James Dicks Daily Digest - February 4, 2009

Responding to concerns about Wall Street excesses, President Obama introduced rules limiting to $500,000 compensation paid to executives at financial institutions receiving "exceptional assistance" from the government. Any additional compensation would be made in restricted stock that won't vest until taxpayers are repaid. Banks getting help as part of the bailout program would face new prohibitions on "golden parachutes." The rules also give shareholders of banks receiving capital infusions from the government a non-binding vote on executive compensation.

The cost of the Obama economic recovery plan is now above $900 billion after the Senate added money for medical research and tax breaks for car purchases. It could go higher if a tax break for homebuyers is made more generous, even as centrists in both parties promise to clear away spending items that won't jump-start the economy right away.

Goldman Sachs Group Inc. (GS), which took $10 billion from the U.S. Treasury in October, announced that it would like to pay back the money from the so-called Troubled Asset Relief Program because company officials believe the government is restricting the way they are allowed to do business.

ADP Employer Services said private employers cut 522,000 jobs in January versus a revised 659,000 jobs lost in December. The December job cuts were originally reported at 693,000. Though the rate of job losses slowed slightly, and was also less severe than analysts expected, there is more pain in store even if the government gets a plan in place to stimulate the moribund economy.

Outplacement firm Challenger, Gray and Christmas said that last month's layoff announcements totaled almost 242,000, more than three times as high as in January 2008 and 45% higher compared with December.

Unemployment rates rose in 98% of metropolitan areas across the country in December. The Labor Department reported that the unemployment rates in 363 of 369 metropolitan areas rose in December 2008, compared to the same month in the prior year. In November, 364 of 369 areas reported higher unemployment rates.

The Institute for Supply Management says its service sector index rose to 42.9 last month, from December's downwardly revised reading of 40.1. That January reading was above analysts' expectations of 39. The ISM survey says new orders and production rose last month, while an employment index fell.

AT&T Inc. (T) is reportedly one of the top bidders for $3 billion of wireless spectrum that archrival Verizon Wireless (VZ) must sell to comply with federal regulators as part of its recent acquisition of Alltel Corp.

Panasonic Corp., sinking into its first annual loss in six years, said it was slashing about 15,000 jobs and shuttering 27 plants worldwide, joining a string of Japanese companies making deep cuts as they cope with the global slowdown.

Scheduled U.S. Economic Reports (Thursday)

Initial Jobless Claims (Week of Jan 24), Productivity (4Q), Unit Labor Costs (4Q), Factory Orders (Dec)

In Earnings News

Time Warner Inc (TWX) posted a loss of $16.03 billion, or $4.47 per share, compared with profit of $1.03 billion, or 28 cents per share, a year ago. Analysts forecast earnings of 26 cents per share.

Kraft Foods Inc. (KFT) reported that its fourth-quarter profit fell 72 percent due to costs related to a restructuring program. The company reported net income of $163 million, or 11 cents per share. Excluding one-time items, net income was 43 cents per share. That is a penny short of the 44 cents per share analysts expected.

Costco Wholesale Corp. (COST) said its profit for the quarter ending in February will "substantially" miss Wall Street estimates due to poor sales and margins. The retailer now expects earnings for its fiscal second quarter to miss the consensus estimate of 70 cents per share.

Sara Lee Corp. (SLE) said it lost $17 million in its fiscal second quarter. Sara Lee now anticipates full-year 2009 earnings in a range of 72 cents to 79 cents per share. That is down from a November forecast for earnings in a range of 99 cents to $1.06 a share.

Philip Morris International Inc. (PM) says its fourth-quarter profit fell nearly 8 percent as the dollar's strength hurt profits. Philip Morris International earned $1.45 billion, or 71 cents per share which beat Wall Street estimates of 62 cents per share.

Dow Corning Corp. (DOW) (GLW) said its fourth-quarter profit rose 3.3 percent. The company, owned by Dow Chemical and Corning Inc., posted net income of $172.6 million for the September-to-December period. In the year-ago period, the company earned $167.1 million.

Scheduled Earnings Reports (Thursday)

Mastercard, Kellogg, Cardinal Health, Burger King, Flowers Food, Cigna Corp, Elizabeth Arden, JDS Uniphase, News Corp, Western Union

Stocks in the News

Ace Ltd (ACE) said fourth-quarter net income came in at $20 million, down 97% from a year earlier.

MetLife Inc (MET) reported fourth-quarter net income came in at $985 million, down 12% from a year earlier when the life insurance and annuity giant made $1.12 billion.

BHP Billiton (BHP) reported fiscal first-half net income fell 57%, reflecting costs tied to plant closures and impaired assets.

Electronic Arts (ERTS) said its quarterly net losses widened despite higher videogame sales.

Disney Co. (DIS) said quarterly profit fell 32% on lower DVD sales and a drop in advertising sales at its broadcast and cable-TV networks.

Alcatel-Lucent (ALU) reported a wider fourth-quarter loss on 5.3% lower revenue.

Wynn Resorts Ltd (WYNN) will cut salaries of Las Vegas workers and take other measures to reduce costs.

Ness Technologies (NSTC) reported fourth-quarter net income of 11 cents a share from a year-earlier loss of 18 cents, as revenue stayed about level at $170M.