James Dicks Daily Digest - January 12, 2009

The White House said President Bush has asked Congress to release the remaining $350 billion in financial sector rescue funds after receiving a request to do so from President-elect Barack Obama. Congress has 15 days to reject the request. The request would give Obama not only the opportunity to get access to the money, but also to change its goals and conditions.

Facing a litany of economic and financial challenges, departing Wal-Mart (WMT) CEO Lee Scott urged retailers to work with government leaders to address health care, immigration, energy independence and environmental sustainability issues this year. Scott said building shareholder value can coincide with solving people's problems, adding that he had seen it happen with Wal-Mart's $4 prescription drug program and his company's "Save Money, Live Better" campaign.

A judge ruled that investor Bernard Madoff may remain free on bail pending his trial but imposed new bail conditions on him, according to media reports. News reports said Madoff's new bail conditions include an inventory of his personal property and searches of his mail.

General Motors’ (GE) Chief Executive Rick Wagoner told reporters the auto maker is working to avoid a Chapter 11 filing as weak global auto demand continues to hurt sales and pressure liquidity.

Abbott Laboratories (ABT) announced it is buying Advanced Medical Optics Inc. (EYE) for about $1.36 billion plus debt to expand its eye-care offerings, including laser vision correction.

Landry's Restaurants Inc. (LNY) said it was terminating a planned deal under which its chief executive would have taken the company private to preserve a refinancing agreement for $400 million in senior debt.

Hyundai Motor Co., South Korea's largest automaker, will cut production between 25 percent and 30 percent at its domestic plants during the first quarter amid falling global demand for vehicles.

Citigroup (C) and Morgan Stanley (MS) may announce as early as today a deal to combine their brokerages; a move analysts say could trigger a fresh wave of consolidation in the troubled and thinning banking industry. Morgan Stanley is likely to pay Citigroup between $2 billion and $3 billion for a 51 percent stake in the brokerage Smith Barney.

DirecTV Group Inc. (DTV) said it closed on a $3 billion repurchase program and started a new buyback for up to an additional $2 billion in common stock. The company had started the $3 billion buyback, which was initially $1 billion, in May. DirecTV said it has repurchased about $8.2 billion of its shares since February 2006.

Constellation Brands (STZ) is selling a raft of its low-end spirits brands to Sazerac for $334 million. The deal, which is expected to produce after-tax proceeds of about $210 million, includes $274 million in cash and $60 million in financing and will help Constellation pay down debt.

Scheduled U.S. Economic Reports (Tuesday)

ICSC Chain Store Sales (Week of January 10th), Trade Balance (Nov), Federal Budget (Dec)

In Earnings News

Alcoa (AA) reported a loss in its most recent quarter, and fell short of analysts' expectations amid a historic decline in metal prices. The company reported a loss of 28 cents a share in the fourth quarter, excluding one-time items. In the same period last year, Alcoa reported earnings of 36 cents a share. A consensus estimate forecast a loss of 10 cents a share for the quarter.

Bank of America Corp. (BAC), the largest U.S. lender by assets, may post a $3.6 billion fourth-quarter loss and again slash its quarterly dividend. Bank of America is likely to report a loss of 75 cents a share, compared with an earlier estimate of a 2 cents-a-share profit.

Sony (SNE) is expected to report its first operating loss in 14 years as demand for flat-screen televisions and other electronics sags and profit margins are pared by a strong yen. Sony is now likely to post a group operating loss of around 100 billion yen ($1.12 billion) in the year but the final figure could be significantly higher depending on inventory levels in the January-March quarter.

Aetna Inc. (AET) expects 2009 operating earnings per share to be slightly lower than last year, because of a "significant decline" in equity markets. The company said a pension expense of about 39 cents per share due to the equity markets will cause the lower earnings. That expense represents an increase of 54 cents per share compared with last year.

Human Genome Sciences Inc. (HGSI) expects revenue to top $250 million in 2009 as it delivers 20,000 doses of its anthrax vaccine to the federal government. Analysts polled by Thomson Reuters expect revenue of $220.3 million in 2009.

Mindray Medical International Ltd. (MR) said it expects a profit boost in 2008. The company expects profit of no less than $1.16 per share on revenue between $540 million and $550 million. Analysts expect profit of 98 cents per share on revenue of $550.2 million.

Kendle (KNDL), a leading, global full-service clinical research organization, today announced revised financial expectations for the full year 2008. The Company now expects full year 2008 net service revenues to be in the range of $475 million to $480 million, down from the previous range of $485 million to $500 million, primarily due to the strengthening U.S. dollar.

A. Schulman Inc. (SHLM) reported an 18 percent decline in fiscal first-quarter profit. Earnings for the quarter fell to $8.2 million, or 31 cents per share, from $10 million, or 36 cents per share, during the same period a year before. Analysts expected a profit of 31 cents per share.

Scheduled Earnings Reports (Tuesday)

Biomet, Infosys Technologies, Electro Energy, Infosearch Media, Linear Technology, Create Restaurants

Stocks in the News

Alcoa (AA) was cut to sell from hold and cut its target price to $8 from $10 by Deutsche Bank.

Harley Davidson (HOG) was cut to conviction sell vs. neutral by Goldman Sachs.

Entergy Corp (ETR), the second-largest U.S. operator of nuclear power stations, said it asked the Nuclear Regulatory Commission to suspend reviews of two new nuclear license applications.

Aladdin Knowledge Systems Ltd (ALDN) agreed to be acquired by an investor group led by Vector Capital in a transaction valued at $160 million.

Pfizer Inc (PFE) was upgraded by Goldman Sachs to neutral from sell.

Lloyds TSB Bank (LYG) will forfeit $350 million in connection with violations of the International Emergency Economic Powers Act.

Alfa Laval (ALFVF) is going to cut 1,000 jobs, including 300 in Sweden, citing a decline in demand during the fourth quarter and expectations for 2009.