JDfn Daily Digest - August 4, 2008
Consumer spending dropped by 0.2 percent in June, after removing the effects of higher prices. This is the poorest showing since a similar drop in February. The higher prices reflect a big increase in gasoline prices and helped to drive an inflationary gauge tied to consumer spending up by 0.8 percent in June, the biggest increase since a one percent rise in February 1981. Personal incomes rose just 0.1% after a 1.8% surge in May.
The Commerce Department also reported that inflation increased in June. The personal consumption expenditure price index rose 0.8% compared with May which is the biggest increase since February 1981. Moreover, inflation's up 4.1% in the past year, the largest rate of growth in 17 years.
Orders for U.S.-made factory goods rose 1.7% in June on stronger demand for machinery, metals, and electrical equipment, and on higher prices for petroleum. The report was stronger than 0.9% gain anticipated by economists. Orders in May were revised higher to a 0.9% increase from 0.6%.
According to a survey from outplacement firm Challenger Gray & Christmas, U.S. corporations have increased the pace of layoffs this year. After seeing planned job cuts rise to a little more than 103,000 in July, corporate announcements of layoffs have risen 33% so far this year compared with the same period a year ago.
ImClone Systems Inc.'s (IMCL) board criticized Bristol-Myers Squibb Co.'s (BMY) $4.3 billion buyout offer as too low. Bristol-Myers offered $60 a share on July 31st for the 83 percent of ImClone it doesn't already own.
British Airways PLC (BA), which is already in talks with Spain's Iberia SA over a combination, is hoping to seal an agreement with its U.S. partner American Airlines (AMR) within the next couple of weeks. A B-A spokesman said that the carrier expected final preparations for a deal to be completed within two weeks.
Verizon Communications Inc. (VZ) and two unions representing some 65,000 of its workers remained in talks after agreeing to "stop the clock" on contracts that were set to expire. Major bargaining issues include health care coverage for employees and retirees, wages and union representation for new job areas.
Scheduled Economic Reports (Tuesday)
Retail Chain Index (Week of August 2), ISM Services Index (July), the FOMC Announcement at 2:15 pm (Eastern Time)
In Earnings News
Humana Inc. (HUM) reported a slight drop in second-quarter profit. The Company earned $209.9 million, or $1.24 per share, in the second quarter, down 3 percent from the year ago period. Analysts expected profit of $1.18 per share.
Nicor Inc. (GAS) reported a 61 percent jump in profit that far exceeded analysts' expectations. Nicor reported net income of $28.9 million, or 64 cents per share while analysts anticipated earnings of 28 cents.
HSBC Holdings PLC (HBC), Europe's largest bank by market value, reported its steepest fall in profit since 2001. Net profit for the first half of the year plunged 29 percent to $7.7 billion.
Church & Dwight Co. (CHD) reported second-quarter profit rose 13 percent on a rise in sales. Profit rose to $45.8 million, or 66 cents per share. Analysts expected earnings of 63 cents per share.
Six Flags Inc (SIX) announced its second-quarter profit increased to $94.6 million or 63 cents a share. The theme park operator said revenue was up 1% to $345.7 million from $343.6 million on a year-to-date basis.
Scheduled Earnings Reports (Tuesday)
Procter & Gamble, Cisco Systems, News Corp, D.R. Horton, MGM Mirage, Archer Daniels Midland, Marvel Entertainment, Molson Coors Brewing, Papa Johns International, Tenet Healthcare, Wendy’s International
Stocks in the News
Motorola (MOT) announced its board has named Sanjay Jha as co-chief executive officer of the company as well as CEO of the company's mobile devices business, effective immediately.
EchoStar Corp (DISH) reported a second-quarter profit of $47.8 million, or 53 cents a share.
Walgreen’s (WAG) said its July sales at stores open at least a year rose 4.1%.
Broadcom Corp (BRCM) said its board authorized a new buyback program for up to $1.0 billion of Class A common stock.
Eli Lilly and Co. (LLY) reaffirmed that its $3.00-a-share purchase offer for SGX Pharmaceutical Inc.
Yahoo (YHOO) said all its current board members were re-elected at its annual meeting, but key members had a double-digit percentage of shares withheld from the voting.
