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Updated: 29-Sep-08 19:20 ET
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Monday After the Close
19:15 WRAPX After Hours Summary: MS +2.4% (announces participation in U.S. Treasury temporary guarantee program for money market funds); C +0.5% (Fitch places C's 'AA-' IDR on watch negative; lowers Wachovia to 'BB-')
Companies trading higher in after hours in reaction to news: NTRS +7.9% (S&PBulletin says Northern Trust rating unaffected by charges); NCC +7.4% (Moody's may downgrade National City's rating -- DJ); DPS +5.0% (DPS will replace Wm. Wrigley Jr. Company in the S&P 500 after the close of trading on Friday, October 3); GM +2.8% (Co discloses it issued an aggregate of 16 mln shares of its common stock); MS +2.4% Morgan Stanley Investment Management announces participation in U.S. Treasury temporary guarantee program for money market funds); ING +2.4% (ING Group not to make offer for ABN Amro Netherlands); IRF +1.5 (Board reiterates its rejection of Vishay's unsolicited tender offer); C +0.5% (Fitch places Citigroup's 'AA-' IDR on watch negative; lowers Wachovia (WB) to 'BB-')... Companies trading lower in reaction to news: HIG -2.0% (Fitch revises Hartford's outlook to negative).
19:15 Dow futures after hours are -4 points at 10470, S&P futures +3.1 points at 1121.90, Nasdaq futures +5 points at 1517
19:08 MS Morgan Stanley Investment Management announces participation in U.S. Treasury temporary guarantee program for money market funds (20.99 -3.76) -Update-
Co announced that the MS Funds' Board of Directors/Trustees has approved the participation of its money market funds in the U.S. Treasury Temporary Guarantee Program. All MS SEC registered 2a-7 money market funds will apply to be insured under the program. Co says, "We understand the fundamental role that money market funds play in both the retirement and investment strategies of Americans. While the MS money market funds have maintained their $1 NAV throughout the recent unprecedented turmoil and continued to meet their stated objectives of capital preservation and liquidity, we are pleased to participate in the U.S. Treasury Temporary Guarantee program to provide an added level of protection for our shareholders."
19:07 C Citigroup: Fitch places Citigroup's 'AA-' IDR on watch negative; lowers Wachovia to 'BB-' (17.75 -2.40) -Update-
Fitch Ratings reported that the strategic benefits of Citigroup Inc.'s (Citi) acquisition of Wachovia's (WB) retail, corporate/investment and private banking operations are tempered by Citi's own escalating asset quality challenges, according to Fitch Ratings. Fitch has placed Citi's 'AA-' long-term Issuer Default Rating (IDR) on Rating Watch Negative following the announced agreement. Separately, Fitch has placed Wachovia Bank on Rating Watch Evolving and downgraded WB's long-term IDR to 'BB-' from 'A+'. A complete list of affected ratings follows the end of the release. In exchange for all its bank operations, WB will receive ~$2.2 bln in C stock. In addition, WB is expected to be left with two operating businesses, WB (retail brokerage, including AG Edwards) and Evergreen Asset Management. The balance sheet is expected to be funded with the remaining $9.8 bln in outstanding preferred stock and several billion in equity. There is a meaningful possibility that the earnings of the remaining businesses will be strong enough to service the preferred dividends. Alternatively, it is possible that a merger partner may emerge for the residual WB. Fitch's downgrade of WB reflects Fitch's view of the considerable uncertainty surrounding these assumptions, particularly as WB would be carved away from the bank and no longer benefit from existing synergies. Fitch expects C to post bottom line losses yet again in Q3 2008 (3Q'08) as U.S. consumer problems and other charges weigh on results. If C's losses continue in future quarters and asset quality problems continue to escalate, notwithstanding the acquisition of WB, then Fitch will likely downgrade C's ratings, though likely not below the 'A+' level. On the other hand, if profitability is restored and asset quality issues begin to stabilize, then there is the possibility that the Rating Watch Negative could be removed. For WB bank creditors, the C transaction strengthens their credit position although WB preferred holders' position will hinge on the retail brokerage business, which will comprise most of WB's remaining operations if this transaction is completed. The FDIC-assisted transaction is expected to close on Dec. 31, 2008 and is subject to approval by Wachovia shareholders and the Federal Reserve. FDIC approval has already been received.
18:37 MKTIN Market Internals
The Dow decreased 6.98% closing at 10365.45, the Nasdaq was down 9.14% to finish at 1983.73, and the S&P was down 8.79% to finish at 1106.39. Leading sectors Airport Services N/A%, Alternative Carriers N/A%, Catalog Retail N/A%, Commodity Chemicals N/A%, Health Care Suppliers N/A%. Lagging sectors included: Thrifts and Mortgages -31.3%, Regional Banks -24.4%, Asset Management and Custody Banks -21.2%, Diversified Banks -17.7%, Consumer Finance -17.4%. Today's movement came from higher than avg. volume (NYSE 1930, vs. closing avg of 1362; Nasdaq 2877, vs. 2231), with decliners outpacing advancers (NYSE 202/3335; Nasdaq 422/2557), and with new lows outpacing new highs (NYSE 17/1074, Nasdaq 17/701).
18:22 EXPD Expeditors appoints Bradley S. Powell as Chief Financial Officer (34.85 -1.32)
Co said that Bradley S. Powell has accepted the position of Chief Financial Officer. Powell has most recently served as President, Chief Financial Officer and Secretary of Eden BioScience Corporation (EDEN), a publicly-traded biotechnology co. Before being promoted to this position, Powell was Eden's Chief Financial Officer and Vice President of Finance.
18:21 APC Anadarko updates production outlook following Gulf storms (44.86 -7.87)
Co announced that nearly all of its operated deepwater Gulf of Mexico platforms and Gulf Coast properties are operational, including Independence Hub, which quickly restored production to pre-storm levels of ~900 mln cubic feet of natural gas per day following Hurricane Ike. Co says, "by the end of this week, all of our operated deepwater facilities will be operational. We expect total sales volumes for Q3 to be at or near 51 mln BOE, which was the low end of our guidance, even though almost 5 mln BOE (barrels of oil equivalent) were shut in during the quarter as a result of the severe storms including Hurricanes Gustav and Ike. While all of APC's operated facilities will be capable of producing by week's end, the timely repairs to third-party downstream infrastructure could significantly affect Q4 sales volumes, as some production remains shut in or curtailed. Given the uncertainty surrounding the timing of these infrastructure repairs that will enable the company to resume full production, APC expects its Q4 2008 sales volumes to be in the range of 49-55 mln BOE.
18:18 Dow futures after hours are -6 points at 10468, S&P futures -1.7 points at 1117.10, Nasdaq futures +1 points at 1513
17:59 PCX Patriot Coal idles Jupiter mining complex (26.92 -4.25)
Co announced that it intends to idle its Jupiter mining complex by the end of 2008. The Jupiter complex produced 1.5 mln tons of thermal coal in 2007. The complex currently consists of one underground mine, and previously included the Thunderhill surface mine, which was closed as a result of an October 2007 court injunction that blocked the use of a lawfully issued mining permit.
17:56 COMDX USDA issues weekly crop progress planting report
USDA released its weekly crop progress report for the week ended Sept 28st, which provided data for the second week of how much corn we have harvested vs last week and vs last year and the USDA's figures are showing that we are well behind. Corn harvest was reported at 9% vs 29% in the prior year and vs the 5-yr avg of 21%. As for spring wheat, harvest is complete by this week. Soybeans harvested was reported at 9% vs 24% in the prior year and vs the 5-yr avg of 21%. As for spring wheat, harvest is complete by this week... Also in the report that is very important is the condition of the current corn crop: 14% of the corn is in excellent shape (13% last week), 47% good (46% last week), 26% fair (27% last week), 9% poor (10% last week) and 4% very poor (4% last week). This compares to the prior year of 19% excellent, 44% good, 23% fair, 9% poor, and 5% very poor. This week, corn that is in excellent to good condition is 61% vs the prior week of 59%, and the prior year of 57%. In soybeans: 11% of the crop is in excellent shape (11% last week), 46% good (46% last week), 29% fair (29% last week), 10% poor (10% last week) and 4% very poor (4% last week). This compares to the prior year of 14% excellent, 46% good, 29% fair, 10% poor, and 4% very poor. This week, soybeans that is in excellent to good condition is 57% vs the prior week of 57%, and the prior year of 57%... Other important figures includes the corn crop maturity, where we remain well behind, which boosts frost risk, which is bullish for corn prices. Corn matured is at 52% vs last week's 33%, the prior year of 88% and vs the 5-yr avg of 79%.
17:47 DCP DynCorp International wins new $12 mln contract for de-mining and explosives removal (16.76 -0.62)
Co announced the U.S. Department of State has awarded DCP a contract to establish a humanitarian Quick Reaction Force to respond globally to urgent humanitarian operations that require the removal or mitigation of explosive hazards to protect civilian populations. The contract has a value of $2.4 mln for the base year, and an estimated value of $12 mln over five years if all options are exercised.
17:47 HWFG Harrington West Financial Group raises $11.4 mln in common and preferred stock and announces strategic alliance with Concordia Capital (4.20 +0.20)
17:31 Senator Dodd and Senator Gregg speak on House vote
Senator Dodd says he wouldn't expect anything to happen in the next hour or two or this evening. Dodd says he is still confident Congress will still pass a bailout bill. Gregg says they can't let the process come to an end and they will continue to work to get something done... says they will stay there until something is finished. Gregg says it's important to note that because of the Jewish holiday, they will not be legislating over the next day and a half or so. Gregg says because there will not be any legislation activity over that time, the market should not look at that as inaction... says it's just the appropriate action to take to recognize the holiday... Note: The next vote will then be Thursday at the earliest. Dodd reiterates this is a good bill... says it wasn't the failure of a bill. Says it's the failure to understand the import of the decision.
17:29 IRF International Rectifier's Board reiterates its rejection of Vishay's unsolicited tender offer (18.22 -1.48) -Update-
In response to Vishay's (VSH) $23 per share, unsolicited tender offer commenced today, the Board of Directors of IRF unanimously reaffirmed, by a vote of those present, its earlier determination that the offer significantly undervalues the future prospects of the co and is not in the best interests of International Rectifier and its stockholders.
17:19 DPS Dr Pepper Snapple will replace Wm. Wrigley Jr. Company in the S&P 500 after the close of trading on Friday, October 3 (24.28 -1.11)
(WWY)
17:15 IBNK Integra Bank implement a temporary reduction in the quarterly cash dividend to one cent to further strengthen its capital position (7.69 -0.86)
Co announced that its Board of Directors has decided to implement a temporary reduction in the quarterly cash dividend to $0.01 per common share to further strengthen its capital position. The dividend will be payable on or about October 16, 2008, to shareholders of record at the close of business on October 9, 2008. Co says, "The decision to reduce our dividend was made after input from advisors and extensive deliberation and analysis by our Board of Directors. Our Board realizes the significance that this decision will have on our shareholders and does not take the decision lightly. At the same time, we are facing a challenging economic environment and see continuing pressure in the housing market which is putting pressure on many of our borrowers. Given the uncertainty in the markets, we have been slowing our loan growth, increasing our loan loss provision as a precaution against potential losses and divesting non-core assets. We are focused on preserving and building our strong level of capital and liquidity. Against this backdrop, the Board believes it is important to build capital by suspending the dividend until we see signs of improvement in the capital and credit markets. This action reduces the risk that we would have to raise dilutive capital if we see further deterioration in the markets."
17:05 HLX Helix Energy will not attend two industry conferences (22.82 -3.03)
Co updated its previous report by announcing that it will not attend the following previously announced conferences: The Johnson Rice Energy Infrastructure Conference at the Windsor Court Hotel in New Orleans, Louisiana on Monday, October 6, 2008; and The Natixis Bleichroeder 2nd Annual Hidden Gems Conference at the Waldorf-Astoria Hotel in New York, New York on Tuesday, October 14. Co says, "We feel that management's time should be focused on restoring normal operations in the wake of Hurricane Ike. As stated in our press release dated September 23, 2008, we intend to provide an update on the status of our operations and production guidance for the fourth quarter of 2008 in conjunction with the release of our third quarter earnings."
17:04 SINO Sino-Global Shipping reports FY08 EPS of 0.07 vs $0.58 in the prior year; reported revs growth of 49.5% to $15.1 mln (4.01 -0.91)
Co sees FY09 revs of $22.6-24.9 mln, representing annual growth of 50-65% YoY.
16:59 NCC National City: Moody's may downgrade National City's rating - DJ (1.36 -2.35) -Update-
16:52 Paulson speaks from the White House after speaking with President Bush
Paulson says he will use all tools to protect our economy... says tool kit is substantial, but insufficient. Paulson says he'll work with Congressional leaders to find a way to pass a comprehensive plan to stabilize our financial system. Says the banking system is holding up very well despite pressures.
16:49 HSY Hershey Foods says all products are safe to consume; co has never purchased milk ingredients, including powered milk, from China (39.01 -2.05)
Co issued a statement related to milk purchased from China: Consumer safety and product quality are Hershey's top priorities. The Hershey Company has never purchased milk ingredients, including powered milk, from China. All Hershey products use the highest-quality ingredients and are safe to consume. This includes Cadbury products manufactured and distributed in the United States by HSY.
16:34 JRN Journal Commun signs purchase agreement to purchase assets of Waupaca Publishing for ~$7 mln (5.00 -0.28)
16:31 ATAC Aftermarket Tech Announces June 2009 Retirement of Don Johnson and Promotion of Todd Peters to CEO (23.09 -0.53)
The co announces that Don Johnson, Chairman and CEO, will retire at the co's next annual meeting to be held in June 2009. Don will remain as Chairman of the Board of Directors until then. Todd Peters, the Company's Chief Operating Officer, will succeed Don in the role of CEO effective as of January 1, 2009.
16:26 CMGI CMGI reports Q4 results; guides FY09 revs (8.89 -1.47)
Co reports EPS of ($0.39) vs the $0.08 single analyst estimate; revs rose 9.4% to $276.3 mln vs the $282.10 mln single analyst estimate. Results for the fourth quarter and full fiscal year are preliminary based on the inclusion of an estimated non-cash goodwill impairment charge of $12 million related to its European segment. Based on the strength of its sales pipeline and expectations for increasing demand for the Company's services, and given the uncertain economic environment, the Company currently expects revenue in fiscal 2009 to grow in the range of 10% to 12% over fiscal year 2008 revenue, which equates to ~$1.17-1.19 bln vs $1.21 bln single analyst estimate. The Company expects this revenue growth to be weighted toward the second, third and fourth quarters of fiscal 2009.
16:21 COV Covidien CEO and President Richard Meelia elected Chairman (52.23 -2.68) -Update-
The co announces that its Board of Directors has elected CEO and President Richard Meelia to the additional position of Chairman of the Board, effective October 1, 2008. Mr. Meelia succeeds Dennis H. Reilley, who has served as non-executive Chairman since Covidien became an independent, publicly traded company in June 2007. Mr. Reilley, the immediate past Chairman of Praxair, will continue to serve as a Covidien Director.
16:21 HIG Hartford Financial: Fitch revises Hartford's outlook to negative (50.00 -6.64)
Fitch Ratings has revised the Rating Outlook on the Issuer Default Ratings, senior debt and Insurer Financial Strength ratings for the Hartford Financial Services Group and its primary life and property/casualty insurance subsidiaries to Negative from Stable. The Negative Outlook reflects concerns that Fitch has related to the company's financial profile given the extraordinarily challenging credit market environment. Co has disclosed material exposure to troubled credits in its asset portfolio. In addition, the company completes its review of its deferred acquisition cost assumptions in the third quarter of each year. As previously disclosed by the company, based on market levels as of June 30, it expects to take a DAC unlocking charge primarily related to its variable annuity business in the third quarter.
16:14 DUK Duke Energy submits Federal Loan guarantee application for potential new Nuclear units (17.61 -0.42)
The co announces it has submitted the first part of an application for a federal energy loan guarantee to the U.S. Department of Energy for its proposed William States Lee III Nuclear Station. This is another step in the process of keeping the new nuclear option available for customers.
16:12 NTRS Northern Trust: S&PBulletin says Northern Trust rating unaffected by charges (64.87 -15.03) -Update-
Standard & Poor's Ratings Services said that its rating and outlook on Northern Trust (AA-/Stable/A-1+) are not affected by the company's announcement that it expects to incur a pretax charge of about $525 million ($328 million after-tax) in the third quarter. The charges result from the company's decision to increase the support for certain cash investment funds and commingled investment pools, as well as to buy certain illiquid auction-rate securities that its clients purchased. The capital support levels will increase in aggregate by $321 million to a maximum capital contribution of $550 million. These nonrecurring charges represent a significant proportion of annual expected earnings and illustrate the credit risk inherent in the asset-management business, notably for money-market funds. Despite these charges, Northern Trust maintains a strong market position, excellent liquidity, and healthy capital levels.
16:11 GM General Motors discloses it issued an aggregate of 16 mln shares of its common stock (8.51 -1.25)
Co discloses it issued an aggregate of 16 mln shares of its common stock, par value $1 2/3 per share in exchange for $176,417,800 principal amount of its 1.50% Series D Convertible Senior Debentures due 2009, beneficially owned by a qualified institutional holder of the Debentures.
16:11 HUBG Hub Group announces death of founder and Chairman Phillip Yeager (36.58 -2.24)
16:09 Congressional staffers say no vote until Thursday at the earliest - CNBC
16:04 FSNM First State Banc discloses it will record an additional non-cash other-than-temporary impairment charge for its investment in Freddie Mac preferred stock (7.24 -0.39)
Co discloses it determined that, in connection with the recent actions taken by the United States Treasury Department and the Federal Housing Finance Agency with respect to Fannie Mae (FNM) and Freddie Mac (FRE), the Company will record an additional non-cash other-than-temporary impairment charge to earnings in the third quarter of 2008 for its investment in Freddie Mac preferred stock. Management expects the amount of the additional write-down to be approximately $620,000. Management does not expect that this write-down will have a material impact on the Company's and the Bank's well-capitalized positions under regulatory guidelines.
16:04 S&P 500 falls 7.3%, most since Oct. 26, 1987 - Bloomberg
16:03 ING ING Group not to make offer for ABN Amro Netherlands (21.23 -4.62)
The co announces that it does not intend to make an offer to acquire ABN Amro Netherlands from Fortis. ING has examined the situation closely and carefully. The co is mindful of the interests of all stakeholders, but recognize that the ultimate responsibility is to our shareholders. ING remains committed to a disciplined approach when considering acquisitions, especially in the current extraordinary market circumstances. After careful consideration ING concluded that a transaction would not meet its financial requirements.
16:01 GOLF Golfsmith names Sue E. Gove Executive Vice President | Chief Operating Officer (2.50 -0.38)
16:00 AGII Argonaut Group acquires Insight Insurances Services; terms of the sale were not disclosed (32.68 -4.57)
16:00 PFE Pfizer: U.S FDA says analysis finds cholesterol-lowering drugs do not increase risk of Lou Gehrig's Disease - Reuters (18.00 -0.66)
(MRK)
Today's In Play
15:59 TECHX Market View: Dow and S&P post largest one day loss in history -Update- -Technical-
The stock market entered the day on a two day win streak but the price action was ugly from the opening bell. Caution in front of the vote for the bailout package, substantial losses in overseas markets and speculation that credit conditions continue to tighten weighed heavily this morning. The initial vote to pass the bailout failed which led to a more than 400 point drop in the Dow in a matter of just 10 minutes. The market indices bounced off their worst levels but drifted sideways within a broad range not far from the lows over the next 45 minutes before giving way to renewed selling pressure in late trade. A limited bounce was noted over the last half hour but last minute declines and adjustments left the S&P 500 (-106.85) and the Dow (-777.68) with their largest one day point loss in history (S&P #7 percentage loss list). The worst performing sectors were led Bank -19% Steel -16% Coal -16% Broker -13%, Insurance -12.8%, Mining -12.5%, Natural Gas -12%, Oil Service -11.5%, Oil -11.3%, Disk Drive -10.5%, Casino -10%, Internet -9.7%, Media l-9.2%, Computer-Hardware -9%, Software -8.6% Airline -8.5%, Networking -7.8%, Paper -7.4%, Semi -7.2%. Little was higher other than Gold GLD +3.1% and safe haven U.S. Treasuries.
