James Dicks Daily Digest - January 30, 2009

The Commerce Department said gross domestic product, which measures total goods and services output within U.S. borders, plummeted at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982, when output contracted 6.4 percent. GDP fell 0.5 percent in the third quarter.

The Labor Department reported that its employment cost index was up 0.5 percent for the quarter, weaker than the 0.7 percent rise that economists had expected. For the whole year, employment costs, including wages and benefits, showed an increase of 2.6 percent, an all-time low for this data series, which goes back to 1982.

The economy in the Chicago region continued to worsen in January. The Chicago PMI fell to 33.3% in January from 35.1% in December. Readings under 50% indicate more firms are seeing worsening conditions compared with the previous month.

The University of Michigan reports that consumer sentiment rose in January to a final reading of 61.2 from 60.1 in late December. Analysts were looking for a January result of 61.5. While sentiment remains at relatively low levels, lower prices have provided some relief, even as worry persists over income and ongoing job losses.

Freddie Mac (FRE) announced it is extending its suspension of evictions triggered by foreclosures on single-family properties with Freddie Mac-owned mortgages through February 28th. At the same time, it is launching a new strategy to offer qualified owner-occupants and tenants leases so they can rent the properties on a month-to-month basis after foreclosure at market rates.

Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) are reportedly considering more job cuts as the once-mighty investment banks adapt to much leaner times on Wall Street. Morgan Stanley is mulling laying off up to 5% of its workers in reaction to falling markets and tough conditions in investment banking and trading.

Caterpillar Inc. (CAT) says it is cutting another 2,110 jobs at three Illinois plants to match production with falling demand. The cuts come on top of other work force and cost-cutting actions announced earlier this week.

NEC Corp. (NIPNF.PK) said it will cut 20,000 workers worldwide to stanch mounting losses, joining a slew of other Japanese corporate heavyweights who are slashing jobs to survive the deepening global downturn.

Roche (RHHBY) of Switzerland, said it's now offering $86.50 in cash per Genentech (DNA) share, down from the $89 it had tabled in the summer. Roche already owns 56% of the biotech, making the bid worth about $42.5 billion.

Scheduled U.S. Economic Reports (Next Week)

Personal Income & Spending, ISM Manufacturing and non-manufacturing index, Construction Spending, Vehicle Sales, ADP Employment Index, Productivity, Factory Orders, Consumer Credit, and the Non-Farm Payrolls Report.

In Earnings News

Exxon Mobil Corp. (XOM) reported a profit of $45.2 billion for 2008, breaking its own record for a U.S. company, even as its fourth-quarter earnings fell 33 percent from a year ago. Exxon said net income slid sharply to $7.8 billion, or $1.55 a share, in the quarter. On average, analysts expected the company to earn $1.45 per share.

Chevron Corp. (CVX) says it earned $4.9 billion in the fourth quarter though revenues plunged 28 percent with oil prices in sharp decline. Chevron reported earnings of $2.44 per share in the quarter. Analysts expected earnings of $1.81 per share.

Procter & Gamble (PG) said net sales fell 3.2 percent to $20.37 billion, on lower volume and a stronger dollar. It also said that organic sales have slowed below its targets. Analysts had expected revenue of $20.64 billion.

Honda Motor Corp (HMC) said net profit for quarter was 20.24 billion yen ($224.9 million) versus 200 billion a year earlier. Honda's earnings numbers, while grim, still beat expectations. Analysts had forecast an average 19.75 billion yen in quarterly profit.

Honeywell International (HON) said fourth-quarter net income totaled $707 million, or 97 cents per share, compared with $689 million, or 91 cents per share, a year earlier. Analysts expected fourth-quarter profit of 97 cents per share.

Gannett (GCI) says preliminary net income fell to $158 million, or 69 cents per share, in the fourth quarter, down 36 percent from a year ago. Excluding severance charges, earnings were 85 cents a share, slightly above the 81 cents a share expected by analysts.

Scheduled Earnings Reports (Next Week)

Disney, Motorola, Northrop Grumman, UPS, Humana, Mattel, Sysco Corp, Anadarko Petroleum, Archer Daniels Midland, BP Plc, DR Horton, Electronic Arts, Merck, Yum Brands, Cardinal Health, MasterCard, Toyota Motor Corp, Weyerhaeuser

Stocks in the News

Simon Property Group (SPG) reported that its funds from operations in the fourth quarter were $541 million, or $1.86 a share.

Amazon.com (AMZN) reported a surprise gain in earnings for the fourth quarter amid strong sales during the crucial holiday shopping period.

CA Inc. (CA) reported its third-quarter net income rose to $213 million from $163 million in the same quarter last year.

KLA Tencor (KLAC) reported it swung to a net loss of $434.3 million, or $2.57 a share.

Affiliated Computer Services (ACS) said its fiscal second-quarter profit fell to $75.5 million or 77 cents a share.

PMC Sierra (PMCS) reported a fourth-quarter net income of $13.7 million, or 6 cents a share.

Chubb Corp (CB) said fourth-quarter net income came in at $407 million or $1.13 a share.

AstraZeneca (AZN) stated that fourth-quarter pre-tax profit slipped 1% to $1.82B, or 86 cents a share.