24/7 Wall St. » ADBE

Media Digest (1/5/2012) Reuters, WSJ, NYT, FT, Bloomberg

247wallst — Thu, 05 Jan 2012 11:33:45 +0000

Blackstone (NYSE: BX) will complete the capital raise for its $16 billion fund. (Reuters)

The EU agrees to an embargo on Iranian oil. (Reuters)

Citing defense cuts, Boeing (NYSE: BA) closes it plant in Wichita. (Reuters)

Japan Air plans to list its shares in a $13 billion IPO. (Reuters)

Apple (NASDAQ: AAPL) hires an Adobe (NASDAQ: ADBE) executive to run its iAd business. (Reuters)

Fiat raises its ownership in Chrysler to 58.5%. (Reuters)

Eastman Kodak (NYSE: EK) to declare bankruptcy later this month. (WSJ)

Congress will examine which ratings firms failed to do more to warn on MF Global’s European investments. (WSJ)

Apartment vacancy rates fall as people prefer renting over buying. (WSJ)

Comcast (NASDAQ: CMCSA) and Walt Disney (NYSE: DIS) will put more video from TV behind pay walls on the web. (WSJ)

Farmers face a shortage of corn. (WSJ)

BMW sales top Mercedes in the U.S. for 2011. (WSJ)

The Federal Reserve calls on Congress to do more about the battered housing market. (WSJ)

Prime Minister Lucas Papademos says Greece faces default if it does not receive a second bailout. (WSJ)

Verizon Wireless sells 4.2 million iPhones in the fourth quarter, which will damage its margins. (WSJ)

U.S. auto sales rise strongly in December. (WSJ)

Chevron (NYSE: CVX) faces a decision from an Ecuador court on environmental issues that may dog the U.S. company for years. (WSJ)

Barnes & Noble (NYSE: BKS) puts its Sterling Publishing unit up for sale. (WSJ)

Auto lenders target people who fall behind on home mortgages. (WSJ)

China will create new measures to make it easier for banks to clear yuan across borders. (WSJ)

Nielsen SoundScan says sales of full albums rose 1.3% last year to 330.6 million. (NYT)

If the Strait of Hormuz is closed, oil prices could quickly rise 50% and gas to $4. (NYT)

Americans have less economic mobility than people in many other nations. (NYT)

Spain says that its banks would need 50 billion euro to clean up their balance sheets. (FT)

France will try to raise $10.4 billion at low rates to demonstrate confidence in its economy. (Bloomberg)

Toyota’s (NYSE: TM) sales in China rose only 4% last year, underperforming the market. (Bloomberg)

Apple’s profit margins probably rose because of pressure it put on supplier Foxconn. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: AAPL, ADBE, BA, BKS, BX, CMCSA, CVX, DIS, EK, TM, VZ

Friday’s Top Ten Stocks on the Move (ADBE, ATHN, CVC, CAM, CRYP, ISTA, MRVL, RIMM, RRR, SINA)

Administrator — Fri, 16 Dec 2011 13:17:39 +0000

Friday is turning out to be a big day with many stocks on the move for an options expiration date. Some of the big shares with news and on the move are as follows: Adobe Systems Inc. (NASDAQ: ADBE); athenahealth, Inc. (NASDAQ: ATHN); Cablevision Systems Corporation (NYSE: CVC); Cameron International Corporation (NYSE: CAM); CryptoLogic Limited (NASDAQ: CRYP); Ista Pharmaceuticals, Inc. (NASDAQ: ISTA); Marvell Technology Group Ltd. (NASDAQ: MRVL); Research in Motion Limited (NASDAQ: RIMM); RSC Holdings, Inc. (NYSE: RRR); and Sina Corporation (NASDAQ: SINA). We have compiled news summaries on each and added color if applicable.

