JDfn Daily Digest - December 4, 2008
The Bank of England's Monetary Policy Committee voted to drop its key lending rate by a full percentage point to 2% -- the lowest level for the benchmark since 1939. The European Central Bank's Governing Council slashed its key lending rate by 75 basis points to 2.5%. The cut is the largest in the ECB's 10-year history.
European Central Bank President Jean- Claude Trichet said the Euro region’s economy will shrink next year for the first time since 2003 after the bank delivered the biggest interest rate cut in its 10-year history.
An aide to President-elect Obama aide said Treasury Secretary Henry Paulson is considering asking Congress for the remaining $350 billion of the financial bailout fund. U.S. House Republican leaders have already struck a tone of resistance, sending a letter to Paulson and Federal Reserve Chairman Bernanke demanding more information about the $700-billion Troubled Asset Relief Program (TARP) before the rest of the money is released.
The chief executives of the major U.S. auto companies prepared for make-or-break congressional hearings on their request for $34 billion in government bailout loans. General Motors Corp. (GM) and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout.
The Labor Department reported that initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That was significantly below analysts' estimates of 537,000.
AT&T Inc. (T) said it would cut 12,000 jobs, or 4% of its workforce, and spend less on new equipment in 2009 in response to a weakening economy. The phone giant becomes the latest large U.S. Company to announce major layoffs. The company noted that it's still hiring in its stronger businesses such as wireless, video and high-speed Internet.
United Airlines (UAUA) plans to furlough almost 1100 workers at bases around the country, according to layoff notices and the unions that represent the workers. The nation's third-largest airline also plans to close maintenance facilities at the Newark, New York-LaGuardia and Philadelphia airports on Jan. 11th.
DuPont Co. (DD) cut its fourth-quarter earnings forecast and announced plans to dismiss 6,500 employees, including contractors, due to the downturn in the construction market and a sharp drop off in consumer spending.
Viacom (VIA) says it will cut about 850 jobs and freeze some senior-level raises in a move to weather the global economic downturn. It will take a pretax restructuring charge of $400 million to $450 million in the fourth quarter.
Credit Suisse Group (CS) said it is cutting 5,300 jobs -- about 11 percent of its global work force -- in a bid to reduce costs and take its business back into the black. About two-thirds of the cuts will be made in investment banking.
Capital One Financial Corp. (COF) announced it will acquire Chevy Chase Bank for $520 million in cash and stock, expanding its presence in its own backyard. Under the terms of the agreement, Capital One will use $445 million in cash and 2.56 million shares of Capital One valued at $75 million, or about $29.30 per share.
Scheduled U.S. Economic Reports (Friday)
Non-Farm Payrolls (Nov), Jobless Rate (Nov), Average Hourly Earnings (Nov), Consumer Credit (Oct)
In Earnings News
Smithfield Foods Inc. (SFD) reported a 76 percent drop in its fiscal second-quarter earnings. The Smithfield, Va.-based company says profit fell to $4.2 million, or 3 cents per share. Analysts surveyed expected a smaller loss of 10 cents per share.
Sanderson Farm (SAFM) said it lost $51.9 million, or $2.56 per share, for the three months ended Oct. 31 in contrast to a profit of $24.1 million, or $1.18 per share, a year ago. Analysts expected a loss of 69 cents per share.
Williams-Sonoma Inc. (WSM) reported a fiscal third-quarter loss, as declining same-store sales and weakness across its brands dragged on results. The home-decor retailer posted a loss of $11 million, or 10 cents per share, compared with a profit of $27.1 million, or 25 cents per share, a year earlier.
Jackson Hewitt Tax Services (JTX) reported that it lost $22.2 million, or 78 cents per share, during the quarter ended Oct. 31, compared with a loss of $23.7 million, or 78 cents per share, a year earlier. Analysts forecast a loss of 73 cents per share.
Scheduled Earnings Reports (Friday)
Big Lots, Johnson Outdoors, American Technology, Royal Bank of Canada, Blyth Inc
Stocks in the News
Merck & Company (MRK) said that for 2008 it sees earnings per share of $3.45 to $3.55.
BJ’s Wholesale Club (BJ) reported that November sales at stores open at least one year rose 4.1%, including a 2.1% negative impact from gasoline sales.
Ambac Financial Group (ABK) dropped their 1-cent quarterly dividend to preserve cash. The company estimates eliminating the dividend will save about $11.5 million a year.
Costco Wholesale (COST) reported that in November, comparable-store sales fell 5%.
Nokia Corp. (NOK) lowered its fourth-quarter mobile-industry outlook for the second time in less than a month and warned it may lose market share in the period.
Adobe Systems (ADBE) lowered its fourth-quarter revenue forecast to $912 million to $915 million from $925 million to $955 million.
Belden Inc (BDC) will cut 1,800, or 20%, of its jobs and consolidate manufacturing operations.
