James Dicks Daily Digest - February 5, 2009
President Obama warned that failure to act on an economic recovery package could plunge the nation into a long-lasting recession that might prove irreversible, a fresh call to a recalcitrant Congress to move quickly. In an op-ed in today’s Washington Post, the president argued that each day without his stimulus package, now exceeding $900 billion in the Senate, Americans lose more jobs, savings and homes. He painted a bleak picture if lawmakers do nothing.
The Labor Department reported that initial jobless benefits rose last week to a seasonally adjusted 626,000, from the previous week's upwardly revised figure of 591,000. The latest total is far more than analysts' expectations of 583,000. That's the highest since October 1982, when the economy was in a steep recession.
The Labor Department said that productivity rose at an annual rate of 3.2 percent in the final quarter of last year, far above the 1.1 percent rise that economists had expected. The increase was double the 1.5 percent rise in productivity in the third quarter.
Meanwhile, unit labor costs edged up at a 1.8 percent annual rate in fourth quarter, far lower than the 2.9 percent rise that had been forecast.
The Commerce Department reported new orders for manufactured goods fell 3.9% in December for the fifth consecutive month of declines -- the longest downward streak since comparable data was first published in 1992.
The European Central Bank halted its campaign of rate cuts, leaving its benchmark refinancing rate at 2 percent, while the Bank of England cut by a half-point to a record low 1 percent.
European Central Bank President Jean-Claude Trichet said policy makers may cut their benchmark interest rate next month as a recession in the euro region deepens.
Swiss Reinsurance Co. reported it will get a capital injection of 3 billion Swiss francs ($2.6 billion) from U.S. financier Warren Buffett after warning investors it expects to lose 1 billion francs ($869 million) for the full year.
Toyota (TM) announced that all but one of its Japanese assembly lines will be closed. Toyota also said the scheduled assembly line shutdowns are an attempt to save what jobs the automaker can. Analysts say while painful, these shutdowns are unavoidable.
Wal-Mart (WMT) posted a 2.1 percent increase in same-store sales, excluding fuel. That was better than the 1.1 percent gain that analysts polled by expected. The company said same-store sales were strong in grocery and health and wellness.
Freddie Mac (FRE) said that its benchmark mortgage rate average rose on better-than-expected economic reports. The 30-year fixed-rate mortgage averaged 5.25% with an average 0.8 point for the week ending Feb. 5, up from last week when it averaged 5.1%. Last year, the average was 5.67%.
Scheduled U.S. Economic Reports (Friday)
Non-Farm Payrolls (Dec), Unemployment Rate (Jan), Average Hourly Earnings (Jan), Consumer Credit (Dec)
In Earnings News
Cisco Systems (CSCO) posted a 27% decline in fiscal second-quarter earnings. Cisco reported net income of $1.5 billion, or 26 cents a share, compared with $2.1 billion, or 33 cents a share, in the year-earlier second quarter. Analysts had expected the company to report earnings of 30 cents a share.
MasterCard (MA) said it earned $239.4 million, or $1.84 per share, during the quarter ended Dec. 31st, compared with earnings of $304.2 million, or $2.26 per share, during the same quarter a year earlier. Analysts, on average, forecast earnings of $1.61 per share.
Duke Energy (DUK) reported earnings of $331 million, or 26 cents a share, for the quarter, up from $243 million or 19 cents a share, in the year-ago quarter when one-time charges from discontinued operations depressed its profit. Analysts expected Duke to earn 26 cents a share.
GlaxoSmithKline PLC (GSK) said it would cut jobs and costs after fourth quarter net profit fell 10 percent. The company booked a net profit of 1 billion pounds ($1.46 billion), down from 1.1 billion pounds in the fourth quarter of 2007.
Kellogg (K) earned $179 million, or 47 cents per share, during the three months that ended Jan. 3, compared with $176 million, or 44 cents per share, in the last quarter of 2007. Analysts forecast earnings of 50 cents per share.