Adobe Systems Inc. (NASDAQ: ADBE) rose after reporting earnings of $0.67 EPS on revenues of $1.15 billion, while Thomson Reuters for earnings of 60 cents a share in the quarter on revenue of $1.09 billion. Adobe sees non-GAAP profits of ranging from 54 to 59 cents a share for its fiscal first quarter ending in February and $2.37 to $2.47 a share for the full year. Those views compare to the current average analyst estimates for earnings per share of 58 cents and $2.44 in the respective periods. Shares are up 4.7% at $27.70.

athenahealth, Inc. (NASDAQ: ATHN) is trading up about 3% at $50.50 after both Leerink Swann and Oppenheimer raised their analyst ratings.

Cablevision Systems Corporation (NYSE: CVC) is indicated down 7% after COO Rutledge resigned from the company. Interestingly enough, Reuters said that this means Cablevision could end up being in play after the resignation.

Cameron International Corporation (NYSE: CAM) is trading up about 2.2% at $45.85 after BP agreed to indemnify Cameron against current and future claims in the Deepwater Horizon disaster.

CryptoLogic Limited (NASDAQ: CRYP), which would win from any loosening online gambling regulations in America, surged in the after-hours on news that it has agreed to a buyout offer by the Amaya Gaming Group at $2.50 per share. Shares were up 35% last night at $2.14 and the 52-week trading range was $0.84 to $2.19.

Ista Pharmaceuticals, Inc. (NASDAQ: ISTA) is seeing a major pop with shares up more than 60% after the proposed $6.50 per share acquisition and buyout proposal from Valeant Pharmaceuticals International, Inc. (NYSE: VRX). Valeant is about 75-times the size of Ista, and the $6.22 share price of Ista compares to a $3.89 close on Thursday and compares to a 52-week range of $2.88 to $11.39.

Marvell Technology Group Ltd. (NASDAQ: MRVL) has not yet traded but is indicated higher by almost 1% after increasing its share buyback plan by $500 million last night.

Research in Motion Limited (NASDAQ: RIMM) just cannot get its act together. Despite what appeared to be an earnings beat, RIM guided lower, delayed a new launch due to chipset concerns, it keeps remaining on the same path, and it keeps losing market share despite having nearly 75 million Blackberry subscribers. This company just needs new management and it really needs to figure out a way to show that its security is far superior than that of smartphones from Apple or Google. Shares are down 10% at $13.58 in the pre-market session.

RSC Holdings, Inc. (NYSE: RRR) is going to be up about 50% on the United Rentals buyout at $18.00 per share.

Sina Corporation (NASDAQ: SINA) is trading lower by more than 4.3% at $50.50 after China is going to start requiring microblog users (which Sina hosts) to get users’ real names before allowing them to access posting privileges.

All of these are pre-market trading indications and some are likely to change substantially throughout the trading day.

JON C. OGG

Filed under: Pre-Market Activity, Trading Alert Tagged: ADBE, ATHN, CAM, CRYP, CVC, ISTA, MRVL, RIMM, RRR, SINA

24/7 Wall St. Closing Bell (GE, YHOO, YUM, MO, AVP, GRPN, JOY, SYNO, ADBE, DFS, FDX, FSLR, AVP, EONC, SGI, SPWR, RVSN)

Paul Ausick — Wed, 14 Dec 2011 21:09:02 +0000

Equity markets started the day down and stayed there all day. Traders were mirroring the action on European and Asian markets, which all settled down before the US markets opened this morning. Falling crude oil prices led most commodities down, but had a favorable impact on airlines stocks that may not have to pay so much for fuel next month. A record low yield on 30-year Treasury bonds pushed stock prices up slightly in the afternoon, but the effect was short lived. WTI crude oil is down more than -5% at $94.93/barrel, and Brent crude oil is also down nearly -4.7% at 104.81/barrel. Gold is down more than -5% at $1,576.40, and looks to settle at its lowest point since mid-July.

The unofficial closing bells put the DJIA down nearly 132 points to 11,823.48 (-1.1%), the NASDAQ fell nearly 40 points (-1.55%) to 2,539.31, and the S&P 500 fell -1.13% or nearly 14 points to 1,211.82. So far this week, the indexes have closed lower every day.

