Lexmark (LXK) Printer company lowers guidance. Hits $43.50, down from $74.68.
Quaker Fabric (QFAB) Getting near a liquidation. Down to $.09 against 52-week high of $1.66.
Childrens Place (PLCE) Same store sales off 4%. Drops to $46.13 from 52-week high of $71.81.
Corrections Corp (CXW) Some insider selling. Prison business is not what it used to be. Drops to $32.17 from 52-week high of $66.50. Stock split today.
Douglas A. McIntyre
Alcoa (AA) is up 60% from its 52-week low, and rallied strongly into today’s close, moving up another 2%.
But Alcoa announced second quarter 2007 income from continuing operations of $716 million, or $0.81 per diluted share. Revenues for the quarter reached an all-time quarterly record of $8.1 billion, up from $7.9 billion in the first quarter of 2007 and $7.8 billion from a year ago.
Research firms that cover Alcoa (AA) had an average EPS forecast of 81 cents for Q2 according to Thomson Financial. Analysts polled by Thomson Financial had forecast revenue to rise to $8.34 billion.
The company also extended the expiration date of its offer to buy Alcan (AL) until August 10.
Alcoa’s shares did little and were down less than 1% after hours.
All in all, there is little in the numbers that should have any impact on the merger dance that now includes metal companies Alcoa, Alcan, BHP Billiton (BHP), and Rio Tinto (RTP).
Reuters (RTRSY) is starting a financial blog network.
The benefits for the participating sites are:
Recognition: By becoming part of Reuters Blog network you will join one of the largest and most trusted news sources of the world and one of the fastest growing news sites (www.reuters.com)
Promotion: Participating blogs will be linked from Reuters.com.
Content: you will receive free access to selected Reuters Headlines (RSS or Headline Wizard) and Reuters Video Player to publish Reuters News on your site.
Revenue Potential: Reuters will share 30% of the net revenue derived from your Blog by implementing mutually agreed advertising components to your site.
Independence: Reuters will not interfere with your editorial process.
However, the sites which join must sign agreements with You sign the Letters of Agreement from ComScore and Nielsen. All traffic to your blog will then be assigned as Reuters traffic.
Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.
Not many hours after Johnson & Johnson (JNJ) announced its $10 billion share buy-back, ConocoPhillips (COP) decided it would not be bested. It announced a $15 billion share repurchase program of its own.
The COP shares are up over 2.5% to $83.13, a new 52-week high, on the news.
Douglas A. McIntyre
In a sign that it is still struggling as competition emerges for it major drugs Procrit and Risperdal and that its stent business is still troubled by safety concerns, Johnson & Johnson (JNJ) announced that it would buy back as much as $10 billion of its shares.
JNJ has a market cap of $186 billion. The announcement did not move the shares much. They inched up 1.5% to $63, and are down about 6% this year.
With 2006 revenue of $53 billion, its is a bit surprising that JNJ is not using the capital to buy another company. It is hard not to imagine that it pharma business could not benefit from the R&D at one or more of its smaller biotech partners.
But, it’s only $10 billion.
Douglas A. McIntyre
Unlike most counties, China’s top websites are not Yahoo! (YHOO) and Google (GOOG). According to a new Asia internet study by comScore, two of the top three sites in China are Baidu (BIDU), the country’s top search engine and Tencent, the instant messaging site.
But, the most visited web destinations in China are the Microsoft (MSFT) sites. Some of this traffic is clearly to parts of Microsoft’s online presence related to its desktop, server, and other products. But, some significant portion of its is undoubtedly directed to MSN and Live.
Microsoft has an edge in China that Google and Yahoo! do not. It can use traffic to its internet properties to promote is MSN and Microsoft Live search features.
China still only has a 9% penetration of internet users compared to 59% in Hong Kong.
It is an opportunity that Microsoft cannot afford to let pass.
Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.
After Lexmark (LXK) told Wall St. that it would miss second and third quarter numbers, the stock dropped about 10% to $45 after hitting a 52-week low of $43.50 earlier in the day.
It seems that the printer business is not so hot.
But, are the printer and PC businesses that disconnected? Dell (DELL) and HP (HPQ) both trade near 52-week highs. Dell is around $25 up from $20.52 as a low over the last year. HP is at almost $46, up from $30. HP has a very large printer operation.
The market would have to believe, as clearly it does now, that Lexmark’s problems are restricted to the company and have not spread to other firms in the industry.
But, that may not be true.
Douglas A. McIntyre
Alnylam Pharmaceuticals (ALNY), an RNAi therapeutics company, has signed a huge license with Roche which could be worth as much as $1 billion The small company had total revenue fo $26 million last year.
Under the terms of the agreeement: "Alnylam will give Roche a non-exclusive license to its technology. Roche will pay $331 million in upfront fees, including making an investment of just under 2 million shares of Alnylam stock, representing nearly 5 percent of the company’s outstanding shares," according to the AP.
Shares in ALNY are up 52% to $23.30, which takes the company’s market cap to $875 million.
The stock still looks cheap.
Douglas A. McIntyre
Excitement about EMC’s (EMC) IPO for its virtualization software company VMWare has already helped push the storage company’s stock from just over $10 to over $18.
And, VMWare received a significant vote of confidence as Intel (INTC) invested $218 million in the company and will hold 2.5% of the shares post IPO.
According to MarketWatch the Intel investment is meant to "foster strengthened inter-company collaboration towards accelerating VMware virtualization product adoption on Intel architecture."
The investment is likely to give EMC’s shares a good deal of help, but the Intel investment is strange and may be an example of "hold you friends close and your enemies closer."
Virtualiztion software allows servers to share the load of running multiple applications. VMWare’s own description of its advantage is this: "Each virtual machine exists as a small set of files that simulate an entire hardware platform, including the CPU, RAM and network ports. This powerful technique breaks the “one server, one application” regime."