15:56 U.S. equity averages, international markets and futures plunge
U.S. equity averages set to finish the day sharply lower, but off their worst levels of the day, with the Dow now -575 pts, SPX -81, Nasdaq Comp -151. Percentage losses in the major U.S. indices are as follows: Dow -5.1%, SPX -6.6%, Nasdaq Composite -7.0%, Nasdaq 100 -7.9%, Russell 2000 -6.1%... International markets also fell under significant pressure, with Brazil's Bovespa -9.7%, Mexico's Bolsa -6.6% and Canada's TSX -6.4%. European futures are sharply lower as well, with Britain's FTSE futures -10.9%, France's CAC 40 futures -9.8%, Germany's DAX futures -8.6%.
15:54 SOV Sovereign Banc says company sound, well-capitalized; cites unused liquidity of $12 bln - Bloomberg (2.60 -5.83) -Update-
15:52 GFED Guaranty Fed. Bancshares discloses it will temporarily suspend the payment of quarterly cash dividends on shares of its common stock (12.00 -1.01)
15:50 Bill fails; "concentration accelerates in financials" - Ladenburg
Ladenburg notes that Congress has failed to pass the emergency legislation recommended by the President. Clearly, this will increase the level of volatility in the credit markets. However, firm says the concentration in the banking industry continues to increase so that core banks should emerge from this situation in more dominant positions. Firm remains committed to the buy recommendations on BAC, C, PNC, BBT, USB and WFC.
15:48 RRI Reliant Energy revises its 2008 outlook downward to reflect the financial impact of Hurricane Ike and lower commodity prices in its wholesale business (9.73 -2.48)
Co announces it is revising its 2008 outlook downward to reflect the financial impact of Hurricane Ike and lower commodity prices in its wholesale business. In addition, the company and Merrill Lynch have agreed to take steps to end their credit-enhanced retail structure, given the current operating environment and Reliant's decision to develop a new retail strategy aimed at lowering collateral requirements and providing more consistent earnings. Co has obtained commitments for $1 bln in new capital to support its business to facilitate the transition. "Our retail results in 2008 have been disappointing, due in part to the recent impact of Hurricane Ike. We have also faced unprecedented turmoil in the financial markets... We have arranged for $1 billion of additional capital. Combined with current liquidity of $1.2 bln, we will have adequate liquidity to facilitate the termination of the credit-enhanced retail structure." Co has lowered its retail contribution margin outlook for 2008 by $300 mln to $350 mln as a result of the effects of Hurricane Ike, including reduced sales volumes, the sale of excess supply during this time, updates to retail pricing assumptions and increased storm-related operating costs. In response to its intention to terminate the credit-enhanced retail structure and current operating environment, Reliant is developing a new retail strategy aimed at lowering collateral requirements and providing more consistent earnings. Commodity prices have fallen significantly since the company provided its most recent outlook. In addition, third quarter results were impacted by mild weather and reduced off-peak prices. Co estimates that its outlook for 2008 open wholesale contribution margin will be ~$480 mln lower than its previous outlook. These outlook updates exclude any financial impact arising from termination of the credit-enhanced structure.
15:48 SCANX Nasdaq September short interest highlights
Late last week Nasdaq released its September short interest data, which was collected on the 15th. According to Bloomberg, the stocks with the largest short interest as a percentage of the float include: CAEI 122%; CALM 104%; JOSB 92%; CORS 77%; NTRI 68%; FTEK 60%; NETL 60%; NILE 59%; SHLD 58%; TRLG 57%; CONN 56%; WBMD 56%; GMCR 54%; MBRK 54%; USNA 53%; ARTC 51%; BIDZ 51%; EMKR 50%; AMED 48%; SPWR 47%... The biggest increases in short-interest as a percentage of the float, from August 29th to September 15th, are as follows: MRBK's short interest rose to 54% of the float from 15%; STEC is up to 44% from 35%; CKSI up to 8% from 0%; NAFC up to 26% from 18%; AMED up to 48% from 41%; CLNE up to 21% from 14%; TTGT up to 10% from 4%; CRMT up to 36% from 30%; APWR up to 30% from 24%; ICUI up to 13% from 8%... The biggest decreases in short-interest from August 29th to September 15th, are as follows: SCRX's short interest dropped to 20% from 41%; JOSB down to 92% from 105%; POWR down to 7% from 14%; MHGC down to 32% from 39%; MDTL down to 25% from 31%; BEAT down to 5% from 11%; ROYL down to 13% from 18%; SBLK down to 1% from 7%; LULU down to 27% from 31%; SQNM down to 15% from 20%.
15:47 TECHX Relative Sector strength on late bounce noted in Finance XLF/RKH, Housing XHB, Semi SMH -Update- -Technical-
15:46 Earnings Calendar
Today after the close no companies are scheduled to report. Tomorrow before the open PBG is scheduled to report.
15:42 TECHX Market View: Dow lifts 150 points off the low -Update- -Technical-
15:42 RHT Red Hat amends program for repurchase of common stock and convertible debentures to increase by an additional $125.0 mln (15.15 -1.26)
15:36 BONDX Back to the Basics... 10-yr +2-04/32 yielding 3.594%
Buy treasuries. The market went out near the session highs with the short end leading the action all day long on a flight to quality and expectations of a rate cut in the offing (maybe before Oct 29 now). The bill failed to pass and that has given trade an even greater boost but the fresh ground conquered was met with position squaring ahead of the quarter's end. Data will take a bigger role in the days ahead with payrolls on Fri, and while a new package will probably be tossed around, trade will focus on the seizure in credit markets and the accompanying headlines. The 3-mo-10-yr yield spread is working back to steeper levels at 310 while the 2-10-yr yield spread is holding out at 191 after tipping the scales at 200 post-vote. The dollar is licking its wounds but overnight gains against the euro remain in tact so far as trade leans on euro rallies in expectation of an eventual ECB rate cut. The yen is holding firm as stocks crumble. Spot gold is rolling higher at 919.05 (+40.30) on safe haven buying while crude sank to settle at 96.37 (-10.52). Tomorrow has Chicago PMI and consumer confidence. The euro is at 1.4463 and the yen is at 104.1050. For more click here.
15:36 SCANX NYSE September short interest highlights
Late last week NYSE released its September short interest data, which was collected on the 15th. According to Bloomberg, the stocks with the largest short interest as a percentage of the float include: FED 71%; DSL 67%; LTM 65%; HZO 59%; GHL 59%; BZH 55%; HOV 55%; UA 53%; MNI 52%; PII 50%; BHS 49%; ZLC 47%; TPX 47%; LNY 47%; TLB 46%; BIG 46%; BBI 46%; DRL 45%; SUP 45%; ALJ 44%; LEE 44%... The biggest increases in short-interest as a percentage of the float, from August 29th to September 15th, are as follows: VM's short interest rose to 23% of the float from 11%; REV is up to 16% from 5%; GFF up to 30% from 22%; TLB up to 46% from 40%; MET up to 16% from 9%; DIN up to 31% from 24%; KBH up to 24% from 19%; JCG up to 37% from 32%; HOV up to 55% from 50%; IAR up to 36% from 30%... The biggest decreases in short-interest from August 29th to September 15th, are as follows: TPX's short interest dropped to 47% from 62%; SSP down to 31% from 42%; FED down to 71% from 80%; FRP down to 19% from 26%; HZO down to 59% from 66%; TNH down to 20% from 26%; BHS down to 49% from 55%; UST down to 5% from 11%; DSW down to 24% from 30%; TRA down to 9% from 14%.
15:33 TECHX Market View: Nasdaq Comp extends near 2000 psych level -- session low 2002 (2006 ) -Update- -Technical-
15:28 New lows across the board... Dow -712 pts, SPX -99, Nasdaq Comp -175
15:26 CEG Constellation Energy and MidAmerican Energy Holdings confirm merger process on track (22.47 -2.78) -Update-
The co and MidAmerican Energy Holdings Company announce that the merger between the two parties is proceeding as outlined in the merger agreement entered into on September 19, 2008. "We expect to complete our due diligence within the 14-day period, and based on information reviewed to date, we have not identified any issues."
15:20 TECHX Market View: New session low for S&P 500 (1124 -88)
See 15:10 update.
15:17 CSCO Cisco Systems sets new session low of 21.80 approaching its Sep/two month low at 21.74 (21.83 -1.99) -Technical-
15:17 EWZ Brazil stock mkt resumes trading - DJ (49.85 -10.43) -Update-
15:15 INDXCH Index Change Reminder
S&P SmallCap 600 constituent Oceaneering International (OII) will replace Cypress Semiconductor (CY) in the S&P MidCap 400 after the close of trading.
15:13 Sentiment indicators -- Market volatility spikes to multi-year highs as equities drop to lowest levels in over a year
Broad market volatility spiked to its highest levels in years (VIX reached 46.47 and VXN 48.21) as equities plunged following the House's surprise rejection of the financial rescue bill (SPX and Dow reached lowest levels since 2005, Nas since 2006), although they are currently off lows of the day (Dow -572, SPX -81, Nas -152). Market volatility initially moved higher as the stock market opened significantly lower this morning with investors taking a cautious stance ahead of the House vote on the Emergency Economic Stabilization Act, and following a number of major events within the U.S. and European financial sectors. The "fear gauges" continued to climb (until VIX reached ~40 and VXN ~42) before spiking to yearly highs as the House votes were tallied, ultimately failing to pass the bill sending the markets to yearly lows. The VIX is currently +11.56 (+33.3%) at 46.33, while the more tech-focused VXN (Nasdaq Volatility Index) is +11.29 (+30.6%) at 48.14. The CBOE put/call ratio is currently at 1.33, indicating higher put trading than call trading.
15:11 LEAP Leap Wireless, MetroPCS merger 'less likely' in near term - WSJ (35.92 -6.12) -Update-
(PCS)
15:10 TECHX Market View: S&P 500 approaching afternoon trading range floor at 1130 (1131 -82) -Update- -Technical-
The session low is at 1125 with a technical target below at 1121.
15:09 LEAP Leap Wireless, MetroPCS in 10-yr roaming pact; Leap Wireless, MetroPCS to swap some assets, settle litigation - WSJ (36.00 -6.02)
(PCS)
15:06 CEG Constellation Energy: MidAmerican due diligence finding no "issues"; MidAmerican merger process on track - DJ (20.60 -4.65)
15:05 TECHX Gold -GLD- hovering slightly under the session high at 90.00 and last week's peak at 90.17 (89.75 +3.11) -Update- -Technical-
Its eight-week high from mid-Sept is at 90.78.
15:05 N.Y. securities industry could lose 40,000 jobs, up from initial estimate of 25,000, according to Comptroller - Reuters
N.Y. state could lose up to $3.5 bln in tax revenues from market crisis by March 2010
15:03 NASDAQ 100 (NDX) leaders & laggards heading into final hour of trading
Final Hour NDX Strength:
BIIB +3.2%
Final Hour NDX Weakness:
STLD -18.6%, JOYG -17.7%, DISH -18.0%, AAPL -17.5%, VMED -15.5%, FWLT -15.8%, NIHD -13.9%, CTSH -13.4%, LEAP -13.3%
15:03 TECHX New session lows Housing -XHB- as its slides under last week's low and its 50 day sma at 19.06/18.99-- session low 18.76 (18.80 -1.98) -Update- -Technical-
Congestion comes into play in the 18.50/18.40 area with its Mid-Sep low at 17.90.
15:01 COMDX CBOT Agriculture and Ethanol Closing Prices
Dec corn closed lower by 30 cents (limit down) to $5.13 per bushel, Nov soybeans closed lower by 70 cents to $10.94 per bushel, Dec wheat closed lower by 48 cents to $6.68 per bushel, Oct Ethanol closed lower by $0.087 to $2.17 per gallon.
15:01 WPO Washington Post to acquire Foreign Policy Magazine (537.88 -25.70)
Co announces it has agreed to acquire Foreign Policy magazine. The transaction will close tomorrow.
15:00 Treasury says to work with regulators, use all tools available to protect financial mkts and economy - Reuters
15:00 Dow (INDU) posting very sharp losses heading into final hour of trading, currently @ 10606 -536, or -4.85%
Final Hour INDU Strength: NONE
Final Hour INDU Weakness: AXP -13.2%, BAC -10.4%, AA -9.7%, JPM -8.0%, GM -7.9%, DIS -7.9%
NYSE A/D Line @ -2900
NYSE TRIN @ +3.95
15:00 U.S. Treasury says Paulson to consult with Bush, Bernanke, Congress leaders on next steps on bailout - Reuters
14:57 U.S. House to abandon pre-election recess plans to deal with financial crisis, according to Senior House Aide - Reuters
14:56 TALKX Floor Talk: Stocks plunge following surprise rejection of plan
Stocks are experiencing sharp losses following the U.S. House's surprise rejection of the Emergency Economic Stabilization Act. The highly anticipated vote ended up very close, with the final tally showing 205 votes for the plan and 228 votes against the plan (218 votes represent a majority), despite efforts to convince representatives to change their votes to support the bill... The equity market plunged as it became clear that the plan would not pass, with the Dow dropping an additional 400 pts in 5 minutes (the Dow was down over 700 pts at its low). The market has since stabilized, with the Dow now -554 pts, SPX -77 and Nasdaq Composite -74. There are notable losses in financials (XLF -11%, KRE -8%), Homebuilders (XHB -9%) and technology (XLK -6.6%). Crude oil also extended its losses, now -10.81 at 96.10. The dollar weakened against other major currencies, while safe-haven assets such as Treasuries and gold have gained.
14:45 OPTNX Unusual Options Activity
Select options seeing interest, making upward implied volatility moves on volume today, with little corresponding action in the underlying stock, include: Calls: PBG Oct 30 calls are seeing interest ahead of the co's earnings tomorrow (9/30) before the open (volume: 1240, open int: 110, implied vol: ~58%, prev day implied vol: 43%)... Puts: WOOF Oct 30 puts (volume: 1230, open int: 470, implied vol: ~59%, prev day implied vol: 42%) -- earnings are expected in mid-to-late Oct, possibly falling outside of the Oct expiration cycle; EWW (iShares MSCI Mexico Investable Market Index) May 40 puts (volume: 17300, open int: 210, implied vol: ~43%, prev day implied vol: 38%)... CBOE Put/Call ratio: 1.33, VIX: (46.01, +11.27, +32.4%), VXN: (47.22, +10.37, +28.1%). (To find past options related comments in the archive, use the symbol OPTNX)
14:45 OMCL Omnicell: Cardinal Health spin-off creates window of opportunity - Caris (12.02 -0.80)
Caris believes the CAH spin-off provides a window of opportunity for OMCL. The co can take advantage of the ensuing confusion and pick up market share. Per firm's conservative ests, OMCL could see incremental $0.04 to $0.05 EPS in 2009. However, OMCL's current valuation reflects fear over the credit crunch's potential impact on the 2009 outlook. Should credit crunch concerns persist, OMCL shares at $10-$11 range would be an attractive entry point.
14:45 C Citigroup: Moody's reviews Citi (snr Aa3) for possible downgrade (19.64 -0.51) -Update-
Moody's Investors Service placed its ratings on Citigroup (senior at Aa3) and its subsidiaries including its lead bank, Citibank N.A (B for financial strength and Aa1 for deposits), under review for possible downgrade. The review follows the announcement that Citigroup will acquire the bank and thrift assets of Wachovia (WB) for $2.1 bln in stock. Citigroup also announced that it will assume the senior and subordinated debt including the junior subordinated debt of Wachovia Corporation. Moody's said that the terms of the deal hold a number of positive features for Citigroup. The Wachovia purchase will boost Citigroup's U.S. deposit business, giving greater balance to its U.S. retail banking operations. In the past, Citigroup's U.S. retail business was skewed towards loan products. An expanded deposit business will support both earnings diversity and liquidity. Moody's also said the terms of the deal provided credit protection in that the purchase price was very low, and there is protection against extreme losses provided by the FDIC put. Despite these positives, Moody's placed Citigroup's ratings under review for possible downgrade because the acquisition imposes integration challenges at a time when Citigroup's asset quality is being undermined by weakening consumer and commercial markets.
14:40 COMDX NYMEX Energy Closing Prices
Nov crude ended lower by $11.06 to $95.83, Nov natural gas settled down 4.18 cents to $7.21, Oct heating oil finished lower by 24.49 cents to $2.7500 and Oct RBOB gasoline finished lower by 28.01 cents to $2.3850.
14:38 TECHX Market View: Range trade near lows after midday meltdown -Update- -Technical-
Technically we saw the Dow hold in the vicinity of it Mid-Sep/52-wk low at 10459 (session low 10438) on the highest VIX reading since Oct 2002 with the S&P 500 vacillating near its Mid-Sep low (1133) after an intraday penetration (session low 1125). Short term unless the indices are able work back through the 10800 and the 10950 levels Dow and 1157/1160, 1174/1175 S&P 500 on a sustained basis the price action would suggest potential for further declines. Supports below the low for the S&P are at 1121 (equality target based on the Oct 2007-March 2008 slide off the May 2007 rebound high) and 1116.
14:34 WB Wachovia resumes trading (1.30 -8.70) -Update-
14:33 COMDX Crude oil making new lows in electronic trade, hits $95.20... currently -11.50 to $95.39
14:32 SCANX Today's biggest point gainers/losers
Biggest point gainers: NWLIA (249.69 +6.24), NPS (9.69 +5.33), FFNM (9.8 +4.9), ISRL (48 +3.78), FFG (29.15 +3.46), UVSP (34.45 +2.92), MKL (388.13 +2.63), SMTB (22.98 +2.49), WHG (51.44 +2.36), WSOB (52.69 +2.35), TOWN (22.98 +2.25)... Biggest point losers: RTP (223.11 -47.89), MITSY (220.00 -44.26), GOOG (390.98 -40.06), CME (366.20 -32.80), BIDU (229.25 -31.5), FSLR (178.49 -28.64), AAPL (105.73 -22.51), ISRG (254.37 -20.64), MA (164.59 -20.48), GS (118.40 -19.59), POT (128.44 -19.11), FFH (285 -18), CEO (109.24 -16.07), X (71.27 -15.99), UBB (89.55 -15.55), CLF (44.35 -15.54), ICE (63.5 -15.35), DO (96.97 -14.97), FWLTW (103.5 -14.5), FLS (74.9 -14.47), HES (75.07 -14.46), STT (45.82 -14.44), PTR (97.33 -14.16).
14:28 CNBC reporter says a Senior staffer has told him there is no possibility of a second vote today
14:25 PIMCO's Bill Gross believes over the next 24 hours we'll see high quality rates come down, with the potential for a central bank ease, possibly on a global basis
14:24 FCL Foundation Coal increases repurchase authorization $100 mln; announces third quarter production shortfall (32.74 -5.25)
Co announces that its Board of Directors authorized a $100 mln increase to the existing share repurchase program. Separately, co announced that Eastern production during the third quarter is anticipated to be ~800,000 tons below its previous estimate due primarily to adverse geological conditions, as well as increased regulatory inspection activity. In addition, cash costs and productivity were impacted by escalating wages and a shortage of skilled labor in Central Appalachia.
14:23 Leadership plans second attempt to pass bill - NY Times
14:23 CNX CONSOL Energy resumes trading (38.10 -11.19) -Update-
14:13 VIX hits 46.28, on par with 1998 and 2002 highs (45.76 +11.02)
14:11 US House rejects financial rescue bill, major averages fall back down to session lows... Dow -578, S&P -81, Naz -154
14:10 CNBC reporter says he got a message from a Senior leadership member on the Democratic side who said there is no chance in passing this bill now
14:04 According to reports, Congressional leaders are lobbying right now to switch 11 votes into the Yes column to pass the bill
While the preliminary vote failed, the vote is not officially closed yet.
