05 – February – 2009 – 24/7 Wall St.

Daily Archives: February 5, 2009

Can Biogen Idec Earnings Generate A Buyout? (BIIB, AMGN, GILD, GENZ, CELG, MRK, SNY, GSK)

Biogen Idec Inc. (NASDAQ: BIIB) is set to report earnings on Friday morning. What many investors probably want to know is if these results — or more importantly its guidance — show that this company will be an acquisition target by a larger rival.

Posted on: February 5, 2009 – 5:57 pm in Biotech, Drug companies, Earnings, Mergers and Buy Outs, Trading Alert, AMGN, BIIB, CELG, GENZ, GILD, GSK, MRK, SNY

S&P Pans Retailer Ratings (DDS, M, JWN, JCP, SHLD, BONT, KSS, SKS)

Standard & Poor’s Ratings Services has put six department store companies on CreditWatch with negative implications and has changed the outlook on three department store companies to negative from stable. Moody’s & Fitch either downgraded or warned of possible downgrades. Dillard’s Inc. (NYSE: DDS), Macy’s Inc. (NYSE: M), Nordstrom Inc. (NYSE: JWN), J.C. Penney Co. Inc. (NYSE: JCP), Sears Holdings Corp. (NASDAQ: SHLD), Bon-Ton Stores Inc. (NASDAQ: BONT), Kohl’s Corp. (NYSE: KSS), and Saks Inc. (NYSE: SKS) were all part of the S&P call late today.

Posted on: February 5, 2009 – 5:04 pm in Analyst Calls, Retail, BONT, DDS, JCP, JWN, KSS, M, SHLD, SKS

Oil Services & Drillers Brace For S&P Ratings Cut (ALY, HERO, PKD)

Standard & Poor’s Ratings Services downgraded several oilfield services and drilling companies. Among the companies the ratings agencies took action were Allis-Chalmers Energy Inc. (NYSE: ALY), Hercules Offshore Inc. (NASDAQ: HERO) and Parker Drilling Co. (NYSE: PKD). The problem is that it does not stop here. S&P said its review is not over and it expects more negative ratings actions over the coming days.

Posted on: February 5, 2009 – 4:39 pm in Analyst Calls, Bonds, Oil & Gas, ALY, HERO, PKD

Murdoch & News Corp. Tread Through Earnings (NWS)

News Corporation Limited (NYSE: NWS) has just reported earnings. You know there is no chance that the company was going to be immune to the major slowdown in advertising and earnings. What is interesting is that the stock was up initially after the report.

Posted on: February 5, 2009 – 4:17 pm in Earnings, Media, NWS

B of A CEO & Insiders Buying Stock (BAC)

Bank of America Corporation (NYSE: BAC) was already trading as though the options traders were placing a bet today “against nationalization” and now we are getting more news from the company. SEC filings are showing that key company insiders are buying up stock now that the shares are trading below $5.00.

Posted on: February 5, 2009 – 3:08 pm in Banking, Editor's Picks, Financial Stocks, Insider Activity, BAC

Options Bet: No Bank of America Nationalization (BAC)

Bank of America Corporation (NYSE: BAC) has been the worst performer this year in the financial sector, or at least of all the large money center banks. The reasons are more on fears but the fears have been creating some actual reactions with dire consequences. And suddenly, Senator Dodd’s comments about not nationalizing Bank of America and the possibility of loosening or tweaking the mark-to-market rules have offered some stability. Shares are back up to flat today and we have seen more than 500 million shares trade hands.

Posted on: February 5, 2009 – 2:07 pm in Banking, Financial Stocks, Options, Rumors, Trading Alert, BAC

Has Gold Peaked? (ABX, GG, NEM, AU, GLD, GTU, DGL, IAU)

When the going gets tough, the tough go for gold. That’s historically the way it’s worked out. And the going is definitely tough now. So what about gold? Is it going up or down? Is gold the place to be right now?