Aerospostale (ARO) third-quarter net income rose to $42.6 million, or 63 cents a share, from $36 million, or 48 cents a share.
European Central Bank President Jean- Claude Trichet said the Euro region’s economy will shrink next year for the first time since 2003 after the bank delivered the biggest interest rate cut in its 10-year history.
An aide to President-elect Obama aide said Treasury Secretary Henry Paulson is considering asking Congress for the remaining $350 billion of the financial bailout fund. U.S. House Republican leaders have already struck a tone of resistance, sending a letter to Paulson and Federal Reserve Chairman Bernanke demanding more information about the $700-billion Troubled Asset Relief Program (TARP) before the rest of the money is released.
The chief executives of the major U.S. auto companies prepared for make-or-break congressional hearings on their request for $34 billion in government bailout loans. General Motors Corp. (GM) and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout.
The Labor Department reported that initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That was significantly below analysts' estimates of 537,000.
AT&T Inc. (T) said it would cut 12,000 jobs, or 4% of its workforce, and spend less on new equipment in 2009 in response to a weakening economy. The phone giant becomes the latest large U.S. Company to announce major layoffs. The company noted that it's still hiring in its stronger businesses such as wireless, video and high-speed Internet.
United Airlines (UAUA) plans to furlough almost 1100 workers at bases around the country, according to layoff notices and the unions that represent the workers. The nation's third-largest airline also plans to close maintenance facilities at the Newark, New York-LaGuardia and Philadelphia airports on Jan. 11th.
DuPont Co. (DD) cut its fourth-quarter earnings forecast and announced plans to dismiss 6,500 employees, including contractors, due to the downturn in the construction market and a sharp drop off in consumer spending.
Viacom (VIA) says it will cut about 850 jobs and freeze some senior-level raises in a move to weather the global economic downturn. It will take a pretax restructuring charge of $400 million to $450 million in the fourth quarter.
Credit Suisse Group (CS) said it is cutting 5,300 jobs -- about 11 percent of its global work force -- in a bid to reduce costs and take its business back into the black. About two-thirds of the cuts will be made in investment banking.
Capital One Financial Corp. (COF) announced it will acquire Chevy Chase Bank for $520 million in cash and stock, expanding its presence in its own backyard. Under the terms of the agreement, Capital One will use $445 million in cash and 2.56 million shares of Capital One valued at $75 million, or about $29.30 per share.
Scheduled U.S. Economic Reports (Friday)
Non-Farm Payrolls (Nov), Jobless Rate (Nov), Average Hourly Earnings (Nov), Consumer Credit (Oct)
In Earnings News
Smithfield Foods Inc. (SFD) reported a 76 percent drop in its fiscal second-quarter earnings. The Smithfield, Va.-based company says profit fell to $4.2 million, or 3 cents per share. Analysts surveyed expected a smaller loss of 10 cents per share.
Sanderson Farm (SAFM) said it lost $51.9 million, or $2.56 per share, for the three months ended Oct. 31 in contrast to a profit of $24.1 million, or $1.18 per share, a year ago. Analysts expected a loss of 69 cents per share.
Williams-Sonoma Inc. (WSM) reported a fiscal third-quarter loss, as declining same-store sales and weakness across its brands dragged on results. The home-decor retailer posted a loss of $11 million, or 10 cents per share, compared with a profit of $27.1 million, or 25 cents per share, a year earlier.
Jackson Hewitt Tax Services (JTX) reported that it lost $22.2 million, or 78 cents per share, during the quarter ended Oct. 31, compared with a loss of $23.7 million, or 78 cents per share, a year earlier. Analysts forecast a loss of 73 cents per share.
Scheduled Earnings Reports (Friday)
Big Lots, Johnson Outdoors, American Technology, Royal Bank of Canada, Blyth Inc
Stocks in the News
Merck & Company (MRK) said that for 2008 it sees earnings per share of $3.45 to $3.55.
BJ’s Wholesale Club (BJ) reported that November sales at stores open at least one year rose 4.1%, including a 2.1% negative impact from gasoline sales.
Ambac Financial Group (ABK) dropped their 1-cent quarterly dividend to preserve cash. The company estimates eliminating the dividend will save about $11.5 million a year.
Costco Wholesale (COST) reported that in November, comparable-store sales fell 5%.
Nokia Corp. (NOK) lowered its fourth-quarter mobile-industry outlook for the second time in less than a month and warned it may lose market share in the period.
Adobe Systems (ADBE) lowered its fourth-quarter revenue forecast to $912 million to $915 million from $925 million to $955 million.
Belden Inc (BDC) will cut 1,800, or 20%, of its jobs and consolidate manufacturing operations.
Aerospostale (ARO) third-quarter net income rose to $42.6 million, or 63 cents a share, from $36 million, or 48 cents a share.
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