James Dicks Daily Digest - January 16, 2009
The Reuters/University of Michigan Surveys of Consumers said its preliminary index reading of confidence for January rose to 61.9 from December's 60.1. The index was above economists' expectations of 59.0. The early January reading was the highest since 70.3 in September.
The Labor Department reported that consumer prices dropped by 0.7 percent in December, slightly smaller than the 0.9 percent drop economists expected. For the year, consumer prices edged up by just 0.1 percent, the smallest annual change since consumer prices actually fell by 0.7 percent in 1954. Consumer prices rose by 4.1 percent for all of 2007.
The Federal Reserve reported that production at the nation's factories, mines and utilities fell by 2 percent last month. The dismal showing underscored the heavy toll the housing, credit and financial crises are taking on the nation's manufacturers. Economists were forecasting a 1 percent drop. The report also showed that the operating capacity at big industrial outlets dropped to 73.6 percent in December, from 75.2 in November.
Treasury Secretary Henry Paulson said the second half of the financial industry bailout fund should be used mostly for direct capital injections into troubled banks and financial firms. Congress is working quickly on releasing the second half of the $700 billion war chest. The Senate voted to release the funds. Paulson said he understands the public's impatience that the massive spending has not solved the financial crisis.
Bank of America (BAC) announced that it was awarded $20 billion in new capital from the government's $700 billion Troubled Asset Relief Program (TARP). Bank of America will absorb the first $10 billion of any losses; the government takes the next $10 billion, and the government 90 percent of any remainder. Bank of America said the rescue package will help it operate as normally as possible.
Circuit City Stores Inc (CCTYQ) which filed for Chapter 11 bankruptcy protection in November announced it will request Bankruptcy Court approval to liquidate the company. Circuit City does not expect any value to remain for shareholders at this time. The retail chain had employed more than 30,000 workers in the U.S. and Canada.
Northrop Grumman (NOC) Shipbuilding in Newport News has been awarded a $374 million contract for preliminary work on the second Gerald R. Ford-class aircraft carrier. The nation's only maker of nuclear-powered aircraft carriers has already received a $5.1 billion contract to build the lead ship in the next generation of aircraft carriers.
WellPoint Inc. (WLP) announced it will cut about 1,500 jobs to reduce costs as it copes with the U.S. recession. The insurer will eliminate about 3.5 percent of its staff, which currently totals more than 42,000. More than 900 open positions and 600 associate jobs are being eliminated.
Terra Industries Holdings Inc. (TRA) said it will consider an unsolicited $2.1 billion takeover bid by rival CF Industries Holdings Inc. (CF). CF Industries made the all-stock offer late Thursday. The deal for Terra, which had 2007 revenues of $2.4 billion, would create a major fertilizer producer.
McDonald's (MCD) said it is prepared for another tough year economically but believes it is well-positioned to thrive despite the recession One of only two Dow components to finish 2008 higher, McDonald's plans to continue to expand into emerging markets in 2009 while adding new products and growing its domestic business as well.
Sears Holdings Corp. (SHLD) will keep providing a layaway option at its namesake stores as shoppers dealing with the recession look for more options to help pay for their purchases. The retailer re-launched the layaway program at its Sears stores over the holidays, nearly two decades after it was scrapped.
Scheduled U.S. Economic Reports (Next Week)
Home Builders’ Index (Jan), Housing Starts (Dec)
In Earnings News
Bank of America (BAC) lost $1.79 billion, or 48 cents per share, in the fourth quarter, compared with a year-earlier profit of $268 million, or 5 cents. It was the bank’s its first quarterly loss in 17 years.
Citigroup (C) said it is splitting into two businesses as it reported a fourth-quarter net loss of $8.29 billion -- its fifth straight quarterly loss. The bank's fourth-quarter loss amounted to $1.72 per share. Analysts expected a loss of $1.31 per share.
Sony Ericsson (SNE) said it fell to a euro187 million ($245 million) loss in the fourth quarter, mainly because of a 23 percent drop in sales due to the financial crisis. Sony Ericsson shipped 24.2 million units in the fourth quarter, which was a 21 percent drop from the fourth quarter last year.