14:00 EWZ Brazilian stock trading halted after 10% decline - Bloomberg (52.03 -8.28)
13:55 U.S. House vote on bill is still open... Unofficial tally is now at 207 for, 226 against, 1 not voted
(218 votes represent a majority)
13:53 TECHX Market View: Dow jumps 280 points off the low (10741 -401) -Update- -Technical-
13:53 COMDX Crude falls to fresh low of 96.83 following House vote against emergency economic bill... Crude is now -8.78 at 98.19 -Update-
13:53 COMDX Metals Closing Prices
Gold ended higher by $10.00 to $898.50, silver finished lower by 45 cents to $13.050 and copper closed lower by 16.9 cents to $2.9050 (note these are all December contracts).
13:52 AAPL Apple sinks aggressively into the 100.00 'psych' level, now catching a reflexive intraday bounce higher (105.23 -22.60) -Update- -Technical-
13:50 MSCI World Index falls as much as 5.9%, most since 1970 start - Bloomberg
13:49 TECHX Market View: Dow -527 and S&P -73 rebounding after breaking to new 52-wk lows under Mid-Sep lows -Update- -Technical-
13:48 IMCL ImClone: $70 per share proposal submitted by US-based large pharma; Takeda not ‘mystery bidder’ - FT Mergermarket (62.54 -0.84) -Update-
FT Mergermarket reports Takeda Pharmaceutical is not the so-called "mystery bidder" for the co despite media reports, three industry sources familiar with the situation told dealReporter. Rather, it is understood that the company that submitted the $70 per share proposal for ImClone is a US-based large pharmaceutical company with strategic pipeline synergies, it was said. Meanwhile, it is understood that ImClone is still not entertaining conversations with current bidder Bristol-Myers Squibb (BMY) as it has not yet reached its offer criteria of p per share. Although Takeda has been interested in US-based acquisitions in the areas of oncology and metabolic diseases, to get engaged in a hostile takeover, or competitive bidding situation would be "unusual," to their corporate culture, a source close to Takeda said. Instead, Takeda usually makes recommended, agreed deals, and are more under the radar when it comes to its M&A strategy, the source added.
13:48 TECHX Market View: S&P breaks under mid-Sept low to reach lowest level since Oct 2004-- session low 1125 (1129 -83) -Update- -Technical-
13:46 According to C-Span, U.S. House majority votes against Emergency Economic Stabilization Act
13:45 OPTNX VIX reaches highest level since 2002
13:45 Dow drops a further 200 points after preliminary tally shows House vote on rescue package does not pass
Dow -558, S&P -77, Nasdaq -137
13:44 CNX CONSOL Energy's Buchanan Mine idled production temporarily (39.05 -10.19) -Update-
Co's Buchanan Mine near Mavisdale, Va. idled production temporarily on September 25, 2008, while a recently sealed area of the mine is monitored and new 120 pounds per square inch seals are allowed to cure to full strength. Based on current curing rates, the company anticipates that the remaining seals should reach maximum strength by October 6, 2008. The idling of the mine was required by the federal Mine Safety and Health Administration based on a revised interpretation of federal requirements regarding the sealing of mined-out areas. The area in the Buchanan Mine being sealed is the area of the mine where a roof fall resulted in the mine being idled for nearly nine months last year. The last of 89 seals was completed on September 15. It normally takes several weeks for seals to cure and reach their maximum strength. Of the 89 seals installed, 81 are at or exceed the current 120 psi standard for strength. Once all seals in the area have reached their rated strength of 120 psi, all provisions of the new seal regulations will have been met and production is expected to resume. The company has issued force majeure letters to customers with contracts for delivery of coal from the mine abrogating the company's obligation to deliver the coal production affected by the idling. (stock is currently halted)
13:44 TECHX Market View: Stock indices surge through early lows -- Dow -455, S&P -68, Nasdaq -101 -Update-
13:43 CIT CIT Group announces that it successfully completed the renewal of approximately $6 billion of facilities with multi-seller conduit providers that were scheduled to expire in the third quarter (6.60 -1.68)
13:42 CNX CONSOL Energy halted, news pending (39.05 -10.19)
13:42 U.S. House update: There are now 167 votes for the bill, 172 against
13:39 Equity averages slip back towards lows as House vote on eonomic stabilization bill remains very close
There are currently 153 votes for and 146 against. (Need 218 votes for a majority)
13:37 WRAPX Midday Summary: Major averages remain significantly lower minutes ahead of the House vote on the financial bailout package
The stock market continues to trade significantly lower, but in a narrow range, ahead of the House vote of the financial bailout package results. The market opened significantly lower this morning as investors took a cautious stance ahead of the House vote on the Emergency Economic Stabilization Act, and following a number of major events within the U.S. and European financial sectors: 1) European markets plunged -- FTSE -5.3%, DAX -4.2%, CAC -5.0% -- after a number of European banks were either nationalized or bailed out over the weekend, including Luxembourg's Fortis, UK's Bradford & Bingley, Germany's Hypo Real Estate Group and Iceland's Glitnir; 2) Citigroup (C) acquired Wachovia's (WB) banking subsidiaries in a deal facilitated by the FDIC and other regulatory agencies. Citi will pay Wachovia ~$2.16 bln in stock and assume Wachovia senior and subordinated debt, totaling ~$53 bln. That gives WB shareholders about $1 per share in C stock. Citi expects to raise $10 bln in common equity in connection with this transaction and reduce its quarterly dividend to $0.16 per share from $0.32; and 3) Credit conditions continue to tighten -- according to Bloomberg, the Euribor climbed 10 basis points to 5.24%, its biggest jump since June, while the 3-month LIBOR rose to 3.88%, the highest level since Jan 18 and up from 2.81% a month ago. The major averages extended lower over the first 20 minutes of the session, with the percentage losers list is dominated by financial-related names. Specifically, the WB news led to sharp declines in other large regional bank stocks, including SOV -63%, NCC -50%, FITB -35% and RF -29%. But the major averages stabilized around 10:00ET when the Federal Reserve and other central banks announced further coordinated actions to expand the capacity to provide U.S. dollar liquidity. Specifically, the Fed increased the size of the 84-day maturity Term Auction Facility auctions to $75 bln, announced two forward TAF auctions totaling $150 bln and increased swap authorizations with a number of other central banks to $620 mln. Dow is currently -220 to ~10922; Nasdaq is currently -91 to ~2092; S&P is currently -42 to ~1171... From a technical perspective, the indices continue to be pressured at midday but have slowly worked their way off the lows. Price has been in very tight, sideways consolidation pattern as investors await the results of the House vote. Only the NASDAQ 100 (NDX) and the equivalent ETF (QQQQ) & e~mini futures contract (NQ) printed fresh Sept. 52Wk lows this morning before seeing some sort of stabilization. Breadth remains very weak with decliners outpacing advancers by nearly 12:1 on NYSE... The Bond market traded slightly higher in overnight activity on modest movement. At the open of pit trading, the 10-yr rose steadily higher, which is where the 10-yr is trading in afternoon trading. The 10-yr is currently 1-08/32 3.701%... In Commodities, Nov crude ($99.26 -7.63) continues to trade near its recent session low $97.9, hit right before 12:00ET. The continued move lower comes largely on a stronger dollar and ahead of a House vote on the $700 bln rescue package for the financial system amid concern the measures won't prevent an economic slowdown that would cut demand in the U.S., the world's largest energy consumer... In Europe, mkts dropped to a three-and-a-half year closing low, with banks weighing on the benchmark index amid persistent worries about the health of the financial industry on both sides of the Atlantic. FTSE closed -5.3%; DAX closed -4.2%; CAC closed --5.0%, RTS -7.1%... Note in Asia, the Nikkei closed -1.3%, the Hang Seng closed -4.3% and the Shanghai Composite closed (Note: Mkts in China and Taiwan are closed this week for a holiday)... On the Earnings calendar, 0 cos are confirmed to report today after the close. Tomorrow before the open, 1 co is confirmed to report... On the Economic calendar: Kansas City President Hoenig speaks on the economy and monetary policy at 20:45ET. Tomorrow, there is nothing scheduled to be released.
13:30 TECHX Market View: New intraday recovery high for Dow (10933 -210) -Update- -Technical-
13:28 U.S. House begins vote on Emergency Economic Stabilization Act
13:20 BHLB Berkshire Hills Bancorp downgraded to Hold at Sterne Agee; raises tgt to $29 (29.68 -0.07)
Sterne Agee downgraded BHLB to Hold from Buy and raises their tgt to $29 from $28. Firm remains positive on the Berkshire Hills story and feels the co will remain a dominant player in the Capital Region and Western Massachusetts. However, with the uncertainty and upheaval surrounding the financial markets, they feel there is limited upside from the current share price.
13:19 MOC Command Security announces Edward Fleury joins team as Chief Executive Officer (3.30 0.00)
13:18 CRI Carter Holdings downgrade details (19.05 -1.37) -Update-
As mentioned at 13:09, Sterne Agee downgraded CRI to Hold from Buy based on valuation and concerns about the deteriorating environment. Firm says that while CRI continues to have a strong franchise with leading shares in baby and sleepwear along with the ability to sell to diversified channels from retail to wholesale to mass, they believe its future prospects are best in retail as the wholesale environment is likely to remain challenging.
13:15 IAG IAMGOLD provides update on recent progress focused on optimizing operational performance, cost reduction initiatives and exploration and project development acceleration (5.56 -0.30) -Update-
Co provides update on recent progress focused on optimizing operational performance, cost reduction initiatives and exploration and project development acceleration. The capital expenditure program for the 3.5 million ounce Westwood project has been advanced from $15.6 million by $22.5 million to $38.1 million for 2008, reflecting the acceleration of the project towards commercial production. Co has pursued an aggressive exploration campaign at Buckreef during 2008 and is advancing its technical and economic evaluations. The Boto Project is a significant new gold mineralized trend in eastern Senegal identified earlier this year by IAMGOLD and has become the focus of exploration work by the Company in West Africa. As a result of IAMGOLD's aggressive cost reduction and production initiatives the Company has accelerated the timetable for the sale of Sleeping Giant mine from the previous agreed date of April 1, 2009 to October 31, 2008.
13:09 CRI Carter Holdings drops a quick $0.50; hearing stock was downgraded intraday (19.47 -0.97) -Update-
13:02 WAG Walgreen downgraded to Mkt Perform at Barrington (31.17 -1.56) -Update-
Barrington downgrades WAG to Mkt Perform from Outperform following WAG's Q4 earnings report. The firm notes that EPS of $0.45 per share was below their estimate of $0.46. Firm says while reported EPS met the consensus, quality of earnings was low, reflecting benefits of a lower tax rate and a one-time vacation accrual adjustment. Firm also notes that while overall SG&A spending remains under tight control, mgmt acknowledged that certain promotional investments failed to yield any sales benefit in the quarter, leading to further margin erosion.
13:02 WRAPX European Markets Close Recap: FTSE: -5.3%, DAX: -4.2%, CAC: -5.0%, RTS: -7.1%
In Europe, mkts dropped to a three-and-a-half year closing low, with banks weighing on the benchmark index amid persistent worries about the health of the financial industry on both sides of the Atlantic. Fortis received 11.2 bln euros of capital on Sunday, in a combined rescue by the Belgian, Dutch and Luxembourg Govts, after shares in the banking and insurance group plummeted to 15-year lows amid liquidity worries last week. News that the Icelandic govt had bought a 75% stake in Glitnir, the Atlantic island's third largest lender, for 600 mln euros added to the sense crisis in the European banking industry... In the UK, the FTSE tumbled 5.3% following the British govt's decision to nationalize troubled mortgage bank Bradford & Bingley combined with renewed financial turmoil across Europe. Of banks stocks, Barclays (BCS) fell 8.8%, HBOS dropped 18.1% and Lloyds TSB (LYG) fell 13.5%. Royal Bank of Scotland (RBS) fell 13%... In Germany, the DAX fell 4.2% after the government and a group of banks had to bail out Hypo Real Estate Holding AG with a 35 billion-euro ($50 billion) loan guarantee. Hypo Real Estate tumbled 74% after receiving emergency funding and saying it plans to scrap its 2008 dividend. The rescuers of the bank will pay the guarantee in two allotments, of about 15 billion euros and 20 billion euros, Finance Ministry spokesman Torsten Albig said... In France, the CAC dropped 5.0%. In economic news, the number of jobseekers rose by 41,300 as companies weathering a global economic slowdown shelved hiring plans. Dexia plunged 27% as the co scheduled a second board meeting to discuss the financial market crisis following the bailout of Fortis. The bank may need to raise capital to reassure the markets, French daily Le Figaro reported... In Russia, the RTS slid 7.1% as lower oil prices and fears over the state of the global banking sector more than offset progress on the U.S.' financial markets bailout package. Prime Minister Vladimir Putin pledged further support, saying state development bank VEB would offer Russian companies as much as $50 billion in loans to refinance foreign borrowing, the Interfax news agency reported. (Sources: Bloomberg, Reuters, DJ)
13:00 GNTX Gentex downgraded to Mkt Perform at Barrington Research (14.75 -2.15)
Barrington Research downgrades GNTX to Mkt Perform from Outperform because of the reduced near-term visibility on industry auto production both here and abroadnoting. The firm notes this morning, before the market's open, Gentex lowered its third quarter revenue guidance as a result of significantly greater than previously expected weakness in the automotive market (primarily in the U.S. and European markets) and in the current financial market. The firm says Gentex will be unable to leverage its fixed overhead cost resulting in a sharp decline in the company's gross margin. In addition, due to the significant weakness in the stock market, management expects to report reduced net gains on the sales of equity investments by about $4 million sequentially from the second quarter of 2008.
13:00 LFUS Littelfuse downgraded to Mkt Perform from Outperform at Barrington following this morning's lowered guidance (30.70 -3.21) -Update-
12:57 SCANX Stocks making new 52-week highs/lows today
New lows outpace new highs by nearly 25 to 1: New 52-week highs trading over 100K shares (average daily volume) include: AITP, EBS, LF... New 52-week lows trading over 100K shares (average daily volume) include: Coal (ACI, ARLP, BTU, CNX, FCL, NRP, PVR, YZC), Computer Related (AAPL, BRCD, CDNS, CTSH, HTCH, JAVA, NTAP, QI, RIMM, WDC, XRTX), Engineering & Construction (ABB, CBI, FLR, ICA, JEC, KBR, MDR, OMAB, SGR), Media (ACTG, BLC, CKXE, DISAD, DISH, DM, EMMS, ENL, EVC, LCAPA, MHP, NETC, NOOF, NWS, PSO, SBGI, WPPGY, XFML), Mining (AA, AAUK, ACH, BBL, BW, CCJ, CENX, DNN, FCX, IVN, MYNG, OZN, RIO, RTI, RTP, TGB, URRE, ZINC), Oil & Gas (AOG, APC, ATW, BRNC, BSKO, CFW, CHK, CMZ, CXG, DNR, EPEX, EQT, GSX, HTE, LNG, MRO, NBL, NFX, NXY, PAPO, PINN, RDC, STR, TLM, VTG), Oil & Gas Services (ACGY, BJS, BOLT, CKH, CLB, EXH, GLBL, HLX, MIND, OII, OMNI, TRMA, UDRL, WFT, WG, WSCE), Semiconductors (AMD, ANAD, ASML, ASYT, AUTH, CNXT, ENTG, FCS, IFX, ISIL, LSCC, MRVL, OIIM, PLAB, SIMO, SMI, SPRD, SPSN, TER, UCTT, VRGY, VSEA, WFR), Shipping (DHT, DRYS, DSX, EGLE, ESEA, EXM, FREE, GMR, GNK, KEX, NM, OCNF, PRGN, SSW, TBSI, TK), Software (BMC, CHINA, ERTS, FALC, FIS, INFA, INFY, PFMS, RX, SAY, SPSS, THQI, WIT), Steel (AKS, ATI, CRS, GGB, GNA, NUE, RS, SCHN, SID, STLD, SUTR, TX, X) and Telecommunications (AWYI, CCSE, GSAT, ICOG, IDT, MOBL, NT, PGSW, SWIR, VMED).
12:46 TECHX Market View: Stock indices lifting off lows -Update- -Technical-
The Dow and Nasdaq 100 did not confirm the slide to new lows in the Nasdaq Comp and S&P with the market lifting modestly off the lows in recent trade. Relative Sector Strength has been noted in Commodity/Energy (OIH, XLE, KOL, SLX), along with Transports TRAN/IYT and Semi SMH.
12:46 TSS Total System: Hearing downgraded to Neutral at Susquehanna (16.36 -1.08) -Update-
12:46 BONDX Pressing the Highs... 10-yr +1-09/32 yielding 3.697%
The market has set up in a holding pattern just off the session's best levels. The bill looks to be passed in the not-too-distant future and trade is likely waiting to see where the dust settles while enjoying a modest flight to quality with the short end leading higher. The credit markets are still squeezed with the short-term bills seeing strong interest but spreads are off their steepest levels. The 3-mo-10-yr yield spread is holding near 300 while the 2-10-yr is near 180. The dollar has pulled the euro back under 1.44 tentatively while the yen's trip below 105 was short lived. Spot gold is up at 893.40 (+14.60) while crude is way down at 99.15 (-7.74). The euro is at 1.4407 and the yen is at 105.1620. For more click here.
12:45 Sector ETF leaders & laggards at midday
Midday Sector Strength:
Gold- GLD +1.8%, US Dollar- UUP +1.0%, Bond- BND +0.75%
Midday Sector Weakness:
Solar Power- TAN -11.0%, Coal- KOL -12.4%, Steel- SLX -11.8%, Metals/Mining- XME -10.6%, Wind Energy- FAN -9.6%, Gas- UGA -9.6%, Commercial Banks- KBE -8.8%, Regional Banks- RKH -8.7%, Oil HLDRS- OIH -7.3%
12:32 IRET Investors Real Estate Trust files for offering of up to 5,886,949 Common Shares of Beneficial Interest to the holders of limited partnership units and selling shareholders (10.79 -0.20)
12:28 COMDX Crude oil continues to slide to fresh lows below $98... Crude is now -8.50 at 98.39
12:25 Specialty Apparel: Muted back-to-school selling a dreadful omen for holidays - Wedbush
Wedbush says that given difficult macro environment and following August sales results, they expect mixed Sept sales trends from retailers will wrap up a muted back-to-school season. Historical analyses suggest a muted back-to-school business could be a precursor for holiday selling season. As such, firm is adjusting their H2 and F09 projections for ANN, CHIC, CMRG, MW, PLCE, PSUN, and TLB. Firm prefers children's retailers, cos with strategic pricing strategies and/or highly differentiated merchandise, and firms with international diversification. Within their universe, they expect ARO, GES, GYMB, and URBN to outperform as they meet the criteria of 1) brand distinctiveness, 2) product differentiation, 3) incremental margin expansion, and 5) compelling valuations. For investors with longer-term horizons, firm suggests building positions in ANN and JCG given their compelling turnaround strategies.
12:24 BEZ Baldor Electric expects diluted EPS in Q3 to be similar to that of Q3 2007 (27.60 -3.56)
(Note Q3 2007 EPS were $0.53 and Q3 2008 EPS consensus is $0.61)
12:22 C Citigroup: S&P puts Citigroup 'AA-/A-1+' ratings on CreditWatch negative (20.25 +0.11) -Update-
Standard & Poor's Ratings Services said that it placed its ratings on Citigroup, including the 'AA-/A-1+' counterparty credit rating, and the 'AA/A-1+' counterparty credit ratings on its bank affiliates, on CreditWatch with negative implications. "The action reflects continued pressures on Citigroup's own performance from write-downs on market-disrupted assets and the loan portfolios," said Standard & Poor's credit analyst Tanya Azarchs. The merger agreement with Wachovia does not in itself materially add to the risk for Citigroup, because it is structured essentially as an acquisition of a "clean" bank. On a stand-alone basis, Citigroup's own market-disrupted assets and mortgage loan exposures pose significant risk.