Flowers Foods Inc. (FLO) reported its fourth-quarter profit jumped 50 percent. Net income rose to $32.1 million, or 34 cents per share, from $21.4 million, or 23 cents per share in the prior-year quarter. Analysts expected profit of 31 cents per share.
Cardinal Health Inc. (CAH) said its fiscal second-quarter profit fell 3 percent. The company posted a profit of $316.5 million, or 88 cents per share. Analysts expected 89 cents per share in profit.
Cigna (CI) said it lost $209 million, or 77 cents per share, compared with a profit of $263 million, or 93 cents per share, a year ago. Analysts expected a profit of 41 cents per share and $4.75 billion in revenue.
Burger King (BKC) said its net income fell to $44 million, or 33 cents per share, from $49 million, or 36 cents per share, a year ago. Analysts expected a profit of 37 cents per share.
Scheduled Earnings Reports (Friday)
Toyota Motor Corp, Infineon Technologies, British Airways Plc, Teco Energy, Weyerhaeuser, Tower Semiconductor, Shells Seafood Restaurants
Stocks in the News
Visa Inc (V) said its fiscal first-quarter net income came in at $574 million, or 74 cents a Class A share, up 35% from a year earlier.
Atmel Corp (ATML) is pursuing strategic alternatives for its application-specific integrated circuits business, including a potential sale.
Royal Bank of Scotland (RBS) decided not to sell its insurance business, after putting the division up for sale last year.
BMC Software (BMC) reported its fiscal third-quarter net income was flat on more than 6% higher revenue.
Watson Wyatt (WW) said fiscal second-quarter profit rose to $39.6 million or 93 cents a share.
Pulte Homes (PHM) said its fourth-quarter loss narrowed to $338.2 million or $1.33 a share, from $874.7 million, or $3.46 a share, in the year-ago period.
Sirius XM Satellite Radio Inc (SIRI) traded much higher on reports that EchoStar Corp (DISH) is buying up a sizable stake in the debt of Sirius, prompting speculation of a potential takeover.
Abercrombie & Fitch (ANF) reported January sales at stores open at least one year fell 20%.
The Labor Department reported that initial jobless benefits rose last week to a seasonally adjusted 626,000, from the previous week's upwardly revised figure of 591,000. The latest total is far more than analysts' expectations of 583,000. That's the highest since October 1982, when the economy was in a steep recession.
The Labor Department said that productivity rose at an annual rate of 3.2 percent in the final quarter of last year, far above the 1.1 percent rise that economists had expected. The increase was double the 1.5 percent rise in productivity in the third quarter.
Meanwhile, unit labor costs edged up at a 1.8 percent annual rate in fourth quarter, far lower than the 2.9 percent rise that had been forecast.
The Commerce Department reported new orders for manufactured goods fell 3.9% in December for the fifth consecutive month of declines -- the longest downward streak since comparable data was first published in 1992.
The European Central Bank halted its campaign of rate cuts, leaving its benchmark refinancing rate at 2 percent, while the Bank of England cut by a half-point to a record low 1 percent.
European Central Bank President Jean-Claude Trichet said policy makers may cut their benchmark interest rate next month as a recession in the euro region deepens.
Swiss Reinsurance Co. reported it will get a capital injection of 3 billion Swiss francs ($2.6 billion) from U.S. financier Warren Buffett after warning investors it expects to lose 1 billion francs ($869 million) for the full year.
Toyota (TM) announced that all but one of its Japanese assembly lines will be closed. Toyota also said the scheduled assembly line shutdowns are an attempt to save what jobs the automaker can. Analysts say while painful, these shutdowns are unavoidable.
Wal-Mart (WMT) posted a 2.1 percent increase in same-store sales, excluding fuel. That was better than the 1.1 percent gain that analysts polled by expected. The company said same-store sales were strong in grocery and health and wellness.