Gold miners such as Barrick Gold Corp. (NYSE:ABX), Goldcorp Inc. (NYSE:GG), Newmont Mining Corp. (NYSE:NEM), and AngloGold Ashanti Ltd. (NYSE:AU) offer one way to invest in gold. There is also a mining ETF, Miners Vectors Gold Miners (NYSE:GDX). Another way to invest in gold is either by buying bullion directly or investing in bullion through a commodity ETF such as SPDR Gold Shares (NYSE:GLD) or PowerShares DB Gold (NYSE:DGL).

Posted on: February 5, 2009 – 1:06 pm in Commodities, Metals, ABX, AU, DGL, GG, GLD, GTU, IAU, NEM

Uranium Enrichment Plant Development Slows (USU)

USEC Inc. (NYSE:USU) today announced that it plans to initiate "reduce the planned escalation of project construction and machine manufacturing activities" at its uranium enrichment plant in Piketon, Ohio. The company cited delays in securing a government loan guarantee as the culprit.

Posted on: February 5, 2009 – 12:53 pm in Nuclear, USU

IMF Confirms What Bank Stocks Already Show

Bank of America (BAC) hit another 52-week low today at $3.77. Wells Fargo (WFC) got close.

The IMF said that that the banking crisis is far from over.

Posted on: February 5, 2009 – 12:02 pm in Banking, BAC, BCS, C, DB, WFC

GE’s (GE) Immelt Says Economy As Bad As Early 70s, Maybe Worse

It is worth noting when the head of the world’s largest conglomerate comments on how bad the economy. Jeff Immelt made some grim comments this morning. They speak for themselves.

According to Reuters, "The U.S. economy is in its worst shape since the deep recession of 1974 and 1975, and if it deteriorates further the most meaningful comparisons will be to the Great Depression, General Electric Co (GE.N) Chief Executive Jeff Immelt said."

Douglas A. McIntyre

Posted on: February 5, 2009 – 11:16 am in Conglomerates, GE

ETF LAUNCH: High-Yield Municipal Bonds (HYD)

Van Eck Global has announced the launch of a new ETF to track the high-yield municipal bond market. This is under its Market Vectors program and is called the High-Yield Municipal Index ETF (NYX: HYD). This looks like the first ETFdesigned to track the high-yield municipal bond sector. This willallow investors to trade a basket of muni’s without having to conductdue diligence on individual bond issuers.

Posted on: February 5, 2009 – 10:31 am in Bonds, ETF, HYD

Electric Utilities Need More Bad Weather (LNT, DUK)

Too cool in summer, too warm in winter add up to lower profits for electric utilities. That’s the story today from both Alliant Energy Corp. (NYSE:LNT) and Duke Energy Corp. (NYSE:DUK).

Alliant reported full-year EPS of $2.61, down from EPS of $3.78 in 2007, but $0.02 better than analysts’ estimates. Full-year revenue of $3.68 billion also beat estimates of $3.59 billion. The fourth quarter was less upbeat, though, with EPS from continuing operations of $0.46, down from $1.80 in the same period a year ago.

Posted on: February 5, 2009 – 10:25 am in Earnings, Utilities, DUK, LNT

Diamond Offshore Misses (DO, RIG)

Diamond Offshore Drilling, Inc. (NYSE:DO) reported fourth quarter EPS of $2.11 on revenue of $903.2 million. Analysts had been expecting EPS of $2.34 on revenue of $912.42 million. For the full year, Diamond earned EPS of $9.43 on revenue of $3.5 billion, missing estimates of EPS of $9.71 and revenue of $3.55 billion.

Dayrates and utilization are either essentially flat or up from a year ago and up sequentially. The company gave no 2009 guidance. Diamond opened lower this morning and is down about 3%. It’s also dragging Transocean Ltd (NYSE:RIG) down with it. Transocean is off about 1.5% on no news.

