James Dicks Daily Digest - January 26, 2009

The index of leading U.S. economic indicators unexpectedly increased in December as the money supply expanded, masking signs of a worsening recession. The Conference Board’s gauge rose 0.3 percent, the first gain in six months, after a 0.4 percent drop in November. The index points to the direction of the economy over the next three to six months.

The National Association of Realtors reported sales of existing homes rose 6.5% in December to a seasonally adjusted annualized rate of 4.74 million as prices continued to plunge at a record pace. Sales in December were down 3.5% from the previous December.

The Senate could confirm Timothy Geithner as Treasury secretary as early as today, after delaying a vote because Geithner failed to pay some of his federal taxes earlier this decade. Senate committees are also scheduled to take up the massive economic stimulus package Tuesday and the full House is expected to vote on its version of the $825 billion plan Wednesday.

Home Depot (HD) said that it plans to exit its Expo business and streamline its support functions, resulting in 7,000 job cuts. That is about 2% of the company's workforce. The company sees a total pre-tax charge due to these actions of approximately $532 million, of which approximately $390 million will be recognized in the fourth quarter and the remaining $142 million will be recognized in 2009 and beyond.

Sprint Nextel Corp. (S) said it will cut 8,000 jobs, or about 15% of its workforce, to reduce costs in the face of a deepening U.S. recession. Sprint, which has about 56,000 employees, said the layoffs would take place at every level and be geographically dispersed.

Pfizer Inc. (PFE) announced it will buy rival Wyeth for $68 billion in the biggest pharmaceutical merger in eight years. At the same time, Pfizer reported a 90% decline in fourth-quarter profit, announced a 10% reduction in its workforce and said it would halve its dividend payment.

Rohm & Haas (ROH) says Dow Chemical (DOW) does not plan to close the pending acquisition of the specialty chemicals maker by the Jan. 27th closing date. The two companies have received all required approvals for the closing of the proposed $15.4 billion buyout deal.

John Thain, the recently departed head of Merrill Lynch, said last week in a farewell memo to Merrill employees that Bank of America (BAC) knew about all of Merrill's losses and bonuses that were recently reported. Thain did say that paying $1.2 million to renovate his office suite a year ago was a “mistake,” and that he plans to reimburse the company.

Scheduled U.S. Economic Reports (Tuesday)

Case-Schiller Home Prices (Nov), Consumer Confidence (Jan)

In Earnings News

McDonalds’ (MCD) surpassed analysts' profit expectations for the most recent fourth quarter, but revenue for the period was on the light side. Net income decreased to $985.3 million or 87 cents a share. Analysts expected 83 cents a share.

Caterpillar Inc. (CAT) said it would cut costs, including the elimination of some 20,000 jobs -- nearly 18% of its workforce. The company posted a 32% drop in fourth-quarter profit. The company earned $661 million, or $1.08 per share. Analysts, on average, expected Caterpillar to report earnings of $1.31 per share.

Alberto-Culver (ACV) earnings rose 2 percent to $31.7 million, or 32 cents per share, from $30.9 million, or 31 cents per share, last year. Analysts predicted earnings of 34 cents.

Freeport-McMoRan Copper & Gold Inc. (FCX) said it lost nearly $14 billion during the fourth quarter. The company reported a loss of $13.9 billion, or $36.78 per share. Analysts expected a loss of $1.12 per share, on average.

Tyson Foods Inc. (TSN) lost $112 million dollars for the first quarter. The company announced a loss of 30 cents per share, compared to a year-ago profit of $34 million, or 10 cents per share. Analysts had forecast a loss of 23 cents a share.

Scheduled Earnings Reports (Tuesday)

Yahoo, Siemens AG, Hershey Co., Callaway Golf, Bristol Myers Squibb, U.S. Steel, McGraw Hill, DuPont, Lexmark International, St. Jude Medical, Sun Microsystems, Verizon Communications

Stocks in the News

American Express Co. (AXP) is expected to report fourth-quarter earnings of 20 cents a share.

Danaher Corp (DHR) said fourth-quarter net income fell nearly 5% to $306 million, or 92 cents a share, from $320 million, or 97 cents a share, in the year-earlier quarter.

First California Financial Group (FCAL) will assume the insured deposits of 1st Centennial Bank.

ING (ING) expects to post a loss of 1 billion euros for 2008 after taking a 3.3 billion-euro loss in the fourth quarter on asset impairments and fair-value adjustments.

Philip’s Electronics (PHG) had a loss of 1.5 billion euros ($1.9 billion) in the fourth quarter.

Covidien Ltd (COV) reported first-quarter net income slipped to $386 million or 74 cents a share, from $420 million, or 84 cents a share, in the year-earlier period.

Quest Diagnostics (DGX) earnings from continuing operations rose to $170 million, or 87 cents a share, from $154 million, or 79 cents, in the year-earlier period.

Halliburton Co. (HAL) is close to reaching settlements with the U.S. Justice Department and the Securities and Exchange Commission regarding the Foreign Corrupt Practices Act investigations involving the company and KBR.

Weatherford International Ltd (WFT) fourth-quarter income rose to $348.1 million, or 50 cents a share, from $331 million, or 47 cents a share, in the year-ago period.