Freddie Mac (FRE) said that its benchmark mortgage rate average rose on better-than-expected economic reports. The 30-year fixed-rate mortgage averaged 5.25% with an average 0.8 point for the week ending Feb. 5, up from last week when it averaged 5.1%. Last year, the average was 5.67%.
Scheduled U.S. Economic Reports (Friday)
Non-Farm Payrolls (Dec), Unemployment Rate (Jan), Average Hourly Earnings (Jan), Consumer Credit (Dec)
In Earnings News
Cisco Systems (CSCO) posted a 27% decline in fiscal second-quarter earnings. Cisco reported net income of $1.5 billion, or 26 cents a share, compared with $2.1 billion, or 33 cents a share, in the year-earlier second quarter. Analysts had expected the company to report earnings of 30 cents a share.
MasterCard (MA) said it earned $239.4 million, or $1.84 per share, during the quarter ended Dec. 31st, compared with earnings of $304.2 million, or $2.26 per share, during the same quarter a year earlier. Analysts, on average, forecast earnings of $1.61 per share.
Duke Energy (DUK) reported earnings of $331 million, or 26 cents a share, for the quarter, up from $243 million or 19 cents a share, in the year-ago quarter when one-time charges from discontinued operations depressed its profit. Analysts expected Duke to earn 26 cents a share.
GlaxoSmithKline PLC (GSK) said it would cut jobs and costs after fourth quarter net profit fell 10 percent. The company booked a net profit of 1 billion pounds ($1.46 billion), down from 1.1 billion pounds in the fourth quarter of 2007.
Kellogg (K) earned $179 million, or 47 cents per share, during the three months that ended Jan. 3, compared with $176 million, or 44 cents per share, in the last quarter of 2007. Analysts forecast earnings of 50 cents per share.
Flowers Foods Inc. (FLO) reported its fourth-quarter profit jumped 50 percent. Net income rose to $32.1 million, or 34 cents per share, from $21.4 million, or 23 cents per share in the prior-year quarter. Analysts expected profit of 31 cents per share.
Cardinal Health Inc. (CAH) said its fiscal second-quarter profit fell 3 percent. The company posted a profit of $316.5 million, or 88 cents per share. Analysts expected 89 cents per share in profit.
Cigna (CI) said it lost $209 million, or 77 cents per share, compared with a profit of $263 million, or 93 cents per share, a year ago. Analysts expected a profit of 41 cents per share and $4.75 billion in revenue.
Burger King (BKC) said its net income fell to $44 million, or 33 cents per share, from $49 million, or 36 cents per share, a year ago. Analysts expected a profit of 37 cents per share.
Scheduled Earnings Reports (Friday)
Toyota Motor Corp, Infineon Technologies, British Airways Plc, Teco Energy, Weyerhaeuser, Tower Semiconductor, Shells Seafood Restaurants
Stocks in the News
Visa Inc (V) said its fiscal first-quarter net income came in at $574 million, or 74 cents a Class A share, up 35% from a year earlier.
Atmel Corp (ATML) is pursuing strategic alternatives for its application-specific integrated circuits business, including a potential sale.
Royal Bank of Scotland (RBS) decided not to sell its insurance business, after putting the division up for sale last year.
BMC Software (BMC) reported its fiscal third-quarter net income was flat on more than 6% higher revenue.
Watson Wyatt (WW) said fiscal second-quarter profit rose to $39.6 million or 93 cents a share.
Pulte Homes (PHM) said its fourth-quarter loss narrowed to $338.2 million or $1.33 a share, from $874.7 million, or $3.46 a share, in the year-ago period.
Sirius XM Satellite Radio Inc (SIRI) traded much higher on reports that EchoStar Corp (DISH) is buying up a sizable stake in the debt of Sirius, prompting speculation of a potential takeover.
Abercrombie & Fitch (ANF) reported January sales at stores open at least one year fell 20%.
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