In layman’s terms that mean that, over time, companies will need fewer servers, which is bad for server companies like HP (HPQ), Sun (SUNW), and IBM (IBM), but will also cut demand for Intel and AMD (AMD) chips.
Perhaps Intel just wants to keep tabs on VMWare development.
Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.
BIDU downgraded to hold at Citi.
Wachovia lowers earnings estimates at INFY.
AFT announces revenue for Q2 will be below Wall St. consensus.
ISIS upgraded to strong buy at Needham.
XFML says revenue will be above prior guidance.
Douglas A. McIntyre
Reuters writes that International Energy Agency is predicting that demand for oil will keep increasing until 2012 while production falls. According to the report’s authors: "Either we need to have more supplies coming on stream or we need to have lower demand growth."
With oil prices back in the $75 range, it is hard to imagine that, if the report is right, oil is not moving toward a place well above $80. And that the higher price of oil will not remain high for some time to come.
The impact on large economies that rely on oil imports, especially US and China, could substantially slow growth and industries from airlines to auto manufacturing could be dealt a severe set-back.
The storm flags are up again.
Douglas A. McIntyre
Think Equity has downgraded Yahoo! (YHOO) to "accumulate" and dropped its price target to $32.
New CEO Jerry Yang did not even get to warm his new seat.
The research firm is concerned that new search advertising tech, Panama, has not performed up to expectation and that Yahoo!’s display advertising business is not making much progress. Apparently Think Equity did not buy the idea that Yahoo!’s new behavior targeted display platform will help improve revenue.
Douglas A. McIntyre
After seeing its June sales in the US fall 21% and its marketshare here fall to an all-time low, GM (GM) picked up some sales in Europe.
GM’s Europe sales in June rose over 10% to 215,000 and sales for the first half were up over 5%.
While Europe alone will not save GM’s bacon, a combination of rising sales there and in China and UAW concessions in the US may be just enough to keep the company on its feet.
As long as domestic sales do not continue their brutal fall.
Douglas A. McIntyre
Bear Stearns Upgrades PCAR to outperform.
Think Equity downgrades YHOO to accumulate.
LXK cuts guidance for Q2.
TEVA upgraded to outperform at Bear Strearns.
ESV downgraded to underperform at Credit Suisse.
GOOG target upped to $700 at Think Equity.
TYC downgraded to sell at Citi.
Douglas A. McIntyre
The New York Times reports that editors at Dow Jones (DJ) are worried that they will lose their jobs if News Corp (NWS) or some other rich parent does not buy the company. Falling advertising revenue might force an independent Dow Jones to cut costs. The sight of the gallows focuses the mind.
The writes and editors at The Wall Street Journal now face the prospects of living under the tyranny of Rupert Murdoch or working in an environment where Dow Jones has to deal with falling print revenue. To stay profitable, the company would probably have to bring down costs. Much of the company’s cost base is in its editorial operations. The Journal currently has 760 editorial employees.
Although Murdoch will probably end up owning that company, the Dow Jones editorial staff could take the approach that workers have taken in the airline and auto industries. They could agree to simply work for less money in exchange for holding jobs. It is a time honored tradition and one that may come to the newspaper business.
Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.
It would be tempting to think that Sony (SNE) is cutting its PS3 price in reaction to hardware problems with the Microsoft (MSFT) Xbox. But, the decision is probably due to the fact that the company is not selling many of its flagship game platforms.
Just last week, Sony’s president said the company would not cut PS3 prices. This week its appears that he may have been dazed or confused.
Sony knocked $100 off the cost of the PS3 in the US, bringing the retail cost to $499, more in line with the Xbox 360. Industry analysts say that the component costs for the game platform may have dropped enough to allow for the cut. But, it is a bit hard to believe that underlying hardware costs have dropped 20% in such a short time.
In other words, Sony is probably eating gross margin in a move to get moribund sales back on track.
In May, Sony sold less than 82,000 PS3s in the US. Microsoft sold about 155,000 Xboxs, and Nintendo sold over 338,000 Wiis.
Sony now finds itself in a double bind, and one that it may not be able to get out of. Sales of the PS3 are slow and may not improve, and its is making less money on each unit.
Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.
According to Reuters, a dispute between Airbus and GE (GE) could delay the launch of the Airbus 350.
Reuters writes that Boeing (BA) will unveil its 787 after recently receiving a number of new orders.
Reuters writes that Sony (SNE) will cut the price of its PS3 by $100.
Reuters also reports that Microsoft (MSFT) will not cut the price of its Xbox in Japan.
The Wall Street Journal reports that it appears that the Chicago Merch (CME) will end up buying rival CBOT (CBOT) as a rival bidder refused to raise its price.
The Wall Street Journal writes that Campbell (CPB) will push into the Chinese and Russian markets with new soup products.
The New York Times reports that editorial workers at The Wall Street Journal are worried that falling ad revenue could cause job cuts if Dow Jones (DJ) stays independent.
The FT writes that News Corp (NWS) has set up its own video-game network.
Barron’s reports that Ebay (EBAY) PayPal has been effectively fighting off competition from Google (GOOG) CheckOut, its newest rival.
Douglas A. McIntyre
Markets in Asia rallied with the Nikkei hitting a seven-year high.
The Nikkei rose .7% to 18,252. KDDI fell 1.3% to 900000. NTT (NTT) fell 1.1% to 544,000. Toyota (TM) rose .5% to 7830.
The Hang Seng rose .9% to 22,738. China Netcom (CN) fell 1.4% to 21.5. China Unicom (CHU) rose 2.1% to 13.52.
The Shanghai Composite rose 2.7% to 3,883.
Data from Reuters
Douglas A. McIntyre
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