12:20 SCHW Charles Schwab: Friedman Billings notes Schwab bank takes hit on pretax loss of $75 mln; believes announcement shows co moving toward more balance sheet focused business model (23.83 -0.49)
Friedman Billings reiterates their Underperform rating and $19 price target following announcements by the co that its bank will record losses related to Lehman and Washington Mutual securities. While the losses are not material from an earnings or capital standpoint, firm believes this announcement highlights the fact that Schwab is moving toward a more balance-sheet-focused business model, which should result in a lower rating from the markets over time, in firm's opinion. Firm is lowering their 3Q08 est to $0.24 from $0.28 (consensus $0.27) to reflect the charge announced today and are lowering their GAAP and operating ests for CY 2008 to $1.04 and $1.06 from $1.08 and $1.09 (consensus $1.09), respectively.
12:20 TECHX Market View: New session low for Nasdaq -102 and S&P -49, Dow -298 holding above thus far -Update- -Technical-
12:17 AIG American Intl: N.Y. Fed says 79.9% stake in AIG has potential to provide "substantial" return to American people - Reuters (3.00 -0.15) -Update-
12:15 MKTIN Market Internals
The Dow is down 2.3% to 10888, the S&P is down 3.6% to 1169, and the Nasdaq is down 4.4% to 2088. Leading sectors include: Thrifts & Mortgagors +3.2%, Airlines +0.8%, Home Furnishings +0.3%, Household Products +0.03%. Lagging sectors include: Coal & Consumable Fuel -14.4%, Diversified Metals & Mining -12.5%, Real Estate Services -12.5%, Asset Management & Consulting -12.3%, and Steel -12.0%. The morning action has come on mixed volume (NYSE 475 mln, vs midday avg at 488 mln; NASDAQ 903 mln, vs 876 mln avg), decliners outpacing advancers (NYSE advancers/decliners 154/2637, NASDAQ advancers/decliners 538/2239), and with new lows outpacing new highs (NYSE new highs/new lows 0/330, Nasdaq new highs/new lows 1/161).
12:14 IAG IAMGOLD announces "positive results" expected in Ecuador's constitutional referendum (5.53 -0.33)
Co provides an update on Ecuador's constitutional referendum which includes the mandate to form a new policy for mining development. The results are expected to be favorable. Co continues to progress its 100% owned, 3.5 mln ounce Quimsacocha Gold Project, located in Ecuador and will complete a final Feasibility Study by the second half of 2009.
12:04 USGS reports 7.3 magnitude quake at Kermadec Islands, New Zealand
12:01 BSY British Sky Brdcst ordered to cut ITV stake - Guardian Unlimited (29.27 -2.27) -Update-
Guardian Unlimited reports BSkyB has been ordered to sell the majority of its controversial 17.9% stake in ITV in a move expected to lead to a takeover battle for the UK's largest commercial broadcaster. Today's long-awaited Competition Appeal Tribunal ruling, that the shareholding must be reduced to under 7.5% as ordered previously by the Competition Commission and secretary of state John Hutton, leaves Sky facing a 650 mln pounds loss on its investment. The satellite broadcaster is understood to be considering yet another appeal, further lengthening a process that began with then chief executive James Murdoch's dramatic decision to snap up ITV shares in November 2006.
11:58 Lehman reaches agreement to sell its Neuberger Berman unit to private-equity cos Bain Cap and Hellman & Friedman for $2.15 bln - WSJ
11:47 European Markets Closing Prices: FTSE: 4832.9 -255.6 -5.0%, DAX: 5818.0 -245.5 -4.1%, CAC: 3976.0 -187.4 -4.5%
11:46 GOOG Google breaks through 400 support level (398.50 -32.50) -Technical-
11:43 BONDX Off the Highs... 10-yr +1-21/32 yielding 3.650%
The market continues to see dip buying but the space in which prices are playing currently is just not all that meaningful, yet. Trade will be eyeing the 10-yr yield under 3.55% before getting really interested. In the meantime, the banking headlines remain bad and fears that a bailout, while providing some relief, may not restore confidence in credit markets. WaMu's senior debtholders were left with nothing and that will only undermine efforts to bring back investors. The dollar is trying to claw its way back on the euro after the common currency corrected some short-term oversoldness and the Fed announced a massive swap agreement diluting demand for the buck. The yen is powering higher as stocks get battered. The euro is at 1.4419 and the yen is at 104.8800. For more click here.
11:41 MNT Mentor Corp: Dysport PDUFA date scheduled for today; could affect Allergan and Mentor - Lazard (25.00 -0.67)
Lazard says that Ipsen announced that the scheduled PDUFA date for Dysport is today, but also said the FDA has run behind on some PDUFA dates and it is unclear if this date will hold. Firm says Dysport is Ipsen's Botulinum Toxin Type A which is currently seeking a label for cervical dystonia in the U.S. The firm says if Dysport is approved, they believe MNT may trade up a few dollars and Allergan (AGN) may trade off a bit and also notes that they do not have any method to estimate whether the FDA will approve Dysport today. Firm says regardless, they expect, and they believe more investors expect, that both Medicis's (MTX) Reloxin and Mentor's Puretox will eventually be approved. MRX will sell Ipsen's Botulinum Toxin Type A, under the name Reloxin, for cosmetic uses in the U.S. Firm expects a PDUFA date for Reloxin barring any delays to occur in 1H09.
11:35 TECHX Market View: S&P pulls back toward intraday support at 1166 in front of the early low at 1164 (1166.74 -46) -Update- -Technical-
11:29 AGEN Antigenics announces the FDA grants permission for export of Antigenics' Oncophage to Russia (1.63 +0.08)
11:28 C Citigroup Conference Call on WB (20.83 +0.69) -Update-
Sees $3 bln pretax charge on FDIC loss protection pact... says had other opportunities prior to this that they passed on because they were not compelling; 'this deal is compelling'... believes operating risk is a minimum... says capital ratios will remain strong... combined assets will be approx $2.9 trillion... 6% dividend will be paid on preferred stock issued to FDIC... sees about $100 bln of WB assets to be saleable, adds depth to U.S. franchise; will have a deposit share of 9.8%... will expense FDIC over next three years; says will be more than 10% accretive in 2009 and expect deal to be even more accretive going forward... says losses are capped.C says insurance buying up front cuts off the tail risk... Year 1- approx 1.3 bln in pre-tax expense synergies offset by rev dis-synergy... $3 bln pre-tax charge related to loss protection with FDIC... Year 2-4- fully loaded pre-tax impact of annual expense synergies of ~$2.8-3.2 bln, offset by revenue dis-synergies of $1.5-1.7 bln; restructuring charge of $600 mln; ~$3.0 bln pre tax annual charge related to loss protection; 6% div on $12 bln face value of preferred stock and accretion of discount on the pre stock... Pro Forma Balance Sheet- GAAP Assets $2.9 trl, risk-weighted assets $1.4 trl, Tier 1 Cap ~$130 bln, Total Capital ~$170 bln; Ratios- Tier 1 8.8%, TCE/RWMA 7.0%, Leverage Ratio 5.2%, Total Cap Ratio 11.8%... sees a significant improvement of structural liquidity; ~71% of total assets on a pro forma basis.Book Value after purchase accounting is approx ($1 bln)... $448 bln WB deposits compliment existing $804 bln Citi deposits... plan to fold retail bank into the Wachovia platform... trying to get operating leverage by 'getting fit' and repositioning services... asset reduction plan 'continues in full force'... believes this will be a high return transaction... releasing Q3 results on 10/16; notes that this quarter so historical Q3 slowdown; combined with market activity had a substantial slowdown; expect subprime marks of $1.5 bln; saw widening on credit of SIVs despite quality remains strong, expects SIV markdowns of $1.7 bln; expect markdown loss in card to be $2 bln...Total credit cost will be $9-10 bln in Q3 compared to $7 bln in Q2, mostly due to loan loss preserves; expect unemployment and housing deterioration to impact card business into 2009; seeing progress on headcount in credit card business... Preferred to a discount to par?: still finalizing warrants and preferred, discount to par is due to the coupon; says that is just the way the conversion came around... aggregate of just over $100 bln in debt being assumed... says very impressed with WB's technology... Not taking the WB preferred... says no strategic need to be in the asset mgmt business... Tier 1 ratio at end of Q4 is 'expected to be very strong'; have a deposit base that is 'truly unassailable'; will be the strongest in the country... The Trust Preferred are coming along in the deal... $312 bln of protected loss is a piece of what they are bringing over; took over $800 bln but after going through on a line by line item basis felt that the $312 bln was the amount that they 'needed help on'... call has ended.
11:26 PMFG Peerless Manufacturing upgraded to Buy at Dougherty - tgt is $21 (15.95 0.00)
Dougherty upgraded PMFG to Buy from Neutral, and establishes a $21 tgt saying they believe PMFG's current valuation discounts their previous concerns and offers attractive appreciation potential. Firm says they believe that a major global infrastructure building cycle is underway over the next decade, or two and says this investment will occur in power generation, gas transmission/processing, refining and petrochemicals, all of which are facing stricter environmental regulations. Firm also says this burgeoning global demand requires the building of thousands of electric power and hydrocarbon processing facilities representing hundreds of billions of dollars of investments and the abatement of greenhouse gases and other pollutants will continue to represent a lucrative market for companies such as PMFG.
11:26 BIIB Biogen Idec sets new session high of 50.92 above its Sep range high at 50.34 (50.56 +0.79) -Update- -Technical-
It has tested congestive resistance in the 50.90/51.00 area with the next short term area of interest near 51.50/51.60. Its Sep peak does not come into play until 52.37.
11:23 TALKX Floor Talk: Worldwide sell off underway as news continues to be dominated by financial sector turmoil
Equities are under significant pressure this morning with a number of major events taking place within the financial sector both in the U.S. and Europe -- most notably WB's banking operations being taken over by Citigroup, and European regulators staging a series of interventions to stabilize a number of European banks. In addition to these developments, investors continue to digest the tentative $700 bln "Emergency Economic Stabilization Act" for the financial system, which is expected to be passed in the House by midday today. The combination of these events has resulted in a worldwide sell off in stocks (S&P 500 -3.5%, UK's FTSE -4.6%, France's CAC 40 -4.4%, Germany's DAX -3.8%, Japan's Nikkei -1.2%, Hong Kong's Hang Seng -4.3%), tighter credit conditions (increased Libor rates, widening spreads) and increased volatility (VIX & VXN +14%)... Looking more closely at the news, a number of European banks were either nationalized or bailed out over the weekend, including the UK's Bradford & Bingley, Luxembourg's Fortis, Germany's Hypo Real Estate Group, and Iceland's Glitnir. This led to a broad sell-off in other European banks, with sharp losses in RBS, Icap, Barclays, Lloyds, HBOS, and Man Group, among many others. Here in the U.S., the biggest piece of corporate news is Citigroup's acquisition of Wachovia's banking subsidiaries, creating the largest U.S. bank by total deposits. In a deal facilitated by the FDIC and other regulatory agencies, Citi will pay Wachovia ~$2.16 bln in stock and assume Wachovia senior and subordinated debt, totaling ~$53 bln. This gives WB stockholders about $1 per share in C stock. Citi expects to raise $10 bln in common equity in connection with this transaction and reduce its quarterly dividend to $0.16 per share from $0.32. The FDIC stated that Wachovia did not fail and the co will remain a publicly traded institution, although the market cap has been significantly reduced. The WB news has led to sharp losses in other large regional bank stocks, including NCC -42%, SOV -31%, FITB -25% and RF -16%... In other news, Mitsubishi UFJ Financial Group (MTU) and Morgan Stanley confirmed that MUFG is investing $9 bln in equity in MS for a 21% interest in the co on a fully diluted basis... Following all this, the Federal Reserve announced several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets. The Fed increased the size of the 84-day maturity Term Auction Facility (TAF) auctions, announced two forward TAF auctions totaling $150 bln, and increased swap authorizations with a number of other central banks... Looking at today's trading, the major averages are off their morning lows but remain sharply lower on the day: Dow -286 pts, SPX -43, Nasdaq Comp -86 pts. The percentage losers list is dominated by financial-related names, including the following: TMA -67%, CCOW -62%, NCC -42%, SOV -31%, CRBC -27%, FED -26%, FITB -25%, RBS -21%, STT -19%, SFI -19%, BCS -19%, AIB -19%, ING -18%, GNW -17%, LYG -17%, RF -16%, UBS -15%, MS -6.9%, GS -5.9%, BAC -5.0%, JPM -4.3%. Names trading on the positive side include: FRE +8.5%, C +3.0%, WFC +1.5%, FNM +0.4%.
11:13 CBRX Columbia Labs downgraded to Above Average at Caris - tgt reduced to $8 (2.47 -0.99) -Update-
Caris downgraded CBRX to Above Average from Buy, and cut its tgt to $8 from $11 noting the co announced this morning that its vaginally delivered lidocaine product missed its primary endpoint in a Phase II study for the treatment of primary dysmenorrhea (menstrual cramps). As a result, the firm no longer believes that a near-term partnership for the product is forthcoming, and therefore, they have removed associated assumptions from our model and based on this event, they downgraded the co.
11:08 OPTNX Early Options Activity
Taking an early look at the options market, we found the following names that may be worth watching throughout the day for further indication of investor expectations given their options volume and implied volatility movement. Stocks seeing volatility buying: WOOF Oct 30 puts are seeing interest with 1230 contracts trading vs. open int of 470, pushing implied vol up around 14 points to ~56% -- earnings are expected in mid-to-late Oct, possibly falling outside of the Oct expiration cycle; IYR (iShares Dow Jones U.S. Real Estate) Mar 64 puts are seeing interest with 1720 contracts trading vs. open int of 80, pushing implied vol up around 5 points to ~46%; SCSC Nov 30 calls are seeing interest with 1810 contracts trading vs. open int of 1490, pushing implied vol up around 4 points to ~54% -- earnings are expected in late Oct; EWW (iShares MSCI Mexico Investable Market Index) Mar 40 puts are seeing interest with 1730 contracts trading vs. open int of 210, pushing implied vol up around 3 points to ~41%; EMC Nov 10 puts are seeing interest with 1890 contracts trading vs. open int of 380, pushing implied vol up around 3 points to ~64% -- earnings are confirmed on 10/22... Stocks seeing volatility selling: GM Dec 14 puts are active with 21.9K contracts trading vs. open int of 20.5K, pushing implied vol down around 10 points to ~109% -- earnings are expected in early Nov... CBOE Put/Call ratio: 1.31, VIX: (39.58, +4.84, +13.9%), VXN: (41.50, +4.65, +12.6%). (To find past options related comments in the archive, use the symbol OPTNX)
11:05 PCOP Pharmacopeia downgraded to Market Perform at Rodman & Renshaw (1.47 -0.50)
Rodman & Renshaw downgraded to Market Perform from Market Outperform, removes its price tgt (previous price tgt was $9 tgt). Firm noted that Wednesday, September 24th, Ligand Pharmaceuticals (LGND, Not Rated) agreed to acquire PCOPC through a stock-for-stock exchange for consideration of $55MM. Also, the firm notes, Contingent Value Rights (CVRs), currently valued at an additional $15 mln, will be paid to PCOP shareholders in the event that LGND agrees to partner lead compound PS433540 (DARA) by 2011. Firm says the transaction awaits the approval of PCOP shareholders. Given the unlikely possibility of either a higher bid or successful shareholder demand for a materially increased offer, the firm downgraded the co's shares.
10:52 TECHX Market View: Dow lifts as much as 130 points off low (10904 -238) -Update- -Technical-
Index tested intraday resistance noted in the 10:36 update at 10920/10930 (rebound high 10918).
10:47 NCC National City is far better capitalized than Wachovia and other large U.S. banks - Reuters (1.63 -2.07) -Update-
Reuters reports that NCC says its tier 1 capital ratio is the highest of all large U.S. banks at 11.1%. Says on average its tier 1 capital ratio is about 25% higher than at other regional and national banks. Says has no plan, intention, or need to raise additional capital, or the need to undertake any particular transaction because of insufficient capital.
10:46 SLF Sun Life announces effective October 14, 2008, Jon Boscia will join as President, Sun Life Financial (35.04 -0.86)
10:40 TEL Tyco Electronics: Hearing downgraded intraday at tier 1 firm (26.39 -0.98) -Update-
10:39 LFUS Littelfuse: Hearing downgraded intraday at tier 1 firm (30.62 -3.29) -Update-
10:36 TECHX Market View: Dow best performing index on a relative basis (10882 -260) -Update- -Technical-
The blue chip index has been the best performer on a relative basis thus far today as it held above last week's low at 10753 (session low 10790). It pays to keep an eye on the leader as the overall market attempts to stabilize from the early breakdown to get a read on the underlying strength of the move. Short term resistance is at 10920/10930 with a more important zone to take out and hold above at 10970/10980 -- AIG +3.4%, GM +0.7%, JNJ +0.5%, PG +0.2%.
10:35 V Visa slips to session lows as it eyes a test of its Sep momentum low of 58.38 just below (58.58 -3.46) -Technical-
10:30 IDEV Indevus Pharm tgt raised to $9 before the open at JMP (3.18 -0.33) -Update-
Before the open, JMP raised their IDEV tgt to $9 fom $4 and reiterated their Market Outperform noting that IDEV announced Friday that it has reached an agreement with the FDA regarding NDA filing for NEBIDO (Phase III, male hypogonadism). Separately, the firm says, IDEV announced a collaboration for development of Pagoclone (Phase II, stuttering) with Teva Pharmaceutical (TEVA - $46.03). Firm believes both events significantly improve the IDEV outlook, but the firm focusus on the NEBIDO news as they are surprised that this "best possible" outcome of recent FDA discussions actually transpired. Firm is also accelerating their revenue projections for NEBIDO to reflect the new timeline.
10:29 Sector ETF leaders & laggards through first hour of trading
First Hour Sector Strength:
Gold- GLD +1.6%, US Dollar- UUP +0.80%, Bonds- BND +0.70%
Fisrt Hour Sector Weakness:
Coal- KOL -12.3%, Solar Power- KWT -11.5%, Steel- SLX -10.2%, Metals/Mining- XME -9.9%, Regional Banks- RKH -8.6%, Commercial Banks KBE -8.1%, Gas- UGA -7.5%, Wind Energy- FAN -8.4%, Oil HLDRS- OIH -6.7%
10:27 TECHX Stock indices lift off lows, relative sector strength vs S&P noted in Housing XHB, Transports TRAN/IYT, Finance XLF/RKH -Update- -Technical-
10:25 TECHX DJ Transportation Index -TRAN- vacillating back above its July low of 4571 after short lived breach-- session low 4562 (4591 -159) -Update- -Technical-
10:25 NCC National City drops more than half as market wonders who's next - Reuters.com (1.73 -1.98) -Update-
Reuters.com reports the co dropped more than half on Monday as investors wondered which regional bank might need a merger partner as the sector suffered what analysts called a deepening crisis of confidence. The stock fell more than 25 percent on Friday. "There are a number of regional banks which may need help, either because of the weakening mortgage market or simply because of the weakening economy," said Michael Sheldon, chief market strategist, RDM Financial Group. "I think it's absolutely a crisis of confidence, there's some real weakness in the economy," he said. "But the larger issue is simply a paralysis of the economy or lack of confidence in financial institutions."