Johnson Controls Inc. (JCI), which makes building and automotive systems, said Friday it lost $608 million in its fiscal first quarter. The company said its loss amounted to $1.02 per share. Analysts expected a profit of 1 cent per share.
Charles Schwab Corp (SCHW) said net income for the quarter was $308 million, or 27 cents per share, in the last three months of 2008. That was in line with the $308 million, or 26 cents a share, it earned a year ago when it had slightly more shares outstanding.
Meridian Bioscience Inc (VIVO) said its profit for the quarter rose to 20 cents per share from 18 cents per share a year ago. Revenue increased 1 percent, to $34.3 million from $33.8 million. Analysts expected an average profit of 22 cents per share.
Estee Lauder Cos. (EL) lowered its earnings and sales outlooks for the fiscal second quarter and full year. The company anticipates earnings per share for the second quarter between 75 cents per share and 82 cents per share.
Scheduled Earnings Reports (Next Week)
Google, General Electric, Microsoft, Lockheed Martin, Northrop Grumman, Nokia, Southwest Airlines, Johnson & Johnson, Xerox, TD Ameritrade, Abbott Labs, Raymond James, Harley Davidson, Capital One Financial, Fifth Third Bancorp, SunTrust Bank
Stocks in the News
U.S. Airways Group Inc (LCC) traded higher after its flight 1549, en route to Charlotte, N.C. from LaGuardia airport in New York, ditched into the Hudson River at about 3 p.m. Eastern time, yesterday afternoon. All 155 aboard got out alive, with a few reported minor injuries.
Genentech Inc.’s (DNA) earnings increased 47% during the fourth quarter on strong sales of its line of anti-cancer drugs, but forecast lower-than-expected earnings for the current year.
First Horizon National Corp (FHN) posted a narrower fourth-quarter net loss as credit quality continued to deteriorate amid continuing woes in its residential construction portfolio.
Saks Inc (SKS) will reduce 1,100 corporate support and store positions, about 9% of its total workforce.
Intel Corp (INTC) reported a 90% drop in fourth-quarter earnings. CEO Paul Otellini cited a "dramatic" decline in sales.
Allied Irish Banks Plc (AIB) will be nationalized by the Irish government, in a surprise move, following a loan scandal and further deterioration in the bank's funding position.
The Labor Department reported that consumer prices dropped by 0.7 percent in December, slightly smaller than the 0.9 percent drop economists expected. For the year, consumer prices edged up by just 0.1 percent, the smallest annual change since consumer prices actually fell by 0.7 percent in 1954. Consumer prices rose by 4.1 percent for all of 2007.
The Federal Reserve reported that production at the nation's factories, mines and utilities fell by 2 percent last month. The dismal showing underscored the heavy toll the housing, credit and financial crises are taking on the nation's manufacturers. Economists were forecasting a 1 percent drop. The report also showed that the operating capacity at big industrial outlets dropped to 73.6 percent in December, from 75.2 in November.
Treasury Secretary Henry Paulson said the second half of the financial industry bailout fund should be used mostly for direct capital injections into troubled banks and financial firms. Congress is working quickly on releasing the second half of the $700 billion war chest. The Senate voted to release the funds. Paulson said he understands the public's impatience that the massive spending has not solved the financial crisis.
Bank of America (BAC) announced that it was awarded $20 billion in new capital from the government's $700 billion Troubled Asset Relief Program (TARP). Bank of America will absorb the first $10 billion of any losses; the government takes the next $10 billion, and the government 90 percent of any remainder. Bank of America said the rescue package will help it operate as normally as possible.
Circuit City Stores Inc (CCTYQ) which filed for Chapter 11 bankruptcy protection in November announced it will request Bankruptcy Court approval to liquidate the company. Circuit City does not expect any value to remain for shareholders at this time. The retail chain had employed more than 30,000 workers in the U.S. and Canada.
Northrop Grumman (NOC) Shipbuilding in Newport News has been awarded a $374 million contract for preliminary work on the second Gerald R. Ford-class aircraft carrier. The nation's only maker of nuclear-powered aircraft carriers has already received a $5.1 billion contract to build the lead ship in the next generation of aircraft carriers.