There were several analyst upgrades and downgrades today, including General Electric (NYSE: GE) reiterated as ‘outperform’ with the target price raised to $22 at Credit Suisse. Other ratings actions today include Yahoo Inc. (NASDAQ: YHOO) restarted as ‘sell’ at Goldman Sachs; Yum! Brands Inc. (NYSE: YUM) reiterated as ‘buy’ and target price raised to $60 at Argus; Altria Group Inc. (NYSE: MO) cut to ‘hold’ at Stifel Nicolaus; and Avon Products Inc. (NYSE: AVP) raised to ‘outperform’ at BMO Capital. Groupon Inc. (NASDAQ: GRPN) received ratings from a slew of analysts this morning, and the results are in our full ratings coverage.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Joy Global Inc. (NYSE: JOY) is down nearly -11% at $75.54 and Synovis Life Technologies Inc. (NASDAQ: SYNO) is up 0.2% at $27.83. Synovis received a buyout offer yesterday at $28/share from Baxter International Inc. (NYSE: BAX). Tomorrow’s big earnings releases come from Adobe Systems Inc. (NASDAQ: ADBE), Discover Financial Services (NYSE: DFS), and Fedex Corp. (NYSE: FDX).

Other standouts from today include the following stocks:

First Solar Inc. (NASDAQ: FSLR) is down more than -21% at $33.46, after posting a new 52-week low of $33.08 earlier today. The solar PV maker lowered guidance this morning. See our coverage here.

Avon Products Inc. (NYSE: AVP) is up almost 5.5% at $17.02. The cosmetics company is replacing CEO Andrea Jung. We have more on the story here.

eOn Communications Corp. (NASDAQ: EONC) is up about 108% at $2.12. The online marketing company reported good earnings yesterday, but not that good. Investors must be anticipating a buyout offer.

Silicon Graphics International Corp. (NASDAQ: SGI) is down nearly -17.5% at . The computer maker’s president/CEO has resigned, effective January 1st, to take a position as president and CEO at another company.

SunPower Corp. (NASDAQ: SPWR) is down more than -15% at $5.35, after posting a new 52-week low of $5.34. The solar maker is caught in the general sell-off of solar stocks following the lowered guidance from First Solar.

RADVision Ltd. (NASDAQ: RVSN) is down nearly -12% at $8.57. The communications equipment maker’s shares jumped more than 14% yesterday on talk of a buyout by Avaya. The falling share price is very likely discounting yesterday’s rumor.

Stay tuned for a busy Thursday. Here are some other noteworthy events on the schedule (all times Eastern):

8:30 a.m. – New unemployment claims report
8:30 a.m. – Producer price index report
8:30 a.m. – Empire State Manufacturing survey
9:15 a.m. – Industrial production report
9:45 a.m. – Bloomberg consumer comfort index
10:00 a.m. – Philadelphia Federal Reserve survey
10:30 a.m. – EIA weekly natural gas report
1:00 p.m. – 5-year TIPS auction
4:30 p.m. – Federal Reserve balance sheet and money supply report

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ADBE, AVP, DFS, EONC, FDX, FSLR, GE, GRPN, JOY, MO, RVSN, SGI, SPWR, SYNO, YHOO, YUM

The Twitter-24/7 Wall St. Market Report (11/9/2011) Italy Crisis, GM Earnings, Adobe Jobs

247wallst — Wed, 09 Nov 2011 13:53:15 +0000

NYT: G.M. Profit Falls on Rising Costs http://nyti.ms/s8Io25

Reuters: Macy’s posts higher net, raises full-year outlook http://reut.rs/szLlTP

Zerohedge: Worldwide Markets Collapse Following Italian Bond Margin Hike http://tinyurl.com/bouy2o4

BBC: Adobe job cuts cloud Flash future http://bbc.in/sMfd8a

Reuters: Italian borrowing costs reach breaking point http://reut.rs/s8iqri

MSNBC: Italy crisis deepens despite Berlusconi quit pledge http://on.msnbc.com/uVCm6T