10:21 COMDX Crude oil drops back below the $100 mark to fresh lows, now -6.95 at 99.93
10:20 TECHX Oil Service HOLDRs-OIH- attempting to stabilize after approaching 52-wk low from mid-Sept at 144.18-- session low 144.82 (146.46 -11.16) -Update- -Technical-
10:20 ELX Emulex initiated before the open with a Market Underperform at JMP - $10 tgt (10.84 -0.35)
Before the open, JMP initiated ELX with an Market Underperform and a $10 tgt saying they are modeling $0.18 for the September quarter (F1Q09) on revenue of $110.0 million; Reuters' consensus is $0.19 on $110.4 million in revenue. For FY09, the firm operating EPS estimate is $0.89, versus consensus of $0.90, and for CY09, they estimate operating EPS of $0.96. Though the firm believe that ELX's valuation is neutral, with expected negative growth and the potential of declining margins with Brocade (BRCD - $5.78) entering the market, they believe the stock will underperform the market over the near term.
10:19 CEPH Cephalon concludes all outstanding federal and state government investigations into the co's sales and promotional practices (78.72 -1.15)
Co announces it has finalized a previously announced agreement in principle with the U.S. Attorney's Office for the Eastern District of Pennsylvania, the U.S. Department of Justice and various other federal agencies. Co also reached separate agreements with the Attorneys General of the states of Connecticut and Massachusetts to settle related investigations into the company's sales and promotional practices. Under the previously disclosed terms of the federal settlement, Cephalon will pay the $425 mln reserved in 2007 plus an estimated $12 mln in accrued interest expense, plead guilty to a single misdemeanor violation of the U. S. Food, Drug, and Cosmetic Act, and enter into a five-year Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services. Co also settled its two outstanding state government investigations for a total of $6.85 million.
10:19 MU Micron: Correction (4.36 -0.29) -Update-
In our 8:59 comment we reported JMP initiated MU with an Underperform, this is incorrect. JMP did not initiate coverage of MU today, our comment has been removed.
10:18 TECHX Semi HOLDRs -SMH - continues to weigh on lagging Nasdaq, tests 52-wk close low (24.58 -1.27) -Update- -Technical-
The SMH has dropped as low at 24.53 as its test its 52-wk close low from Mid-Sep at 24.51. The 52-wk intraday low is at 24.15.
10:17 MSCI all-country world index loses 4.3%, most since 1997 - Bloomberg
10:15 TECHX New session low for Finance SPDR -XLF- at 19.84 leaving its slightly above last wk's low at 19.73 (19.88 -1.51) -Update- -Technical-
Intraday supports below if this is taken out are at 19.55 and the 19.30/19.24 area.
10:11 ARBA Ariba downgrade details (13.08 -2.04)
As mentioned at 8:35ET, Cowen downgraded ARBA to Neutral from Outperform saying the firm remain fans of the story, and although the stock is only moderately expensive on traditional multiples (5.3x subs revs and 1.2x the traditional business), they are concerned that consensus expectations for organic bookings growth, the best measure of the health of the business, are aggressive. Firm says FY09 bookings growth forecasts are actually ahead of FY08 bookings growth when they back out specific one time growth catalysts from FY08. The firm says it is also important to note that the Sept Q is a seasonally weak 4Q (atypical for enterprise software) and will reflect the last full quarter of growth boosted by the Procuri acquisition.
10:11 TTWO Take-Two upgraded to Outperform at Cowen & Co, pre-market (15.28 -0.88)
Before the markets open, Cowen & Co upgrades TTWO to Outperform from Neutral. Firm expects fundamentals at TTWO to remain strong following ERTS' dropped bid. They est that Take-Two will be able to support average normalized non-GAAP FD EPS of $1.40 in FY09-FY10. The FY09 release slate looks solid and the co now has over $4/share in cash on the balance sheet. The main question mark is the status of Rockstar's key talent, with their contract due to expire in Feb 2009. Although the Rockstar question creates an impending binary event for the stock, they believe that at current levels the risk/reward trade-off on TTWO shares is attractive.
10:06 TECHX Sectors outpacing the S&P as the index attempts to stabilize-- Housing XHB, Retail RTH, Energy XLE/OIH -Update- -Technical-
10:02 ECONX Federal Reserve and other central banks announce further coordinated actions to expand significantly the capacity to provide U.S. dollar liquidity
In response to continued strains in short-term funding markets, central banks today are announcing further coordinated actions to expand significantly the capacity to provide U.S. dollar liquidity. Central banks will continue to work together closely and are prepared to take appropriate steps as needed to address funding pressures. Federal Reserve Actions: The Federal Reserve announced today several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets. We will continue to adapt these liquidity facilities as necessary and will keep them in place as long as circumstances require. Actions by the Federal Reserve include: (1) an increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 bln per auction from $25 bln beginning with the October 6 auction, (2) two forward TAF auctions totaling $150 bln that will be conducted in November to provide term funding over year-end, and (3) an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 bln, from $290 bln previously. These steps are being undertaken to mitigate pressures evident in the term funding markets both in the United States and abroad. By committing to provide a very large quantity of term funding, the Federal Reserve actions should reassure financial market participants that financing will be available against good collateral, lessening concerns about funding and rollover risk. 84-Day Maturity TAF Auctions The increase to $75 bln per auction will triple the supply of 84-day maturity credit to $225 bln from $75 bln. TAF credit at the 28-day maturity will remain at $75 bln. The total amount of TAF credit available in the 28-day and 84-day auction cycles will double to $300 bln from $150 bln. Forward TAF Auctions The forward TAF auctions are a new program designed to provide reassurance to market participants that term funding will be available over year-end. The timing and terms of the two forward TAF auctions will be determined after consultations with depository institutions that utilize the TAF program. It is anticipated that there will be two auctions in November totaling $150 bln. These auctions will provide short-term (one- to two-week term) TAF credit over year-end. Foreign Exchange Swap Lines: The Federal Open Market Committee (FOMC) has authorized a $330 bln expansion of its temporary reciprocal currency arrangements (swap lines). This increased capacity will be available to provide funding for U.S. dollar liquidity operations by the other central banks. The FOMC has authorized increases in all of the temporary swap facilities with other central banks. These larger facilities will now support the provision of U.S. dollar liquidity in amounts of up to $30 bln by the Bank of Canada, $80 bln by the Bank of England, $120 bln by the Bank of Japan, $15 bln by Danmarks Nationalbank, $240 bln by the ECB, $15 bln by the Norges Bank, $30 bln by the Reserve Bank of Australia, $30 bln by the Sveriges Riksbank, and $60 bln by the Swiss National Bank. As a result of these actions, the total size of outstanding swap lines is $620 bln. All of the temporary reciprocal swap facilities have been authorized through April 30, 2009. Dollar funding rates abroad have been elevated relative to dollar funding rates available in the United States, reflecting a structural dollar funding shortfall outside of the United States. The increase in the amount of foreign exchange swap authorization limits will enable many central banks to increase the amount of dollar funding that they can provide in their home markets. This should help to improve the distribution of dollar liquidity around the globe.
10:02 NASDAQ 100 (NDX) leaders & laggards through first half hour of trading
Early NDX Strength:
ESRX +2.2%, SIRI +1.3%, BIIB +1.2%, DTV +1.0%, APOL +0.30%
Early NDX Weakness:
AAPL -13.3%, JOYG -12.0%, STLD -10.2%, FWLT -9.4%, FMCN -8.9%, DISH -8.2%, INFY -7.9%
10:02 Dow rallies ~40 points off the lows following the ECB headline as well as the Fed increasing their TAF auction
10:01 CNBC reports that the Fed is announcing a “massive” liquidity injection... says they are increasing the total size of the 84-day TAF auctions to $225 bln up from $75 bln beginning Oct. 6
10:01 Fed increasing TAF auctions to $75 bln
10:00 Dow (INDU) leaders & laggards through first half hour of trading
Early INDU Strength:
GM +1.1%, JNJ +0.40%
Early INDU Weakness:
AXP -8.5%, AA -7.1%, CAT -4.8%, BAC -4.3%, IBM -4.2%
10:00 ECB says swap with Fed doubled to $240 bln; will last through April 30, 2009
09:59 TECHX Market View: Nasdaq Comp tests/lifts slight off its 52-wk close low from Mid-Sep at 2098 -- session low 2097.88 (2107 -75) -Update- -Technical-
Noted the Sep/52-wk close low at 2098 in the 09:45 update and have seen a minor lift off this low. Intraday resistances are at 2118/2120, 2130 with last wk's low at 2137.
09:58 OPTNX VXN (Nasdaq Volatility Index) edges to new multi-year high of 40.92
09:56 TECHX Market View: Selling pace picks up with stock indices running through numerous supports -- Dow -331, S&P -44, Nasdaq -83 -Update- -Technical-
The S&P low is at 1169 which is near a congestive support at 1170. Levels below are at 1165 and 1162.
09:52 NASDAQ 100 (NDX) prints fresh 52Wk lows here @ 1604.65
AAPL -13.3%, JOYG -10.6%, STLD -9.2%
09:50 TECHX Market View: S&P 500 testing last week's low at 1179 (1180 -32) -Update- -Technical-
09:50 Equity averages extend to the downside, Dow -236 pts, SPX -32, Nasdaq -64
09:48 TECHX Dow components in the black led by AIG +6.7%, JNJ +0.2%, PG +0.1% -Update- -Technical-
09:47 Credit Suisse says that in order for T.A.R.P. to be fulfilled, three preconditions need to be fulfilled: Capital, Improved liquidity, and Workability
Credit Suisse says that in order for T.A.R.P. to be fulfilled, three preconditions need to be fulfilled: 1) Capital: Firm ests that the banks in the U.S. need $200 bln of capital and in Europe at least as much again. Thus the most critical issue is the price the Treasury pays. This has been left deliberately vague (probably good news). If credit prices are unchanged, then just $15-25 bln of capital has been injected into banks. 2) Improved liquidity: $700 bln represents about 12% of the ex-GSE mortgages and is probably an appropriate amount to ensure markets become more liquid. Funding mismatches are now being addressed as central banks lengthen the maturity of their repo operations. Firm says the package is however too small. 3) Workability: The dis-incentives for banks using this programme (in terms of caps on executive pay and warrants) have been watered down.
09:46 AAPL Apple challenging its mid-2007 and Feb 2008 lows near 115.40 (115.39 -12.72) -Update-
09:46 ATK Alliant Tech awarded $10.4 mln Phase 1 contract to design and demonstrate the M982E1 excalibur precision engagement projectile (94.96 -1.27)
Co announces that it has been awarded a $10.4 million contract for the first phase of a 48-month Excalibur Ib system design and development program from the U.S. Army, Picatinny Arsenal, New Jersey. The program is structured in two phases with a 15 round "shoot-off" and down-select at the completion of Phase 1, 18 months from now. Production options, which are expected to be exercised in the 2012, could bring total contract value to more than $350 mln.
09:45 TECHX Market View: Nasdaq Comp pacing the way lower as it breaks below last week's low of 2136 (2125 -57) -Update- -Technical-
The breakdown off the open has quickly brought a congestive support zone at 2130/2120 into play (session low 2124). Support below is in the 2110/2106 area with its psych level and the Sep closing low at 2100/2098. First level resistance is at last week's low at 2136.
09:45 VRAD Virtual Radiologic resumes trading (10.00 -1.74) -Update-
09:42 CAH Cardinal Health Spinoff Conference Call Summary (49.85 +0.15) -Update-
Mgmt said that it expects this spinoff occur sometime in the middle of calendar year '09. Co is choosing to do the spinoff for several reasons. First, Healthcare Supply Chain Services businesses and Clinical and Medical Product businesses are very different; Second, Clinical and Medical Products has matured and can stand on its own as a publicly traded company and third, co believes this approach will deliver the maximum value customers and shareholders over time to more focused management that is closer to its customers. Co reiterates goal of 10% rev growth and 20% segment profit growth for its clinical and medical products segment and 6% rev growth for Healthcare Supply chain Services segment.
09:41 COV Covidien: New restructuring program lowers costs, adds further EPS flexibility - Leerink Swann (53.67 -1.24) -Update-
Leerink Swann notes this morning, as COV prepares to start its FY2009 (Sept FY-end), the co is announcing its second major restructuring program. The new program is designed to sustain gross margin expansion at COV, with savings likely to offset recent raw material cost increases and potential FX headwinds, while allowing the co to continue to invest in R&D and growth enhancing projects. It should also help COV bridge its FY2010 profitability gap due to the anticipated FY2009 oxycontin "windfall". With additional EPS flexibility on tap for FY2010 and beyond, driven by restructuring, firm continues to recommend COV shares. They believe the shares should react positively to this morning's announcement.
09:40 TRGL Toreador Royalty: 2009-2010 should be an active period for exploration results - Stanford (9.69 -0.30)
Stanford says that in the Dec quarter, TRGL should resume exploratory activities, which had been promising prior to a period of intensely negative developments at the SASB gas field in the Western Black Sea. Next month, TRGL should complete the sale of 26.75% of its $36.75% interest in SASB to Petrol Ofisi for gross proceeds of $80.25 mln. This transaction would reduce net debt to about $30 mln from $103 mln on June 30, which along with annualized positive cash flow going forward of about $25 mln, should allow evaluation of large exploration holdings on over two million net acres of properties in Turkey, France, Hungary, and Romania over the medium term.
09:39 ESRX Express Scripts shows notable relative strength as it rallies towards the top of its Aug-Sept trading range (76.99 +2.11)
09:38 TECHX Sector Watch -Update- -Technical-
Broad based pressure in the early going with little other than Gold GLD +0.5% and safe haven U.S. Treasuries in the plus column. Commodities are the weakest performers thus far: Coal -7.3%, Oil Service -5^%, Steel -5.4%, Natural Gas -4.9%, Commodity Index -4.4%, Oil -4%.
09:37 CBRX Columbia Labs: Rodman & Renshaw says no significant difference was observed in terms of average patient-assessed pain intensity between the Lidocaine and placebo groups (2.65 -0.81) -Update-
Rodman & Renshaw says that this morning CBRX announced results from its 70-patient Phase II Trial of Vaginally-administered Lidocaine for Dysmenorrhea. No significant difference was observed in terms of average patient-assessed pain intensity between the Lidocaine and placebo groups. Columbia suggested that top line data from end-of-cycle patient assessments trended in favor of Lidocaine. No significant adverse events occurred, and the adverse events that occurred were similar in frequency and kind between the two groups. The co is currently evaluating possible optimization of the dosing regimen and treatment protocol and expects to provide further analysis on the third quarter call.
09:36 AMLN Amylin Pharms: Recent Liraglutide data highlights importance of Byetta LAR approval - Leerink Swann (20.59 -0.18)
Leerink Swann says that last week, Novo Nordisk published more detailed results from the liraglutide Phase III developmental program. Overall, the data from the LEAD 3 and LEAD 6 studies are consistent with what has been published before -- namely, that liraglutide QD might be slightly more effective and better tolerated than Byetta BID. However, the real struggle will not be between liraglutide and Byetta BID, but with QW Byetta LAR, which has been shown to be more effective than Byetta BID in head-to- head studies. Firm says the recent announcement that liraglutide approval will be considered by an FDA advisory panel next March has likely delayed liraglutide by at least two months to May 2009. A Byetta LAR filing is expected to occur no later than midyear 2009. If this schedule remains intact, it is unlikely liraglutide will have enough time to make a significant impact in the marketplace before Byetta LAR is approved.
09:33 MTZ MasTec: Friedman Billings believes AT&T/DTV agreement positive for Mas Tec (13.51 -0.02)
Friedman Billings says that late Friday, T announced it will resell DTV's satellite service co-branded with T's U-verse TV offering, starting on Feb 1, 2008. This is positive news for MTZ's DirecTV business as MTZ is the home service provider in the legacy Bell Atlantic region. MasTec, which services approximately 20%-25% of DirecTV's subscribers was negatively impacted by T's acquisition of BellSouth given that T and the legacy SBC were under contract with DISH network through Jan 31, 2008. This reversal should increase MTZ's DirecTV rev going forward, which in 2Q08 accounted for $107 mln (or 35% of total rev). Longer-term even as the DirecTV rev increases, firm believes DTV will become a smaller customer as a percentage of rev given MTZ's recent diversification strategy.
09:31 WIRES On The Wires -Update-
Baxter Healthcare (BAX) announced that it received 510(k) clearance for expanded labeling for the first antimicrobial needleless intravenous connector, V-Link Luer-activated device with VitalShield protective coating... Synvista Therapeutics (SYI) announces that it has received approval from the Israeli Ministry of Health to begin a Phase 2 trial of a topical formulation of SYI-2074 in mild-to-moderate plaque psoriasis... Spectrum Control (SPEC) announced that Spectrum Microwave, its wholly-owned subsidiary, has acquired substantially all of the assets and assumed certain liabilities of SatCon Electronics. The total purchase price of the acquisition was approximately $5.6 mln... Chemtura Corporation (CEM) announced it will increase calcium sulfonate grease capacity by 60% at its West Hill, Ontario, Canada plant.
09:30 MCD McDonald's: Credit crunch takes bite out of McDonald's - AdAge (63.20 )
AdAge reports the banking crisis is threatening to take a rather surprising hostage: McDonald's big-budget coffee rollout. Tightening credit conditions, have prompted Bank of America to halt loans to McDonald's franchisees. They need the capital to frantically build coffee bars in the chain's 14,000 locations for what was planned to And although it won't derail the launch altogether, it is likely to delay it nearly into summer -- hardly optimal timing for a hot-beverage introduction. It also could force the company to postpone a huge marketing push it's been planning to support the java drive, as the company generally waits until 60% of its stores have been outfitted to undertake a national ad push. The fast feeder maintains that everything is on track. According to an internal memo from McDonald's executive Cindy Fuller, Bank of America's franchisee-loan program, known as "Eagle," had reached funding limits faster than expected. She warned that market volatility was affecting the bank's ability to "fund additional growth."
09:30 TKTM Ticketmaster upgraded to Buy at Stifel Nicolaus; tgt $14 (10.74 )
Stifel Nicolaus upgrades TKTM to Buy from Hold and sets target price at $14 based on valuation
09:27 SYMC Symantec profiled in New America section of IBD (19.80 )
IBD reports "Management has done a good job of communicating their strategy to investors as well as to customers," said Daniel Ives, an analyst at Friedman Billings Ramsey. "One brick at a time, they're rebuilding their credibility on the Street." Chief Executive John Thompson says this strategy combines Symantec's core security business with general data management, blending the technology from its battery of buyouts into a single package. "While we've had a historical focus on security, we're convinced now more than ever before that you can't separate the security of the information from the management process of the information itself," he said in an interview. "When IT budgets are more restrained, large vendors like Symantec are going to benefit," Ives said. "They have a lot more tools in their garage to sell."... The leadership has also scaled back the co's buying habits. The current strategy seeks small, private companies that fill out the portfolio in modest ways.
09:25 LLY Eli Lilly: No news is bad news - Caris (46.82 ) -Update-
Caris notes LLY announced on Sept 26, 2008, that the FDA had not completed its review of Effient (prasugrel) and that the agency would need an unspecified amount of time to make a final decision on the drug. Given that this is the second push out of a decision, firm views the delay as a negative, noting that the FDA delayed Cardiome's (CRME) Kynapid product for nearly seven months before letting the sponsor know that additional safety data would be needed. Next is news related to the company's application for Byetta as monotherapy, and given the FDA's recent warnings on pancreatitis, firm does not anticipate good news.
09:24 VLTR Volterra Semi assumed with a Buy at Collins Stewart; tgt $17 (13.30 )
Collins Stewart is assuming coverage with a Buy and $17 tgt. While many investors have focused too heavily on the uncertain outlook in the co's high profile enthusiast graphics card business, firm believes that servers and notebooks driven by the launch and ramp of several new Intel platforms should serve as the primary growth drivers and focus for investors moving forward. New Intel platforms to provide growth drivers through 2009. Firm says in the near term, VLTR expects to see very strong strength in its notebook segment as it benefits from the ramp of new design wins with customers such as Sony, Lenovo, and recently announced Dell, on Intel's Montevina/Centrino 2 platform. Notebook revenues are expected to double q/q in Q3. Additionally, Calpella should provide yet another opportunity for the company to secure additional design wins and gain market share in 2009 in its notebook segment.
