbled nearly 40 percent, dragged down by a bitter dose of investment losses and an expected decline in premiums from its Medicare prescription drug plans. Humana earned $183 million, or $1.09 per share, down from $302.4 million, or $1.78 per share, in the year-ago period.
Lorillard Inc (LO) earned $237 million, or $1.38 per share, in the quarter. It earned $244 million, or $1.40 per share, in the same period a year ago. Total wholesale shipment volume was up 4.5 percent compared with the same quarter a year ago. Analysts expected profit of $1.35 per share.
B/E Aerospace Inc. (BEAV) said growth in the corporate-jet business helped drive third-quarter profit up more than 16 percent. The company reported net income of $51.8 million, or 54 cents per share, up from $44.5 million, or 48 cents per share, a year ago.
Scheduled Earnings Reports (Tuesday)
Occidental Petroleum, DreamWorks Animation, Martha Stewart Living Omnimedia, Entergy, Taser International, Centex, Schnitzer Steel, Fresh Del Monte, Estee Lauder, McGraw Hill, Royal Caribbean, Valero Energy, Whirlpool
Stocks in the News
Volkswagen (VLKAY) shares traded more than 200% higher in Europe after Porsche said it had options on 31.5% of VW, in addition to the 42.6% of the Wolfsburg automaker it already owns.
Pilgrim’s Pride Corp’s (PPC) lenders have agreed to extend the temporary waiver under its credit facilities through Nov. 26th and to provide continued liquidity.
SanDisk Corp (SNDK) was upgraded to neutral from underperform at Cowen & Co.
Penn National Gaming (PENN) third-quarter earnings tripled to $147 million or $1.69 a share.
Alberto Culver (ACV) fiscal fourth-quarter net income quadrupled to $147.1 million or $1.48 a share.
Sohu.com (SOHU), the Beijing online-media company, reported third-quarter net income quadrupled to $40.3 million or $1.02 a share.
Comerica Inc (CMA) said it would get $2.25 billion from the Treasury Department as part of the government's capital purchase program.
SunTrust Banks (STI) said it has received preliminary approval to sell $3.5 billion in preferred stock and related warrants to the Treasury Department under a program designed to provide capital support to financial institutions.
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