BBC: IEA: Oil price in ‘danger zone’ http://bbc.in/u6TyJt

Douglas A. McIntyre

Filed under: Earnings Tagged: ADBE, GM

What’s Important in the Financial World (11/9/2011) Adobe Layoffs, Christine Lagarde’s Warning

247wallst — Wed, 09 Nov 2011 11:37:57 +0000

Greek and Italian prime ministers resign.The sovereign debt crisis in Europe became more confused as an unprecedented event occurred. The heads of two major national governments resigned within days of one another — Italian Prime Minister Silvio Berlusconi and Greece’s Prime Minister George Papandreou. Neither has been replaced as the restructuring or support of the finances of each nation has become more vital. Italy’s sovereign paper now yields almost 7%. Eurozone leaders believe that Greece’s economy could contract by as much as 5% this year. Bank experts predict that the write-offs of Greek debt will become write-offs of Italian or Spanish debt as these nations seek better terms for loans they have taken in the past.

President agrees to more offshore drilling. The Obama administration said it would open more offshore locations to deepwater drilling. The president’s argument is that the U.S. cannot be less dependent on foreign oil if it cannot explore for oil here. Secretary of the Interior Ken Salazar announced the Proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2012 – 2017. The program makes more than 75% of undiscovered technically recoverable oil and gas resources estimated in federal offshore areas available for exploration and development. There will be resistance from some environmentalists, but concerns about that have been overwhelmed, in Obama’s estimation, by the chance that the U.S. could face oil prices above $100 for the next several years, and perhaps longer.

Adobe layoffs. The divide between the technology “haves” and “have nots” was demonstrated again as Adobe (NASDAQ: ADBE), the distributor of the Flash multimedia software found on nearly every PC in the world, laid off 750 people. Adobe has not had much success as it has tried to move its Flash software onto mobile devices. Apple (NASDAQ: AAPL) has blocked this progress as much as it can. Apple’s mobile devices use the competing HTML5. Apple’s near ubiquity in the mobile content delivery system has taken another victim.

IMF concerns with euro regions’s financial risk. Christine Lagarde, the head of the IMF, made more comments about the euro region’s financial risks. So far, based on the progress of Greece and Italy, her statements fall on deaf ears. She said, “Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand … we could run the risk of what some commentators are already calling the lost decade.” The advice has gone unheeded for months.

Douglas A. McIntyre

Filed under: Industry Tagged: AAPL, ADBE

Media Digest (11/9/2011) Reuters, WSJ, NYTimes, FT

Douglas A. McIntyre — Wed, 09 Nov 2011 11:20:09 +0000

Greece will announce its new government today. (Reuters)

Inflation in China drops in October. (Reuters)

Olympus investment losses may have gone above $1 billion. (Reuters)

Silvio Berlusconi leaves as prime minister of Italy. (Reuters)

Investors will focus on General Motors’ (NYSE: GM) $20 billion unfunded pension liability as it releases earnings. (Reuters)

Microsoft (NASDAQ: MSFT), Aol (NYSE: AOL) and Yahoo! (NASDAQ: YHOO) set a new advertising sales partnership. (Reuters)

Samsung will invest nearly $34 billion in R&D next year. (Reuters)

An Informa study for the Wireless Broadband Alliance says Wi-Fi hot spots will grow by four times by 2015. (Reuters)

Nvidia (NASDAQ: NVDA) releases new products for tablet PCs. (Reuters)

Yelp hires banks to take it public. (Reuters)

Carlyle Group sharply cuts fees as it tries to raise money for a $$2.3 billion real estate fund. (WSJ)

Investors aggressively sell Italian bonds. (WSJ)

Foreign markets help AB Inbev’s (NYSE: BUD) earnings. (WSJ)

Vivendi makes a bid for EMI. (WSJ)

Fannie Mae wants another $7.8 billion from the government. (WSJ)

The number of U.S. job openings rose to 3.4 million in September from 3.1 million in August. (WSJ)

President Obama approves very limited off-shore drilling. (WSJ)

The State Department may agree to move the Canada-to-U.S. pipeline around a section of Nebraska. (WSJ)