09:24 WB Wachovia: Citigroup confirms agreement-in-principle to acquire WB's banking operations in an FDIC-assisted transaction; C to raise $10 bln, cut dividend to $0.16 (0.93 ) -Update-
Citi (C) announces it has reached an agreement-in-principle to acquire all of the banking subsidiaries of Wachovia, creating the largest U.S. bank by total deposits. Under the terms of the agreement-in-principle, Citi will pay Wachovia ~$2.16 bln in stock and assume Wachovia senior and subordinated debt, totaling ~$53 bln. Citi will acquire more than $700 bln of assets of Wachovia's banking subsidiaries, and related liabilities. The Federal Deposit Insurance Corporation has agreed to provide loss protection in connection with ~$312 bln of mortgage-related and other Wachovia assets. Citi is responsible for the first $30 bln of losses on this portfolio, and expects to record these expected losses under purchase accounting upon closing of the transaction. Citi is also responsible for the next $12 bln in losses up to a maximum of $4 bln per year for the next three years. Citi has also agreed to issue to the FDIC preferred stock and warrants with a combined value of ~$12 bln. The FDIC has agreed to be responsible for any further losses on this portfolio. The transaction, which has been approved by the Boards of Directors of both companies, is subject to: approval by Wachovia's shareholders; to the occurrence of the closing by December 31, 2008; definitive documentation; regulatory approvals; and other customary closing conditions. The deal is expected to be accretive to Citi's earnings from year one excluding a total of $3.7 bln in pre-tax restructuring charges for severance over the next four years, and expected to be fully accretive in 2010. Citi expects to raise $10 bln in common equity in connection with this transaction and reduce its quarterly dividend to 16 cents per share (vs. current dividend of $0.32 per share), effective immediately, to maintain the company's strong capital position. On a pro forma basis for the second quarter ended June 30, 2008, Citi's Tier 1 capital ratio is expected to be 8.8% assuming completion of the transaction.
09:22 C Citigroup to cut quarterly dividend to $0.16, raise $10 bln in common equity - DJ (20.15 ) -Update-
Briefing.com Note: Co's current dividend is $0.32 per quarter.
09:22 WB Wachovia confirms bank subsidiary divestitures to Citigroup (10.00 ) -Update-
The co announces intentions to sell its retail bank, corporate and investment bank and wealth management businesses to Citigroup. Wachovia Corporation will remain a public company with two main operating subsidiaries: Wachovia Securities, the nation's third largest brokerage firm, and Evergreen Asset Management, a leading provider of asset management services. Under terms of the transaction, Citigroup (C) will pay $2.1 billion to Wachovia and assume the senior and subordinated debt of Wachovia Corporation. The transaction is expected to close before year-end. It has been approved by directors of both companies and is subject to shareholder approval of Wachovia and the appropriate regulatory approvals. Customers of both companies should continue banking as usual, and feel confident that their deposits are secure. Also, employees and vendors should continue to operate business as usual.
09:22 ATHR Atheros Communications resumed with a Buy at Collins Stewart; tgt $28 (23.44 )
Collins Stewart resumes coverage of ATHR with a Buy and sets target price at $28 saying target markets for Atheros products are growing. The firm says the co should grow even if market share is maintained.
09:20 TECHX Market View: Support and Resistance -Update- -Technical-
The market is headed for a firmly lower start to the day amid continued credit crisis worries. For a look at the near term supports/resistances of note as well as charts and bigger picture levels go to The Technical Take.
09:20 MS Morgan Stanley: Mitsubishi UFJ Financial Group to invest $9 bln in Morgan Stanley (24.75 )
Mitsubishi UFJ Financial Group (MTU) and Morgan Stanley announced that the two companies have reached a definitive agreement under which MUFG is investing $9 bln in equity in Morgan Stanley for a 21% interest in the company on a fully diluted basis. MUFG will acquire 9.9% of Morgan Stanley's common stock on a primary basis at a price of $25.25 per share, for a total of $3 bln. MUFG will also acquire $6 bln of perpetual non-cumulative convertible preferred stock with a 10% dividend and a conversion price of $31.25 per share.
09:20 MCBC Macatawa Bank Corporation takes steps to maintain its financial strength (9.13 )
The co announces that it is taking several steps to maintain its financial strength. In light of continued soft economic conditions in West Michigan, the Holland, Michigan-based community bank will take $15.0 million in loan loss provisions and $878,000 in losses on foreclosed properties. These loan loss provisions and foreclosed property losses are being recorded in the quarter ended June 30, 2008. The additional provisions and losses result in a $10.3 million decrease in the Company's second quarter earnings on an after-tax basis from $2.2 million in earnings to $8.1 million in net losses. After these adjustments, Macatawa Bank continues to remain a well-capitalized financial institution under regulatory guidelines. The additional provisions and losses reflect continued weakness in the Company's portfolio of real estate loans. The Company's management and board have determined the need for the adjustments based upon current and evolving information regarding its real estate loan portfolio and the continued decline in the housing market.
09:18 XL XL Capital announces preliminary loss estimates for Hurricanes Gustav and Ike; says less than one-quarter of a percent of its investment portfolio was exposed to LEH (18.41 )
Co announced preliminary net loss estimates for Hurricanes Gustav and Ike. The co's preliminary loss estimates, pretax and net of reinsurance and reinstatement premium, related to Hurricane Gustav range from approximately $30 mln to $35 mln, which are attributable in roughly equal proportions to our insurance and reinsurance operations. The Company's preliminary loss estimates, pretax and net of reinsurance and reinstatement premium, related to Hurricane Ike range from approximately $165 mln to $235 mln, of which $65 mln to $85 mln is attributable to insurance and $100 mln to $150 mln to reinsurance... The Company also announced that less than one-quarter of a percent of its investment portfolio was exposed to Lehman Brothers Holdings (LEH) as of June 30, 2008. As of September 25, 2008, the amortized cost of XL's fixed income holdings of Washington Mutual (WM) was $4 mln. As of September 25, 2008, the cost of XL's common and preferred equity of Fannie Mae (FNM) and Freddie Mac (FRE) was $9 mln.
09:18 AAPL Apple Slides After Morgan Stanley Predicts 10% Drop -- Bloomberg.com (128.24 ) -Update-
Analyst Kathryn Huberty cut her price target 35 percent to $115 today. That is 10 percent less than the stock's closing price Sept. 26. She reduced the stock to "equal-weight" from "overweight." Slowing iPhone and Mac orders will hurt the Cupertino, California-based company, New York-based Huberty said in a note. Apple will have to cut prices to compete this holiday season, weighing on earnings, Huberty said
09:17 Iceland takes control of Glitnir - Guardian Unlimited
Guardian Unlimited reports the Icelandic government has seized control of one of the nation's biggest banks, Glitnir, the latest victim of the crisis gripping the world's financial markets. The move will stoke long-held fears that Iceland could be facing financial ruin. Officials said the government in Reykjavik had bought a 75% stake in the bank for €600 mln to prevent it from going bust.
09:17 RBC says that with legislation agreed upon, congress expected to pass T.A.R.P. bill within days; implementation several weeks away
RBC says the Troubled Asset Relief Program will be funded in three tranches; immediately with $250 bln, followed by $100 bln and finally with $350 bln (subject to Congressional disapproval). The second and third tranches need additional oversight to be funded. The Treasury's purchase authority will last two years. T.A.R.P. will be targeted to purchase residential and commercial whole loans and securities originated or issued on or before March 14, 2008. Plus any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability.
09:17 S Sprint’s iDEN network attracts private equity interest, sources say - FT Mergermarket (6.93 )
FT Mergermarket reports the co has attracted private equity interest to its iDEN network, two industry sources and two analysts told mergermarket. However, continued the analysts, iDEN, the wireless network Sprint acquired when it purchased Nextel for $35 bln three years ago, has a number of issues impeding its attractiveness. In a brief interview, Sprint CEO Dan Hesse said the company has "tested" buyer interest in its iDEN network but has not begun a formal auction. One industry source who is following the situation said the interested private equity firms could have included Alltel's owners TPG Capital and GS Capital Partners, and an analyst claiming knowledge of the situation said former Nextel CEO Tim Donahue had paired with one of the firms. However, continued the industry source and analysts, buyers encountered problems when trying to sort through issues related to separating Sprint's iDEN from its original code division multiple access network.
09:16 S&P futures vs fair value: -18.90. Nasdaq futures vs fair value: -33.00.
09:15 VDSI VASCO Data Security downgraded to Underperform at RBC Capital Mkts; tgt lowered to $14 (11.38 )
RBC Capital Mkts downgrades VDSI to Underperform from Sector Perform and lowers their tgt to $14 from $15 saying checks indicate further deterioration in the macro environment that challenges management guidance and investor expectations. The firm says companies are lowering IT budgets for year-end and taking a defensive approach to their 2009 operating plan.
09:15 FRE Freddie Mac announces receipt of Federal Grand Jury subpoena and Securities and Exchange Commission inquiry (2.00 )
Co received on Friday, September 26, 2008 a federal grand jury subpoena from the United States Attorney's Office for the Southern District of New York. Also on Friday, September 26, 2008, Freddie Mac received from the Staff of the Enforcement Division of the United States Securities and Exchange Commission notice indicating that the Enforcement Division is also conducting an inquiry, and directing the Company to preserve documents. The subpoena seeks documents relating to accounting, disclosure and corporate governance matters for the period January 1, 2007 to the present. Freddie Mac will cooperate fully in these matters.
09:14 SNWL SonicWALL downgraded to Sector Perform at RBC Capital Mkts; tgt lowered to $7 (5.77 )
RBC Capital Mkts downgrades SNWL to Sector Perform from Outperform and lowers their tgt to $7 from $8 saying checks indicates further deterioration in the macro environment that challenges management guidance and investor expectations.
09:14 VRAD Virtual Radiologic lowers FY08 guidance (11.74 )
Co announced that, in a departure from historical trends, a decline in procedure counts at customer facilities in September has led to lower volumes than previously forecast. As a result, the company expects that lower revenue estimates will adversely affect Adjusted EPS for both the third quarter and full-year 2008. In addition, Virtual Radiologic announced that it is in the process of establishing a wholly owned captive insurance company to self-insure its medical malpractice liability. As a result of the company's favorable loss history, the captive insurance company is expected to reduce the cost of insurance and ensure the long-term availability of medical malpractice coverage. The company will maintain current policy limits within the captive insurance subsidiary. There will be a charge to fourth quarter results to establish the initial actuarial reserve. Virtual Radiologic is now expecting full-year 2008 revenue ranging from $102 million to $104 million vs $109.50 mln First Call consensus, Adjusted EBITDA from $17.5 million to $19.2 million, and Adjusted EPS from $0.46 to $0.52, before the impact of establishing actuarial reserves in the captive insurance company, amy not be comparable vs $0.72 First Call consensus. The charge against earnings to establish the captive insurance company is expected to range from $2.7 million to $3.0 million, with an impact to Adjusted EPS of $0.09 to $0.10 per share. The company also announced that it will continue repurchasing shares under its previously announced share repurchase program.
09:14 SCANX Gapping down
In reaction to disappointing earnings/guidance: XING -20.1%, CALM -15.6%, WAG -3.8%... Select financial related names showing weakness: WB -90.3% (Citigroup to acquire banking operations of Wachovia), NCC -25.9%, RBS -21.6% (tumbles in the UK because of its perceived links to the stricken European bank Fortis - Guardian Unlimited), CORS -20.0%, AIB -19.6%, LYG -18.9%, UBS -14.9%, CS -13.7%, AEG -11.4% (has EUR125 mln gross exposure to Washington Mutual - DJ), ING -11.1%, IBN -10.9%, MS -9.1%, C -5.2% (Citigroup to acquire banking operations of Wachovia), JPM -5.2%, WFC -3.8%, GS -3.6%, AIG -3.5% (will issue a new series of Convertible Participating Serial Preferred Stock, FT reports AIG looks to sell 15 units), ABK -2.9%, BAC -2.9%... Select oil/gas names stocks showing weakness with crude lower: BP -5.8%, RDS.A -5.6%, TOT -5.6%... Select mining names trading lower: MT -8.6%, BHP -8.1%, RTP -7.7%, RIO -5.0%... Other news: NOK -6.3% (still checking for anything specific), LLY -3.9% (announced the FDA did not complete its review for the prasugrel new drug application)... Analyst comments: AAPL -6.2% (downgraded to Equal Weight at Morgan Stanley and downgraded to Sector Perform at RBC), FCX -4.7% (downgraded to Hold from Buy at Deutsche Securities), CDE -4.5% (downgraded to Sell from Hold at Deutsche Securities).
09:14 ANGO AngioDynamics: RBC expecting Q1 results to reflect continued business momentum (16.90 )
RBC expects ANGO to post another strong quarter, continuing the positive trends that they saw in the very busy May-quarter results. Firm thinks ANGO should have been able to at least match their projections, which are at the high-end of the Street's range. Since the Feb quarter, ANGO has completed several key events that have boosted investor confidence and strengthened ANGO's long-term business outlook. Among these key events were the acquisition of Oncobionic's IRE tissue ablation technology; the acquisition of Diomed's laser leg vein therapy assets out of bankruptcy; the resolution of the VNUS patent case over leg vein therapy; the implementation of significant price increases on the leg vein procedure kits; the completion of a successful pilot study of IRE in prostate cancer patients; and the formulation of a branding strategy for NanoKnife.
09:14 DRIV Digital River downgraded to Sector Perform at RBC Capital Mkts; tgt lowered to $35 (36.03 )
RBC Capital Mkts downgrades DRIV to Sector Perform from Outperform and lowers their tgt to $35 from $47 saying they believe the macro environment continues to weigh on the consumer and has progressed faster than management's guidance. Their checks indicate that weakness is broad-based across the company's core business despite new product launches from Symantec and others. Despite a strengthening consumer electronics business the firm believes customers are more cautious in their site launches, which is delaying revenue to Digital River and will likely have a significant affect on operating margins and EPS.
09:13 MOT Motorola building up 350-person Android team; Nokia also checking it out - Tech Crunch (7.63 )
Tech Crunch reports cell phone manufacturers are gearing up for a major Android push. The most significant of these may come from Motorola. One of the original partners in the Open Handset Alliance behind the open-source mobile OS, Motorola already has 50 people on its Android team and is growing that to 350, according to an Android developer approached by a headhunter to join the team. That is a huge commitment that shows how big a bet Motorola is making on Android. This same source has also seen people from Nokia (NOK) and Verizon (VZ) at a recent Android developer conference. The conference was put on by Google last week for developers who had not yet seen the G1 to help prepare them for its launch. In general, in order to be an attendee, you had to have an Android app. Neither Nokia nor Verizon are official members of the Open Handset Alliance.
09:13 CNQR Concur Tech downgraded to Underperform at RBC Capital Mkts; tgt lowered to $40 (41.32 )
RBC Capital Mkts downgrades CNQR to Underperform from Sector Perform and lowers their tgt to $40 from $43 they think that Concur's CQ3 is likely to be in-line, but upside from transactions is limited and is likely to disappoint investor's expectations. They believe current multiples do not reflect the further slowdown in the macro environment that they believe will limit upside through the first half of 2009.
09:11 WBSN Websense downgraded to Hold from Buy at Deutsche Securities (23.85 )
09:10 SPRT SupportSoft downgraded to Hold from Buy at Deutsche Securities (3.13 )
09:10 CTXS Citrix Systems downgraded to Hold from Buy at Deutsche Securities (28.02 )
09:09 WRAPX Pre-market Summary
Futures are trading sharply lower this morning as investors remain cautious on a tentative $700 bln rescue package for the financial system and as the turmoil in the banking system spread to Europe over the weekend (see below). The final legislation was released Sunday evening, and goes to the House for a vote today. The govt could get at $250 bln immediately, $100 bln more if the president certified it was necessary, and the last $350 bln with a separate certification -- and subject to a congressional resolution of disapproval. The resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it. Separately, the FDIC announced this morning that Citigroup (C) will acquire the banking operations of Wachovia (WB). Citi will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp, while Wachovia Corp will continue to own AG Edwards and Evergreen. Citigroup will absorb up to $42 bln of losses on a $312 bln pool of loans. The FDIC will absorb losses beyond that, as Citigroup has granted the FDIC $12 bln in preferred stock and warrants to compensate the it for bearing this risk. Despite the FDIC saying Wachovia did not fail, unlike Washington Mutual (WM) last week, investors did not like the news, sending shares below $1, off over 90% from Friday's close. Dow futures are currently -162; Nasdaq futures are currently -33.8; S&P futures are currently -20.1. For technical levels of interest, click here... The Bond mkt is bid as the rescue plan heads to a vote, while the list of victims in the financial sector increases (UK's B&B, Europe's Fortis, Wachovia). The 10-yr is currently +23/32 to 3.763%. Looking ahead on the Fed calendar, Kansas City President Hoenig speaks on the economy and monetary policy at 20:45ET... In Commodities, Nov crude oil is trading $101.31 -5.58... In Europe, banks led a broad retreat in mkts on Monday, as news that Belgo-Dutch bank Fortis had been partially nationalized spooked investors and damped hopes of a mkt revival following details of the U.S. Govt rescue package. In addition, Bradford & Bingley, the UK's largest lender to landlords, was seized by the govt after the credit crisis shut off funding and competitors refused to buy mortgage loans that customers are struggling to repay. Hypo Real Estate, Germany's second-largest commercial property lender, will also receive a 35 bln euro guarantee from the govt and private banks to save it from potential collapse. FTSE is currently -2.6%; DAX is currently -2.7%; CAC is currently -2.9%. In Asia, mkts declined as the turmoil in the banking system spread to Europe after Fortis received a $16 bln bailout and the U.K. Govt seized Bradford & Bingley. Note: Mkts in China and Taiwan are closed this week for a holiday. Nikkei closed -1.3%; Hang Seng closed -4.3%... Notable pre-market Calls include Upgrades: NCC at Oppenheimer; Downgrades: AAPL at Morgan Stanley and RBC Capital, BEE, HOT, HST and SHO at Citi, CMCSA and S at Oppenheimer, COP at Goldman Sachs, MOT at Citi... On the Earnings calendar, no cos are confirmed to report today after the close... On the Economic calendar, nothing remains on the schedule for today.
09:08 DVAX Dynavax Technologies announces $17 mln contract from NIH (1.24 -0.04)
Co announces it has been awarded a 5-yr, $17 mln contract to develop its advanced immunostimulatory sequences technology using Toll-Like Receptor 9 agonists as vaccine adjuvants.
09:07 ICON Iconix Brand announces definitive agreement to purchase the home brand, Waverly (13.06 )
Co announces that it has entered into a definitive agreement to purchase the Waverly brand from Nexcen Brands, (NEXC). The purchase price will be $26 mln to be paid in cash and the acquisition is anticipated to close within 30 days. Iconix is forecasting the next 12 month royalty revenue from Waverly to be ~$7 mln.
09:06 Turbulence in the global financial markets could translate into nasty surprises for the Indian software industry - Business Standard
Business Standard reports turbulence in the global financial markets could translate into nasty surprises for the Indian software industry. While the US government is trying to push through a $700 billion bailout package, the fallout of the collapse of marquee names in the US financial services sector spells trouble for the export-dependent Indian software sector. Geographically, the sector gets over half of its revenues from the US, and based on verticals, a third of the total revenues flow from the BFSI segment. If the systemic financial collapse affects sentiment and growth of other sectors, then the IT sector could well face its toughest times since its many years... Notable exposures to these troubled financial institutions, it is estimated that each, Infosys (INFY) and Satyam (SAY), earn about 2% of their total revenues from AIG and Merrill Lynch, while Wipro's (WIT) exposure to Lehman Brothers is estimated to be about half a per cent. "Indian tech firms might not be too affected by the exposure to these institutions. But, it is the indirect impact on growth trajectory of the technology service providers, that is worrying," asserts Viju George, analyst, Edelweiss Securities.