ICE Intercontinental Exchange (ICE) said that second-quarter earnings rose to $85 million, or $1.19 a share.
Nortel Networks (NT) was downgraded to hold from buy at Jefferies & Co.
The Commerce Department also reported that inflation increased in June. The personal consumption expenditure price index rose 0.8% compared with May which is the biggest increase since February 1981. Moreover, inflation's up 4.1% in the past year, the largest rate of growth in 17 years.
Orders for U.S.-made factory goods rose 1.7% in June on stronger demand for machinery, metals, and electrical equipment, and on higher prices for petroleum. The report was stronger than 0.9% gain anticipated by economists. Orders in May were revised higher to a 0.9% increase from 0.6%.
According to a survey from outplacement firm Challenger Gray & Christmas, U.S. corporations have increased the pace of layoffs this year. After seeing planned job cuts rise to a little more than 103,000 in July, corporate announcements of layoffs have risen 33% so far this year compared with the same period a year ago.
ImClone Systems Inc.'s (IMCL) board criticized Bristol-Myers Squibb Co.'s (BMY) $4.3 billion buyout offer as too low. Bristol-Myers offered $60 a share on July 31st for the 83 percent of ImClone it doesn't already own.
British Airways PLC (BA), which is already in talks with Spain's Iberia SA over a combination, is hoping to seal an agreement with its U.S. partner American Airlines (AMR) within the next couple of weeks. A B-A spokesman said that the carrier expected final preparations for a deal to be completed within two weeks.
Verizon Communications Inc. (VZ) and two unions representing some 65,000 of its workers remained in talks after agreeing to "stop the clock" on contracts that were set to expire. Major bargaining issues include health care coverage for employees and retirees, wages and union representation for new job areas.
Scheduled Economic Reports (Tuesday)
Retail Chain Index (Week of August 2), ISM Services Index (July), the FOMC Announcement at 2:15 pm (Eastern Time)
In Earnings News
Humana Inc. (HUM) reported a slight drop in second-quarter profit. The Company earned $209.9 million, or $1.24 per share, in the second quarter, down 3 percent from the year ago period. Analysts expected profit of $1.18 per share.
Nicor Inc. (GAS) reported a 61 percent jump in profit that far exceeded analysts' expectations. Nicor reported net income of $28.9 million, or 64 cents per share while analysts anticipated earnings of 28 cents.
HSBC Holdings PLC (HBC), Europe's largest bank by market value, reported its steepest fall in profit since 2001. Net profit for the first half of the year plunged 29 percent to $7.7 billion.
Church & Dwight Co. (CHD) reported second-quarter profit rose 13 percent on a rise in sales. Profit rose to $45.8 million, or 66 cents per share. Analysts expected earnings of 63 cents per share.
Six Flags Inc (SIX) announced its second-quarter profit increased to $94.6 million or 63 cents a share. The theme park operator said revenue was up 1% to $345.7 million from $343.6 million on a year-to-date basis.
Scheduled Earnings Reports (Tuesday)
Procter & Gamble, Cisco Systems, News Corp, D.R. Horton, MGM Mirage, Archer Daniels Midland, Marvel Entertainment, Molson Coors Brewing, Papa Johns International, Tenet Healthcare, Wendy’s International
Stocks in the News
Motorola (MOT) announced its board has named Sanjay Jha as co-chief executive officer of the company as well as CEO of the company's mobile devices business, effective immediately.
EchoStar Corp (DISH) reported a second-quarter profit of $47.8 million, or 53 cents a share.
Walgreen’s (WAG) said its July sales at stores open at least a year rose 4.1%.
Broadcom Corp (BRCM) said its board authorized a new buyback program for up to $1.0 billion of Class A common stock.
Eli Lilly and Co. (LLY) reaffirmed that its $3.00-a-share purchase offer for SGX Pharmaceutical Inc.
Yahoo (YHOO) said all its current board members were re-elected at its annual meeting, but key members had a double-digit percentage of shares withheld from the voting.
ICE Intercontinental Exchange (ICE) said that second-quarter earnings rose to $85 million, or $1.19 a share.
Nortel Networks (NT) was downgraded to hold from buy at Jefferies & Co.
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