Amylin (NASDAQ: AMLN) and Eli Lilly (NYSE: LLY) kill their diabetes drug partnership. (WSJ)

Adobe (NASDAQ: ADBE) cuts 750 jobs. (WSJ)

Credit Suisse (NYSE: CS) will give the U.S. names of clients who may have evaded taxes. (WSJ)

The FCC wants to expand low-income family access to high-speed internet. (NYT)

The head of HSBC (NYSE: HBC) says Asia faces a shortage of available credit. (FT)

Douglas A. McIntyre

Filed under: Press Digest Tagged: ADBE, AMLN, AOL, BUD, CS, GM, HBC, LLY, MSFT, NVDA, YHOO

Media Digest (10/4/2011) Reuters, WSJ, NYTimes, FT, Bloomberg

247wallst — Tue, 04 Oct 2011 10:18:54 +0000

World stock markets hit 15-month lows. (Reuters)

Apple (NASDAQ: AAPL) to launch the iPhone 5 as competition grows from Google’s (NASDAQ: GOOG) Android. (Reuters)

China warns of a trade war if Congress passes a currency manipulation bill. (Reuters)

Greek debt holders may have to take more write-downs than planned. (Reuters)

Greece faces a nearly impossible task to turn around its economy. (Reuters)

Apple rejects a deal with Samsung to end their battle over tablet PCs in Australia. (Reuters)

Hewlett-Packard (NYSE: HPQ) completes acquisition of Autonomy. (Reuters)

UBS (NYSE: UBS) forecasts a Q3 profit. (Reuters)

Pharmaceutical Product Development (NASDAQ: PPDI) to go private. (Reuters)

U.S. stocks near bear territory. (WSJ)

Citigroup (NYSE: C) has trouble with the sale of the balance of its “bad bank” assets. (WSJ)

Sprint-Nextel (NYSE: S) will bet much of its future on a deal to distribute the iPhone. (WSJ)

A new federal program will allow people who lived in foreclosed homes to see if their banks acted properly. (WSJ)

AMR (NYSE: AMR) plunges on reports it may go bankrupt. (WSJ)

A new hormone may treat autism. (WSJ)

Adobe (NASDAQ: ADBE) to begin more work on cloud computing and a presence on tablets. (WSJ)

The White House approves plans for oil drilling north of Alaska. (WSJ)

The UK Treasury will buy bonds to help the economy. (WSJ)

September auto sales rise as expected. (WSJ)

The chief marketing officer at Target (NYSE: TGT), Michael Francis, to move to JCPenney (NYSE: JCP). (WSJ)

More criticism emerges about life insurance policies held as collateral for high interest loans. (WSJ)

Yum! Brands (NYSE: YUM) sales in China continue to rise rapidly. (WSJ)

Mitsubishi UFJ Financial Group, Morgan Stanley’s (NYSE: MS) largest shareholder, offers support of the company. (WSJ)

An increase in the EFSF bailout fund may not be enough to quell fears about EU debt. (WSJ)

Fannie Mae may have known about mortgage abuses earlier than previously believed. (NYT)

Yahoo! (NASDAQ: YHOO) sets a broad content deal with Disney’s (NYSE: DIS) ABC. (NYT)

Molycorp (NYSE: MCP) makes a rare earth discovery in California. (NYT)

Eurozone ministers meet to discuss budget problems in Greece. (FT)

Starbucks (NASDAQ: SBUX) asks people to contribute to a program to create jobs at other companies. (FT)

The EU may ask bondholders to take deep losses from a Greek restructuring. (Bloomberg)

Goldman Sachs (NYSE: GS) cuts global GDP forecasts and says it expects recessions in Germany and France. (Bloomberg)

Microsoft’s (NASDAQ: MSFT) Steve Ballmer receives half of his maximum bonus. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: AAPL, ADBE, AMR, C, DIS, GOOG, GS, HPQ, JCP, MCP, MS, MSFT, PPDI, S, SBUX, TGT, UBS, YHOO, YUM

Top Active Trader Alert Stocks (ADBE, ORCL, OREX)

247wallst — Wed, 21 Sep 2011 12:53:43 +0000

Active traders and day traders have many stocks to choose from this Wednesday morning. We are tracking news and moves in shares of Adobe Systems Incorporated (NASDAQ: ADBE), Oracle Corporation (NASDAQ: ORCL), and Orexigen Therapeutics (NASDAQ: OREX).