09:06 LOJN LoJack: Kington Files US$269M Claim Against LoJack (6.87 )
Kington Holdings Ltd ("Kington") announced today that it has filed a counterclaim in proceedings with the American Arbitration Association against LoJack Equipment Ireland Ltd ("LoJack Ireland"), a subsidiary of LoJack Corporation (LOJN), a provider of recovery systems for stolen vehicles. The dispute arose from LoJack Ireland's termination of a Technology License agreement for China on 12th November 2007, after which LoJack filed for arbitration for alleged damages in the amount of US$5,000,000 and enforcement of certain post-termination provisions. In its defense and counter-claim, Kington asserts that the termination was unlawful and denies all of LoJack Ireland's allegations including that the company is subject to any post termination obligations. Kington's counterclaim seeks US$269.2 million in damages for breach of contract, plus an additional award of treble damages. The claimed amount is for lost profit and expenses based on projections originally approved by LoJack and for unfair trade practices.
09:05 Lazard says that directly or indirectly, the turmoil in the financial services industry affects most technology stocks
Lazard says credit for capital-intensive technology companies may be reduced or revenues may be lowered due to a reduction in financial services-related I.T. spending. Additionally, some companies may weather the storm better than others: Companies that are dependent on government spending may fare better than those dependent on business spending. Some video game and Internet companies may benefit from a "cocooning" effect. In general, firm believes that more stringent lending terms will negatively impact capitalintensive companies (SNDK, MU, SPSN, QI) that rely on outside financing for high-cost manufacturing tools and fabs.
09:04 NSSC Napco Security Systems misses by $0.16, beats on revs (3.25 )
Reports Q4 (Jun) loss of $0.06 per share, $0.16 worse than the First Call consensus of $0.10; revenues rose 7.6% year/year to $22.1 mln vs the $21.2 mln consensus. Gross profit for the fourth quarter of fiscal 2008 was adversely affected by the recognition of certain material and factory expenses in the fourth quarter that should have been charged to cost of goods sold during the first nine months of fiscal 2008. This was a result of not fully adjusting the gross profit method for the negative impact of product mix and the expensing of overhead costs that were capitalized into inventory as of the end of the prior fiscal year.
09:03 GRH GreenHunter Energy provides update on recovery efforts at biodiesel refinery; est total damages of $22.4 mln (14.80 )
Co previously announced on Sept 15, 2008, the preliminary ests of damage caused by Hurricane Ike that struck the Co's biodiesel refinery located in Houston, Texas on Sept 12-13, 2008, after less than sixty days of initiating operations. The water surge created by Hurricane Ike reached levels exceeding twelve feet within the refinery complex. GreenHunter's biodiesel refinery took almost a direct hit from the eye of the hurricane. The storm surge that flooded the refinery was exacerbated due to the timing of the hurricane strike, which happened at high tide. This created a number of problems which included the floatation of certain storage tanks, the puncture of certain tanks and subsequent disposal of feedstock and chemicals, the complete destruction of all office buildings, both permanent and temporary, the destruction of many electrical panels that were not located above the water line, and the destruction of many pumps and motors due to water damage. Fortunately, the Coy anticipates that most of the damage sustained by its wholly-owned subsidiary, GreenHunter BioFuels, Inc., will be covered by existing property and casualty insurance along with business interruption insurance. Insurance adjusters for the Co and underwriters have been at the refinery and are daily assisting management in preparing co's claims. While co's personnel continue to find damage caused by the storm, it is currently estimated that total damages are approximately $22.4 million.
09:02 EFJI EFJ announces it has received an order valued at $1.9 mln from a state and local customer to provide its Project 25 compliant radios and accessories (1.14 )
09:01 OTIV On Track Innovations names Tanir Horn-Wekselman Chief Financial Officer (3.10 )
Co announces the appointment of Tanir Horn-Wekselman as Chief Financial Officer. Horn-Wekselman's appointment is effective October 1, 2008.
09:01 PPG PPG Industries Acquires Bonny Automotive Refinish Coatings Business in China; terms were not disclosed
09:00 S&P futures vs fair value: -16.30. Nasdaq futures vs fair value: -28.30.
Stocks are set for steep losses at the opening bell. Meanwhile, Treasuries are enjoying buying interest and commodities are on the retreat. Crude oil prices are down 5% to $101.54 per barrel.
09:00 IMCL Imclone announces the large Pharma company that had made an offer to acquire ImClone at $70 per share, has informed them they will either make a proposal, or withdraw (63.38 ) -Update-
Co announces that the large Pharma company that had made an offer to acquire ImClone at $70 per share, subject to due diligence, but not financing, has informed ImClone that by 11:59 pm on Wednesday, October 1, 2008, they will either make a proposal, that is no longer subject to due diligence, or withdraw. As has been mutually agreed, if they withdraw and negotiations have thus been ended, the name of the company will be disclosed.
09:00 AAPL Apple: RBC downgrade details (128.24 ) -Update-
RBC downgrades to Sector Perform from Outperform in this worsening consumer spending environment, specifically citing: 1) reduced visibility to growth/margins; 2) elevated risks to valuation. AAPL not recession proof: According to RBC, Sept RBC IQ/Changewave data show Mac purchase intentions suddenly moderating. In a separate survey, Sept data show 40% of consumers plan on spending less on electronics next 90 days, the weakest outlook ever seen. While Mac momentum remains strong firm's Q4 Mac outlook becomes 2.9M (3M prior) and firm sees elevated risk for disappointing Q1 guidance, below street at $11 bln and $1.75. Firm's F09 est goes to $40.0 bln/$5.47 from $42.5 bln/$6.07 and F10 goes to $48.8bln/$6.95 EPS from $54.8 bln/$8.03... Price tgt goes to $140 from $200.
09:00 RICK Rick's Cabaret's Board increases stock buyback authorization to $5 million from $500k (10.23 )
09:00 LLY Eli Lilly: FDA grants Lilly's ALIMTA (Pemetrexed for Injection) third U.S. approval (46.82 ) -Update-
The co announces it received approval from the FDA for the use of ALIMTA (pemetrexed for injection), in combination with cisplatin, in the first-line treatment of locally-advanced and metastatic non-small cell lung cancer, for patients with nonsquamous histology. ALIMTA is not indicated for treatment of patients with squamous cell non-small cell lung cancer. NSCLC is the most common form of lung cancer, resulting in more than 180,000 new cases in the U.S. each year.
08:59 CNTF China Techfaith Wireless announces $10 mln share repurchase program (1.10 )
"The decision to initiate the share repurchase program reflects our continued commitment to increase shareholder value and our belief that the current ADS price level does not reflect our current potential value. The Board's authorization illustrates their confidence in our long-term profitability and we will continue to execute on our mid to high end products offering strategy to maximize shareholder returns."
08:59 QLGC QLogic initiated with a Mkt Outperform at JMP Securities (16.19 )
08:58 KBH KB Home: Pursuing new strategy to address industry weakness - Argus (21.56 )
Argus notes KBH has reduced its community count and begun offering smaller, lower-priced homes with less content in an effort to cope with falling home prices. As the co expands its new product strategy to more of its communities, firm expects an improvement in margins. However, KBH will need to take further steps to reduce SG&A costs. They are widening their FY08 loss est to $9.34 per share from $8.57. For FY09, firm now project a loss of $0.86 per share, vs. their previous loss forecast of $0.47 per share (consensus FY08 ($8.48); FY09 ($0.59)).
08:57 VRAD Virtual Radiologic trading halted - news pending (11.74 )
08:57 HOLX Hologic initiated with a Hold at Collins Stewart (20.00 )
08:56 CLS Celestica: Overexposed in at-risk sectors - Argus (6.80 )
Argus says that despite CLS' strong year-to-date outperformance, there is increasing concern that the financial crisis will impact the technology industry and its manufacturing cos. The recent drop in the CLS share price creates a more favorable value proposition; however, firm thinks the co is overexposed to certain technology sectors that are at risk of additional decline. By contrast, industry rivals are sustaining rev growth through greater exposure to nontechnology areas and to the global consumer.
08:55 RBS Royal Bank of Scotland tumbles in the UK - Guardian Unlimited (3.99 )
Guardian Unlimited reports RBS shares were down more than 20% at one point as all major banks suffered losses this morning, following the nationalization of buy-to-let lender Bradford & Bingley. But RBS was particularly damaged because of its perceived links to the stricken European bank Fortis, its partner in buying ABN Amro. As part of a rescue package from the Belgian, Dutch and Luxembourg governments, Fortis has been told to resell the share of ABN Amro it bought a year ago. RBS is insulated against the problems that have engulfed Fortis - which has already paid for its part of the ABN Amro deal.
08:54 INFN Infinera downgraded to Sell from Neutral at Goldman- DJ (10.16 )
08:54 CHL China Mobile upgraded to Neutral from Sell at Goldman- DJ (50.53 )
08:53 TRA Terra Industries upgraded to Neutral from Sell at Goldman- DJ (30.42 )
08:52 Aerospace and Defense: FY09 to start with a continuing resolution; $488 bln for defense - AmTech
AmTech notes that FY09 commences on Oct 1. With Congress eager to return to their districts for last minute campaigning, a consolidated appropriations package will be passed no later than Monday that includes several appropriations bills and a continuing resolution all rolled into one. The package excludes funding for ongoing military operations in Iraq and Afghanistan, which received $69 bln through the "bridge" supplemental. With the C.R. to be cleared by the Senate no later than Monday, spending for major defense programs will be maintained as FY09 commences. Obviously the election will play a role as more funding is appropriated in the spring, but firm does not expect any major changes from the original Administration FY09 request—which is bullish for defense industry's outlook.
08:52 GPI Group 1 Auto upgraded to Neutral from Sell at Goldman- DJ (21.61 )
08:52 PPDI PPD Inc. confirms Takeda's NDA submission of Alogliptin in Japan (43.61 )
Co confirmed that Takeda Pharmaceutical Company Limited has submitted a new drug application for alogliptin, a highly selective DPP-4 inhibitor for the treatment of type 2 diabetes, to the Ministry of Health, Labour and Welfare in Japan. PPD partnered with Takeda to develop the compound. Under PPD's agreement with Takeda, submission of the NDA in Japan triggered a $3 million USD milestone payment to PPD.
08:51 BPHX Blue Phoenix signs multi-million dollar modernization project with large U.S. financial institution (3.52 )
The co announces that it has signed a major new modernization project to migrate 4GL and COBOL applications to Java for one of the leading financial institutions in the United States. As part of this project, the organization will migrate from DB2 to Oracle and downsize off the mainframe (z/OS) to HP UNIX and LINUX.
08:50 T.A.R.P. proposal regarding mark-to-market provides a respite, not a solution - FBR
Friedman Billings ays that while they expect initial investor reaction to be positive regarding what they believe should be imminent passage of the $700 bln Trouble Asset Relief Program, firm views the proposal as having only a modest, short-term benefit for their community and regional bank coverage universe. Firm believes the problem remains over-levered balance sheets that require a combination of balance sheet contraction and raising of equity capital to permanently address investors' concerns regarding long-term solvency of many institutions. Potentially offsetting investor optimism regarding the T.A.R.P. are increasing problems in the European banking system (Fortis and Bradford & Bingley) and apparent pressure on WB. Section 132 of the discussion draft provides the SEC the power to suspend FASB 157 if it determines that such a decision is in the public's best interest and is consistent with the protection of investors. Firm believes there is a high probability the SEC would suspend FAS 157.
08:50 Hedge funds are bracing for investors to cash out - NY Times
NY Times reports first, the money rushed into hedge funds. Now, some fear, it could rush out. Even as Washington reached a tentative agreement on Sunday over what may become the largest financial bailout in American history, new worries were building inside the nearly $2 trillion world of hedge funds. After years of explosive growth, losses are mounting — and so are concerns that some investors will head for the exits. No one expects a wholesale flight from hedge funds. But even a modest outflow could reverberate through the financial markets. To pay back investors, some funds may be forced to dump investments at a time when the markets are already shaky. The big worry is that a spate of hurried sales could unleash a vicious circle within the hedge fund industry, with the sales leading to more losses, and those losses leading to more withdrawals, and so on. A big test will come on Tuesday, when many funds are scheduled to accept withdrawal requests for the end of the year.
08:45 RPRX Repros Therapeutics announces $15.6 mln financing; sells 2.4 mln shares at $6.50/share (6.08 )
Co announces that it has entered into definitive agreements to sell an aggregate of 2.4 million shares of its common stock at a purchase price of $6.50 per share for an aggregate $15.6 million financing under its previously announced shelf registration statement. The Company intends to close all of the sales on Friday, October 3, 2008. Efficacy Capital, the Company's largest stockholder, is purchasing 1,846,154 shares, and an existing institutional stockholder of the Company is purchasing 550,000 shares. Efficacy Capital and the other institutional purchaser will each receive a Purchase Option allowing Efficacy Capital to purchase from the Company up to $7.5 million of additional shares and the other institutional purchaser to purchase from the Company up to $2.5 million of additional shares of the Company's Common Stock at the greater of the fair market value of the Company's shares at the time of exercise or $7.80 per share. The Purchase Option becomes exercisable at such time as the Company has less than $10 million in cash and cash equivalents and expires on September 29, 2009. Efficacy Capital and the other institutional purchaser will also receive a Right of First Offer on certain future sales of the Company's securities up to their pro rata ownership in the Company. Additionally, Efficacy Capital's Standstill Agreement with Repros will be modified to permit Efficacy Capital to own up to 40% of the Company's outstanding shares of stock, along with the Company's Rights Agreement, and to permit Efficacy Capital to designate two directors of the Company's Board of Directors. The Company also announces that Mark Lappe, a Managing Partner of Efficacy Capital, and John C. Reed, M.D., Ph.D., President and CEO of Burnham Institute for Medical Research are joining the Company's Board of Directors.
08:45 C Citigroup gives up its early gains as it stages a sharp reversal to fresh premarket lows, now trading at 18.74 (20.15 ) -Update- -Technical-
08:43 ZION Zions Bancorp initiated with a Buy at Noble Financial (43.98 )
Noble Financial initiates ZION with a Buy saying the demographics of western states in franchise are among best/fastest growers in nation. The firm says credit quality issues appear manageable for both securities and residential construction/land loans (9% of total loans).
08:43 ACGL Arch Capital announces it expects Q3 pre-tax earnings to be negatively impacted by Hurricanes (73.40 )
Co announced that it expects pre-tax earnings for the 2008 third quarter to be negatively impacted by the effects of Hurricanes Gustav and Ike in the range of $105 million to $180 million, net of reinsurance and reinstatement premiums. The Company's preliminary net loss estimate for Hurricane Gustav is in the range of $15 million to $30 million based on industry insured losses of $2.5 billion to $4.5 billion. The preliminary net loss estimate for Hurricane Ike is in the range of $90 million to $150 million based on industry insured losses of $8 billion to $12 billion. The losses from the storms are currently estimated to arise 30% in our insurance operations and 70% in our reinsurance operations.
08:43 NTRS Northern Trust told clients of its security lending business that they stand to lose a good chunk of change - NY Post (79.90 ) -Update-
NY Post reports the co told clients of its security lending business that they stand to lose a good chunk of change. In a conference call with clients, a Northern Trust official said cash put up as collateral in its security-lending business was invested in funds tied to Lehman debt, which might now be worthless. The official presented clients with several solutions for getting their money back. The goal, this person said, is to ensure clients "exit in a fair and equitable manner." The full extent of the losses will depend on whether clients rush to take their money out - thereby forcing a fire sale of illiquid assets - or agree to wait until the dust settles, the official said in the call, which was intended for clients only. Northern Trust said clients needn't worry about losing securities loaned to Lehman. The co said it rushed to retrieve loaned assets after Lehman went under, securing 70%. The co has been working to buy back the remaining 30%, the official said.
08:43 SOV Sovereign Banc upgraded to Buy from Neutral at Janney Mntgmy Scott (8.37 )
08:43 WAL Western Alliance Bancorp initiated with a Buy at Noble Financial (15.64 )
Noble Financial initiates WAL with a Buy saying they believe the co is positioned to buy distressed assets and failed banks, and pick up employees from failed/troubled banks. The firm says despite 21% of total loans in residential construction/land loans, they view credit quality as manageable
08:42 ECONX Spending Data Disappointing
Real personal consumption expenditures (PCE) were unchanged in August. Total spending was unchanged, and the PCE deflator was also unchanged. This leaves third quarter real PCE at a disappointing level relative to the second quarter, and could lead to downward revisions to third quarter real GDP (although it was already recognized that August was a weak month for spending). Personal income for August was stronger than expected, posting a 0.5% increase, but that doesn't typically have much market impact. Income gains have been consistently better than widely perceived. Declining payrolls are often seen as a key factor in income, although in fact the monthly percentage declines in the number of employed is small relative to the hourly wage gains (raises). Also, those losing jobs typically receive some income replacement. In any case, the continued backing to consumer spending power is being swamped by the understandably overwhelming negative sentiment generated by the stock market and banking news, which leads to consumer restraint.
08:42 WABC Westamerica Banc initiated with a Hold at Noble Financial (57.11 )
08:41 UMPQ Umpqua Holdings initiated with a Hold at Noble Financial (16.61 )
08:41 UCBH UCBH Holdings initiated with a Hold at Noble Financial (6.81 )
08:40 Enterprise Software: Wedbush believes bailout plan likely won't affect the tough software selling environment; lowering ests in front of Q3 results
Wedbush is lowering ests below consensus on many cos firm covers as they believe that the selling environment for enterprise software could remain challenging for the next few months. Firm believes Congress' delay in signing a bailout deal last week has caused extreme strain on the Q3 selling environment, impacting software buyers' psyches to become more risk averse. Regardless of the outcome of a potential bailout plan, software buyer sentiment continues to slide, in firm's view, at a time not only when full year 2008 expenditures come into clearer focus, but when 2009 budgets are also starting to be set. While firm is not expecting a precipitous decline in software spending like they saw in 2001-2002, firm is expecting a modest negative impact from the myriad external factors that are affecting their financial markets currently.
08:39 SCANX Gapping up
Select airlines showing strength with crude lower: LCC +4.9%, UAUA +4.7%, DAL +3.8%, CAL +3.0%... Other news: FNM +20.8% and FRE +12.5% (showing strength with progress on the $700 bln troubled asset agreement), PPC +9.9% (announces definitive written agreement with lenders on temporary covenant waiver), IMCL +4.1% (may have talks to announce - WSJ).
08:38 BSY British Sky Brdcst: Tribunal to rule on BSkyB’s ITV stake - FT (31.54 )
FT reports the latest episode in the long-running drama of ITV will be written on Monday when the Competition Appeals Tribunal rules on what should happen to British Sky Broadcasting's 17.9% stake in the company. Many investors believe that if the tribunal upholds the finding of the Competition Commission last December that BSkyB's holding gives it an ability to influence ITV's strategy in a way that restricts the market, it will trigger a bid for the UK's largest commercial broadcaster.
08:37 GME Gamestop upgraded to Buy at Wedbush Morgan; tgt lowered to $43.50 (36.16 )
Wedbush Morgan upgrades GME to Buy from Hold and lowers their tgt to $43.50 from $46.50. Firm notes GME shares have declined significantly since April, as investors appear concerned that decelerating comp growth indicates slowing earnings growth. Firm disagrees with this concern. As hardware pricing inevitably declines, it will be difficult for the co to deliver greater than single digit comps going forward. Firm believes that concerns about slowing comps led to the conclusion that video game sales will stall, significantly pressuring GameStop's share price. They disagree with this conclusion. Firm believes that current valuation is compelling as they expect the co to deliver earnings leverage in FY09 and FY10 as margins continue to expand.
08:36 WB Wachovia slips below the $1.00 mark, now at $0.87 in pre-mkt trading (10.00 ) -Update-
08:35 ARBA Ariba downgraded to Neutral from Outperform at Cowen & Co (15.12 )
08:34 S&P futures vs fair value: -19.20. Nasdaq futures vs fair value: -28.00.