WellPoint Inc. (WLP) announced it will cut about 1,500 jobs to reduce costs as it copes with the U.S. recession. The insurer will eliminate about 3.5 percent of its staff, which currently totals more than 42,000. More than 900 open positions and 600 associate jobs are being eliminated.
Terra Industries Holdings Inc. (TRA) said it will consider an unsolicited $2.1 billion takeover bid by rival CF Industries Holdings Inc. (CF). CF Industries made the all-stock offer late Thursday. The deal for Terra, which had 2007 revenues of $2.4 billion, would create a major fertilizer producer.
McDonald's (MCD) said it is prepared for another tough year economically but believes it is well-positioned to thrive despite the recession One of only two Dow components to finish 2008 higher, McDonald's plans to continue to expand into emerging markets in 2009 while adding new products and growing its domestic business as well.
Sears Holdings Corp. (SHLD) will keep providing a layaway option at its namesake stores as shoppers dealing with the recession look for more options to help pay for their purchases. The retailer re-launched the layaway program at its Sears stores over the holidays, nearly two decades after it was scrapped.
Scheduled U.S. Economic Reports (Next Week)
Home Builders’ Index (Jan), Housing Starts (Dec)
In Earnings News
Bank of America (BAC) lost $1.79 billion, or 48 cents per share, in the fourth quarter, compared with a year-earlier profit of $268 million, or 5 cents. It was the bank’s its first quarterly loss in 17 years.
Citigroup (C) said it is splitting into two businesses as it reported a fourth-quarter net loss of $8.29 billion -- its fifth straight quarterly loss. The bank's fourth-quarter loss amounted to $1.72 per share. Analysts expected a loss of $1.31 per share.
Sony Ericsson (SNE) said it fell to a euro187 million ($245 million) loss in the fourth quarter, mainly because of a 23 percent drop in sales due to the financial crisis. Sony Ericsson shipped 24.2 million units in the fourth quarter, which was a 21 percent drop from the fourth quarter last year.
Johnson Controls Inc. (JCI), which makes building and automotive systems, said Friday it lost $608 million in its fiscal first quarter. The company said its loss amounted to $1.02 per share. Analysts expected a profit of 1 cent per share.
Charles Schwab Corp (SCHW) said net income for the quarter was $308 million, or 27 cents per share, in the last three months of 2008. That was in line with the $308 million, or 26 cents a share, it earned a year ago when it had slightly more shares outstanding.
Meridian Bioscience Inc (VIVO) said its profit for the quarter rose to 20 cents per share from 18 cents per share a year ago. Revenue increased 1 percent, to $34.3 million from $33.8 million. Analysts expected an average profit of 22 cents per share.
Estee Lauder Cos. (EL) lowered its earnings and sales outlooks for the fiscal second quarter and full year. The company anticipates earnings per share for the second quarter between 75 cents per share and 82 cents per share.
Scheduled Earnings Reports (Next Week)
Google, General Electric, Microsoft, Lockheed Martin, Northrop Grumman, Nokia, Southwest Airlines, Johnson & Johnson, Xerox, TD Ameritrade, Abbott Labs, Raymond James, Harley Davidson, Capital One Financial, Fifth Third Bancorp, SunTrust Bank
Stocks in the News
U.S. Airways Group Inc (LCC) traded higher after its flight 1549, en route to Charlotte, N.C. from LaGuardia airport in New York, ditched into the Hudson River at about 3 p.m. Eastern time, yesterday afternoon. All 155 aboard got out alive, with a few reported minor injuries.
Genentech Inc.’s (DNA) earnings increased 47% during the fourth quarter on strong sales of its line of anti-cancer drugs, but forecast lower-than-expected earnings for the current year.
First Horizon National Corp (FHN) posted a narrower fourth-quarter net loss as credit quality continued to deteriorate amid continuing woes in its residential construction portfolio.
Saks Inc (SKS) will reduce 1,100 corporate support and store positions, about 9% of its total workforce.
Intel Corp (INTC) reported a 90% drop in fourth-quarter earnings. CEO Paul Otellini cited a "dramatic" decline in sales.
Allied Irish Banks Plc (AIB) will be nationalized by the Irish government, in a surprise move, following a loan scandal and further deterioration in the bank's funding position.
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