Adobe Systems Incorporated (NASDAQ: ADBE) is up 6.4% premarket to $26.22, relative to a 52-week range of $22.67 – $35.99. The company reported 4Q revenue guidance that exceeded market expectations.

Oracle Corporation (NASDAQ: ORCL) is up 5.8% before market open to $26.07, relative to a 52-week range of $24.72 – $36.50. The company reported fiscal Q1 2012 numbers that exceeded market expectations.

Orexigen Therapeutics (NASDAQ: OREX) is up more than 75% premarket to $2.58, relative to a 52-week range of $1.22 – $11.15. The company has reached an agreement with the government to renew testing on their obesity drug.

Filed under: General Tagged: ADBE, ORCL, OREX

Top Earnings Previews For The Week Ahead (LEN, ADBE, CCL, CAG, JEF, ORCL, BBBY, GIS, RHT, KMX, DFS, FDX, NKE, UA, RAD)

Administrator — Fri, 16 Sep 2011 18:07:52 +0000

The coming week is going to feel like a mini earnings season. We have many sector leaders reporting earnings and the fallout (or benefits) could be widespread. On deck are key earnings from the following: Lennar Corporation (NYSE: LEN); Adobe Systems Inc. (NASDAQ: ADBE); Carnival Corporation (NYSE: CCL); ConAgra Foods Inc. (NYSE: CAG); Jefferies Group Inc. (NYSE: JEF); Oracle Corporation (NASDAQ: ORCL); Bed Bath & Beyond Inc. (NASDAQ: BBBY); General Mills Inc. (NYSE: GIS); Red Hat Inc. (NYSE: RHT); CarMax Inc. (NYSE: KMX); Discover Financial Services (NYSE: DFS); FedEx Corporation (NYSE: FDX); Nike Inc. (NYSE: NKE); and Rite Aid Corporation (NYSE: RAD).

We have broken these out by day and included consensus earnings and revenue estimates from Thomson Reuters. We have also added in a price and recent trading activity and even added in the consensus analyst price targets. Many of these also have some added color for traders to consider about the earnings reports.

Monday

Lennar Corporation (NYSE: LEN) has estimates of $0.10 EPS and $810.2 million in revenues; next quarter estimates are $0.19 EPS and $908.35 million in revenues. Shares are trading around $13.90, the 52-week trading range is $12.39 to $21.54. Wait a minute… EARNINGS rather than losses? Go figure.

Tuesday

Adobe Systems Inc. (NASDAQ: ADBE) has estimates of $0.54 EPS and $1.03 billion in revenues; next quarter estimates are $0.59 EPS and $1.07 billion in revenues. Shares are trading around $25.50, the 52-week trading range is $22.67 to $35.99. Analysts still have a consensus target above $34.00, which seems a bit optimistic in the new normal where Apple’s mobility service is still crimping Flash.

Carnival Corporation (NYSE: CCL) will show the cruise industry who is boss, maybe. The estimates are $1.63 EPS and $4.91 billion in revenues; next quarter estimates are $0.36 EPS and $3.89 billion in revenues. Shares are trading around $33.50, the 52-week trading range is $28.96 to $48.14. Keep in mind that this report is the King-Maker quarter that dictates the earnings for the full year due to the summer travel months. With an estimate of $1.63 EPS for the quarter, the full year is expected to be $2.46 EPS. Analysts have a consensus target of $almost $44.75.

ConAgra Foods Inc. (NYSE: CAG) has estimates of $0.31 EPS and $2.96 billion in revenues; next quarter estimates are $0.46 EPS and $3.3 billion in revenues. Shares are trading around $24.00, the 52-week trading range is $21.02 to $26.60, and the consensus analyst target is $28.13.