Paul Ausick
February 5, 2009

Posted on: February 5, 2009 – 10:23 am in Earnings, Oil & Gas, DO, RIG

The Rise & Fall, or Just the Fall of Factory Orders

Factory orders for the month of December fell as you would expect for the current economy. But the results were even worse than weak estimates out there. They fell 3.9% rather than the 3.4% decline economists expected. On an ex-transportation basis, the drop-off was 4.4% and the durable goods figures were revised to a decline of 3.0% from fall of 2.6%.

This marks the fifth consecutive month of declines. But there is something interesting here. Because the front months in 2008 remained higher, the full year 2008 factory orders showed a gain of 0.4%. That means that we are likely to see negative comparisons for a few more months before these even start to look normalized. Don’t be too surprised if these continue to look bad on a year-over-year basis through summer.

Jon C. Ogg
February 5, 2009

Posted on: February 5, 2009 – 10:09 am in Economy

Rising CEO Confidence, Sort Of

The CEO Confidence Index from Chief Executive magazine showed a slight up-tick in January. Corpoate chiefs are still very cautious on labor conditions, and this index was just at another all-time low the month before. But the reading is above the all-time lows. Sometimes the criteria for good news is different from normal.

Posted on: February 5, 2009 – 10:00 am in Corporate Governance, Insider Activity

Gap (GPS) Still Has Time To Close “Old Navy” And Save Itself

Sales at Gap (GPS) on a same-store basis were off 23% in January, which is breathtaking and sad. Revenue for the chain moved down from $935 million in the month last year to $757 million.

No part of Gap’s business is doing well, but the one division that is close to drowning the entire company is Old Navy. It needs to be closed or have a huge number of its stores shuttered.

Posted on: February 5, 2009 – 9:58 am in Retail, GPS

Buffett Heads To Switzerland (BRK-A)

Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) have been out making fairly large bets in recent months. It seems that distressed prices are tempting the Oracle of Omaha. But what is interesting is that Mr. Buffett has invested roughly $2.5 billion into diversified Swiss Reinsurance Co. Ltd.

Posted on: February 5, 2009 – 9:25 am in Activist Investor, Buffett, Financial Stocks, BRK-A

GE’s Immelt Says Markets Priced In Rating Downgrade; Has Cash Flow To Pay Dividend

GE’s (NYSE: GE) CEO Immelt is making comments at WSJ event in New York this AM.. Immelt says a ratings downgrade wouldn’t change the way he runs the company. He also said the markets have already priced in a credit downgrade. On the divided, Immelt says the company the has cash flow to pay it.

Shares of GE’s have been making fresh 52-week lows daily on fears of a potential dividend cut or AAA rating cut, or both.

Back to Normal: Wal-Mart Wins At Target’s Expense (WMT, TGT)

Wal-Mart Stores Inc. (NASDAQ: WMT) appears to be back to its game of 2008 and late 2007 after being a bit cautious last month. The company beat its January expectations, and it looks like this continues to be at the expense of Target Corp. (NYSE: TGT).

Posted on: February 5, 2009 – 9:04 am in Economy, Retail, TGT, WMT

Jobless Claims Set Ominous Tone for Unemployment

We just found out the new numbers for the weekly bread lines at the US Labor Department for the week ended January 31. Initial jobless claims have now total 626,000. This is a gain of 35,000 from the week before, which was revised to 591,000 from 588,000. This was the highest reading since October 1982 and the four-week average is up 39,000 to 582,250. The number of continuing jobless claims keeps growing as well. That rose 20,000 and now sits at 4,788,000.

Worker productivity in the quarter before jumped by 3.2% and we saw a gain of 1.8% on unit labor costs. Maybe it is harder to lay off more productive workers. Productivity was expected to hit only +2.0% and labor costs were expected to grow over 3%. If workers are more productive and cost less than expected, maybe businesses will fire fewer of them in hard times. But that is just logic speaking rather than the world where companies have to cut costs as the hunker down for harder times.

This is all a bit of a side show until tomorrow’s unemployment and jobless data. The US is expected to see more than 500,000 non-farm payroll cuts and may see 7.5% unemployment in just 24 hours.