Jefferies Group Inc. (NYSE: JEF) has estimates of $0.26 EPS and $665.6 million in revenues; next quarter estimates are $0.36 EPS and $746.1 million in revenues. Shares are trading around $14.65, the 52-week trading range is $13.85 to $27.12, and the consensus target is $22.22. Jefferies has not been immune from the market’s pounding of banks and brokerage firms, but this is one broker and i-banker expected to grow.

Filed under: Calendar, Earnings Tagged: ADBE, BBBY, CAG, CCL, DFS, FDX, GIS, JEF, KMX, LEN, NKE, ORCL, RAD, RHT, UA

S&P Slashes Europe GDP Targets, Still No Double Dip Recession (CAT, FLS, PCAR, OI, PLL, ADBE, LXK, F, GM, PM, CCE, MCD, YUM)

Administrator — Tue, 30 Aug 2011 12:00:07 +0000

Europe posted anemic GDP growth in the second quarter of 2011, but the continent can still avoid a double-dip recession if European governments could solve a few problems. First is high unemployment which is having a direct effect on consumer spending. Second, converting the accommodative monetary policies of European banks into the real economy.

These are the conclusions of a new report from Standard and Poor’s in which the agency lowers Europe’s GDP growth forecasts for the rest of 2011 and all of 2012. What does this slowdown mean for US companies that do significant business in Europe?

S&P sees demand for European goods continuing to grow in emerging markets, but that’s not much help for US industries’ European sales. But European capital spending is increasing slightly, which should continue to be good news for Caterpillar Corp. (NYSE: CAT), which generated 26% of its total revenues last quarter in Europe, at a year-over-year growth rate of 53%, the highest of all the company’s geographic regions. Other industrial manufacturers like Flowserve Corp. (NYSE: FLS), Paccar Inc. (NASDAQ: PCAR), Owens-Illinois Inc. (NYSE: OI), and Pall Corp. (NYSE: PLL), all of which do more than 40% of their business in Europe, could also benefit from increased capital spending.

Technology companies like Adobe Systems Inc. (NASDAQ: ADBE), which does about 33% of its business in Europe, and Lexmark International Inc. (NYSE: LXK), with 36% of its business in Europe, have not had a lot of success in Europe recently and increased capital spending may not help tech companies very much..

Consumer-oriented companies like automakers Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) and tobacco company Philip Morris International (NYSE: PM) have experienced sales declines. The European “cash for clunkers” programs finally expired last quarter and that has put a damper on new car sales.

Some consumer products are doing fine, however. Coca-Cola Enterprises (NYSE: CCE) does about 60% of its business in Europe and it reports good sales growth. But a bottle of Coke is a lot cheaper than even a Ford Escort.

Fast-food leader McDonald’s Corp. (NYSE: MCD) got 22% of its revenue from its European region last quarter. Comparable store sales for the quarter were up 5.2% year-over-year. Yum! Brands Inc. (NYSE: YUM) is more focused on building its operations in China, but sales in its international division, which includes Europe, grew 6% in the second quarter, with same-store sales up 2%.

S&P expects a “rather more gloomy outlook emerging for consumer demand” in the UK than in the rest of Europe. Like their American cousins, citizens of the UK are more highly leveraged than Eurozone citizens. The UK is deleveraging, which, in turn, causes spending on consumer goods to fall. High unemployment and government austerity moves don’t really help the situation.

S&P now expects German GDP to grow at 2% in 2012, down from a forecast of 2.5% in July. Growth in France is now forecast at 1.7%, compared with 1.9% for 2012 just a month ago. The GDP growth forecast for Spain has been cut from 1.5% to 1%, and the UK forecast for 2012 from 2% to 1.8%.

Even if the S&P forecasts turn out to be on target, GDP growth in Europe will be about the same as forecast for the US. That’s not a particularly bright picture for the next 18 months. The only consolation is that it could be worse.

Paul Ausick

Filed under: Analyst Calls, Economy, International Markets, Regulation, Research Tagged: ADBE, CAT, CCE, F, FLS, GM, LXK, MCD, OI, PCAR, PLL, PM, YUM