Futures continue to suggest a sharply lower open. Citigroup (C) is acquiring Wachovia's (WB) banking operation in a deal facilitated by the FDIC. The FDIC entered a loss sharing arrangement, where Citi will absorb up to $42 billion of losses on a $312 billion pool of loans, with the FDIC absorbing losses beyond the $42 billion. Wachovia will continue to own AG Edwards and Evergreen. WB is down 89% in premarket trading. In economic news, personal income rose 0.5% (consensus +0.2%) in August and spending was flat (consensus +0.2%). PCE, an inflation measure, was unchanged month-over-month. Excluding energy and food prices, PCE rose 0.2% (consensus +0.2%).
08:34 GNPH Genesis Pharmaceuticals Enterprises initiated with a Buy at Brean Murray; tgt $13 (8.70 )
Brean Murray initiates GNPH with a Buy and price target of $13. Firm believes Genesis, with its robust product portfolio, extensive marketing network, and strong momentum in gaining critical mass and traction in sales, possesses the characteristics of a successful Chinese pharmaceutical company, and is likely to benefit from the rapidly expanding Chinese healthcare market.
08:34 CM CIBC upgraded to Sector Perform from Underperform at RBC Capital Mkts (60.90 )
08:34 FHC Female Health: USAID expands Female Condom order to 10 mln units (3.00 )
Co announced that it has received an order from John Snow, Inc., which implements the USAID Deliver Project, for the delivery of up to 10 mln female condoms for the United States Agency for International Development (USAID) supported programs. Under its original order, placed in February 2008, FHC has delivered approximately 6.1 mln units. FHC has been requested to deliver the balance of the order, up to 3.9 mln units, by December 31, 2008 to satisfy increased demand for the female condom.
08:33 IRF Intl Rectifier: Vishay commences tender offer for IRF (19.70 )
VSH announced that its wholly owned subsidiary has commenced a tender offer to acquire all of the outstanding shares of common stock of IRF for $23.00 per share in cash, in furtherance of its previously announced acquisition proposal.
08:33 FCX Freeport-McMoRan downgraded to Hold from Buy at Deutsche Securities (63.82 )
08:32 CDE Coeur d'Alene Mines downgraded to Sell from Hold at Deutsche Securities (1.78 )
08:32 ADY American Dairy increases production output (9.55 )
The co announces it has substantially increased its production output and customer support to meet consumer demand for reliable, high quality, premium infant formula products. There has been a flight towards quality by consumers nationwide since the Chinese government's announcement on September 16, 2008 that 22 dairy enterprises had products containing melamine. As a result, the Company's Feihe branded products have been sold out in many areas. Particularly in Hebei province, where the melamine crisis broke, the Company's sales orders increased more than sevenfold. In other areas such as Henan and Shandong provinces, sales orders have more than quadrupled. The Company has responded by increasing production and is running at full capacity 24 hours a day to keep up with demand. Additional packaging equipment was also installed to meet the increasing demand.
08:31 DISH DISH Network target lowered to $33 at Kaufman Bros (24.55 )
Kaufman Bros lowers their DISH tgt to $33 from $35. Firm notes that on Friday DTV and T announced an agreement for AT&T to market and sell DirecTV's satellite TV service as a co-branded offering after January 31, 2009. DirecTV displaces the DISH Network in AT&T's historical territories and regains its presence in the AT&T territories of the former BellSouth with which it had a deal before AT&T acquired BellSouth.
08:31 WPI Watson Pharm announces "positive data" for RAPAFLO, its investigational product for BPH (28.80 )
Co announces that investigators presented efficacy and safety data on silodosin, its investigational treatment for benign prostatic hyperplasia (BPH, or prostate enlargement). These abstracts included results of Phase 3 studies, which showed that treatment with RAPAFLO for up to one year effectively reduces the symptoms of BPH and is well tolerated without causing any significant changes in blood pressure or adverse cardiac effects. Cardiac safety data further demonstrated that RAPAFLO, used alone or in combination with medications for erectile dysfunction, showed only minimal effects on blood pressure or heart rate.
08:31 CLNE Clean Energy Fuels adds CNG fueling stations at major airports in Atlanta, GA and Oklahoma City, OK (16.38 )
The co will own, operate and supply fuel for new compressed natural gas (CNG) public access stations to support airport operations in Atlanta and Oklahoma City. In the Atlanta area, the City of College Park, Georgia, contracted with Clean Energy to design, construct and manage a public access CNG fueling station on City-owned property located less than a mile from the entrance to Atlanta's Hartsfield-Jackson International Airport, among the busiest in the world. The facility is designed to serve a range of light, medium and heavy duty vehicles, including regional public transit buses, municipal vehicles, refuse hauling trucks, and airport parking, hotel, and employee CNG shuttle buses. The station will open in two weeks. In Oklahoma City, Will Rogers World Airport officials contracted with Clean Energy to build and manage a large-scale public access CNG fuel station. Located on airport property, the new facility will serve -- in addition to CNG-powered airport transit and shuttle vehicles -- a growing number of CNG fleets in the area. The station will begin construction in two weeks.
08:30 DLIA Delia*s enters into agreement to sell CCS brand for $102 mln (2.50 )
Co announces that it has entered into an agreement to sell the assets related to its CCS brand to Foot Locker (FL). The purchase price for the transaction is $102 mln in cash, subject to adjustment as provided in the agreement. In connection with this transaction, dELiA*s entered into separate agreements with Alloy (ALOY) pursuant to which dELiA*s agreed to acquire from Alloy certain intellectual property assets used specifically in the CCS business (which will be transferred to Foot Locker at closing) and to purchase specified media services from Alloy, for aggregate consideration of ~$9 million. Co expects to close the transaction within the next 60 days.
08:30 ECONX August PCE Core m/m +0.2% vs +0.2% consensus, y/y +2.6% vs +2.4% consensus
08:30 CBY Cadbury Schweppes says Chinese-made products questionable - AP (43.34 )
AP reports the co said that tests have "cast doubt" on the safety of its Chinese-made products and ordered a recall, the latest foreign company affected by China's tainted milk scandal. Cadbury said in a statement it has recalled 11 chocolate products made at its factory in the Chinese capital Beijing, which are distributed in Taiwan, Hong Kong and Australia. Tests "cast doubt on the integrity of a range of our products manufactured in China," Cadbury said in the statement issued from its office in Singapore. It was not immediately clear whether the tests revealed melamine, the industrial chemical at the center of China's recent milk scandal.
08:30 ECONX August PCE Deflator +4.5% vs +4.5% consensus
08:30 ECONX August Personal Spending 0.0% vs +0.2% consensus
08:30 ECONX August Personal Income +0.5% vs +0.2% consensus
08:30 ACV Alberto-Culver initiated with a Buy at Goldman- DJ (26.98 )
08:26 Rescue includes steps to help borrowers keep homes - WSJ
WSJ reports the bailout package includes more aggressive steps to help troubled borrowers keep their homes by requiring the government to do more to reduce loan balances and interest rates. The bill calls on the government, as the owner of mortgages, mortgage-backed securities and other assets backed by real estate, "to implement a plan that seeks to maximize assistance to homeowners and use its authority to encourage the servicers of underlying mortgages, and considering net present value to the taxpayer, to take advantage of...available programs to minimize foreclosures." Such measures could reduce monthly loan payments for homeowners and, in theory, increase the likelihood that borrowers keep up mortgage payments. It could also slow down the growing number of foreclosures.
08:25 ARST ArcSight initiated with a Buy at Needham; tgt $11 (8.01 )
Needham initiates ARST with a Buy and price target of $11 saying the company has had success in its core target market of event management for security, with the market drivers of compliance for Sarbanes-Oxley, HIPAA, PCI and other regulatory standards. The firm says their view is that ARST's target market is broader than security event management, and should include the systems management market as a whole. They see event management for security as a field which is a logical extension of traditional systems management.
08:25 C Citigroup to sell Japanese call center worth $2 bln, according to source - WSJ (20.15 )
08:25 PCS MetroPCS: Leap Wireless and MetroPCS Communications enter into national roaming agreement and spectrum exchange agreement and settle litigation (13.90 )
Leap Wireless (LEAP) and MetroPCS announced that they have entered into a national roaming agreement and an agreement to exchange wireless spectrum, and have settled all outstanding litigation between them. The new nationwide roaming agreement, which has an initial term of 10 years, covers the companies' existing and future markets, which the parties expect could ultimately encompass virtually all of the top 200 markets in the nation. Additionally, the companies entered into a spectrum exchange agreement covering licenses in certain markets, with Leap acquiring an additional 10 MHz of spectrum in San Diego, Fresno, Seattle and certain other Washington and Oregon markets, and MetroPCS acquiring an additional 10 MHz of spectrum in Dallas-Ft. Worth, Shreveport-Bossier City, Lakeland-Winter Haven, Florida and certain other North Texas markets. The settlement resolves litigation relating to the companies' intellectual property. The companies have entered into a cross-license agreement for intellectual property related to the litigation and for other intellectual property that is held or applied for by either company. All pending litigation between the parties will be dismissed.
08:24 Tighter terms for car loans promise to deepen troubles for sluggish sales - WSJ
WSJ reports the increasing inability of car buyers to find financing for new automobiles is adding to concerns hanging over a U.S. auto industry that has been blistered by high gasoline prices and a weak economy in 2008. Auto makers will report September sales on Wednesday, and the pace of new-vehicle deliveries is expected to remain at a 15-year low. Research firm J.D. Power & Associates estimates that the seasonally adjusted rate of annual light-vehicle sales will dip to 12.6 million vehicles, compared with 16.2 million a year ago. If the estimate holds, it would represent a decline of 26% compared with the same month in 2007. Such an outcome would shatter any notion that the auto industry has hit bottom following a dismal summer selling season, and turn up the spotlight on the cash concerns facing Detroit's Big Three. (F, GM)
08:24 PKE Park Electrochem downgraded to Hold at Needham (24.13 )
Needham downgrades PKE to Hold from Buy saying they remain pleased with Park's long-term plans to transition its mix away from more commoditized, electronicsbased materials and toward higher-margin products. However, they believe that pressures from the broader macroeconomic environment are developing more quickly than anticipated and have temporarily derailed the company's progress during this transition.
08:22 CTXS Citrix Systems downgraded to Sector Perform from Outperform at RBC Capital Mkts (28.02 )
08:21 CMG Chipotle Mexican Grill: Morgan Keegan trimming 2009 EPS projection (58.82 )
Morgan Keegan is further lowering their FY09 EPS ests for CMG following their initial revisions to both FY08 and FY09 after the co pre-released Q308 earnings results. Given limited sales visibility and no relief from commodities and other inflationary pressures, firm believes an even more cautious outlook in FY09 is appropriate. Firm is further trimming their FY09 EPS to $2.70 from $2.90 on revised SSS of 2.3% from 3.0%, operating margin of 9.3% from 10.0% and slower unit development of 125, down from 150 new restaurants. In firm's previous note following the Q3 pre-release, they had trimmed FY08 to $2.40 from $2.63 and FY09 to $2.90 from $3.25 (consensus FY08 $$2.42, $1.326 bln; FY09 $2.88, $1.572 bln).
08:21 BONDX Grabbing Back Some Easy Ground... 10-yr +12/32 yielding 3.804%
The market is bid as the rescue bill heads to a vote. In the meantime, the list of victims increased with UK's B&B and Europe's Fortis dragged under, while Wachovia is getting bought by Citigroup (Bloomberg). Credit markets remain in lock down with the 3-mo-10-yr yield spread flatter but still logging an anxious 306 ahead of the open. The 2-10-yr yield spread is flatter at 177.6 with trade picking up what extra yield it can out the curve as the short end dipped back below 2%. Bond prices in the EuroZone and Japan are bid on safety seekers. Treasuries will eye some mid-tier data early while Fed speak is absent. Trade will mostly fixate on the bailout and whether markets can shake off the fear that has seized the engines. While passage of the bill is expected, trade will be looking ahead to its implementation and whether demand for treasuries can keep up with the added supply. Prices remain vulnerable on that level as well as any diminished risk aversion. The dollar found a strong bid as bank failures overseas pulled the euro and pound south. The yen is bid on the carry reversal. Spot gold is up at 883.92 (+5.17) while crude is off at 101.63 (-5.26). Personal income/spending is released at 8:30. The euro is at 1.4350 and the yen is at 106.1300. For more click here.
08:20 PFBC Preferred Bank initiated with a Hold at Noble Financial (11.28 )
08:18 PACW PacWest Bancorp initiated with a Hold at Noble Financial (29.79 )
08:18 PCBC Pacific Capital Bancorp initiated with a Buy at Noble Financial; tgt $26 (20.77 )
Noble Financial initiates PCBC with a Buy and price target of $26 saying they believe the Tax refund business deserves a discount for risk, but believe nearly 40% discount is too steep at present. The firm says the Core bank in transition to more commercial banking/wealth management and to greater efficiency and they do not expected to have to raise dilutive capital or cut its dividend.
08:18 WB Wachovia: Details of Citigroup acquisition of WB banking operations (10.00 ) -Update-
The FDIC announces that Citigroup (C) will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC. "For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chairman Sheila C. Bair. "There will be no interruption in services and bank customers should expect business as usual." Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own AG Edwards and Evergreen. The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 bln of losses on a $312 bln pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 bln in preferred stock and warrants to compensate the FDIC for bearing this risk. In consultation with the President, the Secretary of the Treasury on the recommendation of the Federal Reserve and FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability. "On the whole, the commercial banking system in the United States remains well capitalized. This morning's decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury," Bair said. "This action was necessary to maintain confidence in the banking industry given current financial market conditions." (WB is trading at ~$1.90 in pre-mkt trading)
08:17 U.S. moves ahead on loans to develop fuel-efficient cars - WSJ
WSJ reports the U.S. Congress moved Saturday to provide $25 billion in low-interest loans to the auto industry as part of an initiative to accelerate the development of fuel-efficient vehicles. The Senate voted 78 to 12 to pass a broad, must-pass spending bill that includes $7.5 billion to start the loan program. The House passed the bill earlier in the week, and President George W. Bush is expected to sign it. The loan program was approved as part of a 2007 energy bill requiring vehicles to have an average fuel economy of 35 miles a gallon by 2020 -- a 40% increase over the previous standard. Auto makers and parts suppliers will use the loans to retool aging auto plants to make hybrids and other fuel-efficient vehicles. (F, GM)
08:17 FTBK Frontier Fincl initiated with a Hold at Noble Financial (15.16 )
Noble Financial initiates FTBK with a Hold saying residential construction/land loans account for 39% of total loans; far greater than peers. They say over-exposure should impact earnings for a few years, as land loans (22% of total loans) take the longest to resolve.
08:16 WB Wachovia drops to $2.00 on report that Citigroup will buy banking operations (10.00 ) -Update-
08:16 CHIC Charlotte Russe: Wedbush cuts FY09 EPS below consensus (11.44 )
Wedbush says that based on indications of mixed traffic trends and the heightened promotional environment that could dilute CHIC's value messaging, they believe the co could continue to face disappointing trends during the upcoming holiday selling season. As such, while firm believes CHIC's sharply reduced Q4:F08 guidance of $0.15-0.23 vs. $0.33 LY is likely achievable, firm is reducing their F2009 EPS est to $1.23 from $1.40 (consensus $1.24).
08:15 EWBC East West Banc initiated with a Hold at Noble Financial (15.21 )
Noble Financial initiates EWBC with a Hold saying East West has thus far done the best job of Chinese-American banks in balancing short-term and long-term growth. They note California commercial real estate/CRE lending (74% of total loans) has driven EPS growth. Firm says California CRE loan growth should slow, due to sharp decline in residential construction lending. The firm does not expect to have to raise additional dilutive capital or cut its dividend.
08:15 WIRES On The Wires -Update-
Hydrogenics Corporation (HYGS) announced it has received orders from customers in Asia, Eastern Europe and South America with an aggregate value of $6.8 million... Synthesis Energy Systems (SYMX) announced that it has entered into an agreement with ExxonMobil Research and Engineering Company that provides SES the option to execute up to 15 Methanol-to-Gasolinetechnology licenses at U-GAS coal gasification plants globally... Noah Education Holdings (NED) announced that its three founding members, Chairman and Chief Executive Officer Mr. Dong Xu, Director and Chief Technology Officer Mr. Xiaotong Wang and Director Mr. Benguo Tang have each withdrawn their respective written trading plans that were previously established in July 2008 in accordance with SEC Rule 10b5-1 and Noah's insider trading policy.
08:14 WB Wachovia: Citigroup to acquire banking operations of Wachovia - Bloomberg (10.00 ) -Update-
Bloomberg reports the FDIC says Wachovia did not fail, FDIC to absorb losses beyond $42 bln. (C)
08:14 CVBF CVB Financial initiated with a Hold at Noble Financial (13.96 )
Noble Financial initiates CVBF with a Hold saying they regard CVB Financial as well-run bank with excellent credit quality, but uncertain growth prospects.
08:13 Defense industry gets boon - WSJ
WSJ reports many of the defense industry's most important programs will start the new fiscal year next week with higher budgets, thanks to a quickly hashed-out bundle of bills expected to be sent to President George W. Bush for approval just before lawmakers return home to campaign. As part of a continuing resolution, lawmakers set aside $487.7 billion for the Defense Department, ensuring a smooth transition for the Pentagon's big defense contracts ahead of the next administration. Rather than referring the bill to a conference committee, the four senior Democratic and Republican defense appropriations lawmakers in the House and Senate worked out a compromise. It cleared the House Wednesday and was awaiting expected approval in the Senate this weekend.
08:13 LLY Eli Lilly: Major U.S. Prasugrel delay seems unlikely but timing uncertain and label critical - (46.82 )
Leerink Swann notes that LLY/Daiichi Sankyo's announcement on Friday that FDA's review would continue beyond the 9/26 PDUFA date is not surprising and firm expects the stock to be down modestly (~$1/shr) this morning given lack of clarity. Firm believes that FDA is working to approve the drug but they expect prasugrel will be approved with a restrictive label, substantial post-marketing commitments, and no 5 mg dose - limiting its market oppt'y. Should an FDA advisory com be req'd, firm believes this would increase the likelihood of approval. The next Cardio-renal Ad Com is scheduled for early December.
08:10 IDEV Indevus Pharm: Leerink Swann believes worth putting back on the radar after strong rebound with nebido and pagoclone (3.51 )
Leerink Swann notes on Friday IDEV had a flurry of good news that they believe makes this a very compelling story once again. Most importantly, the FDA agreed that IDEV could resubmit its NDA for Nebido in C1Q09 with additional data from European studies instead of conducting new trials to explore the rare risk of cough or allergy. Nebido had been out of the stock as most had written it off after the approvable letter, but IDEV now has a chance to launch it in C4Q09. Firm puts risk-adjusted sales for Nebido back in their model. In addition, IDEV signed a long-awaited partnership for Pagoclone for stuttering with TEVA, a very respectable partner, in their view. Firm believes there could be further upside to the stock as investors get more comfortable with the approvability of Nebido.
08:10 Storms' damage to rice crop is assessed - WSJ
WSJ reports U.S. rice-industry officials are still trying to get a handle on how much rice will be lost due to hurricanes Gustav and Ike, but analysts and industry officials say the storms may have wiped out more than 5% of the U.S. crop. In traveling different paths, the two storms managed to hit just about all major U.S. rice-producing areas except California, officials said. Chicago Board of Trade rough rice futures, which have already risen in the wake of the hurricanes, could climb further. Even so, that is unlikely to lead to higher prices at the supermarket, industry members said.
08:09 MS Morgan Stanley, MUFG near deal - WSJ (24.75 )
WSJ reports Morgan Stanley and Mitsubishi UFJ Financial Group (MTU) are moving closer to sealing a deal whereby Japan's biggest bank by market cap will buy a 20% stake in the Wall Street firm, people familiar with the situation said. An announcement is expected shortly, but the situation remains fluid, one person said.
08:08 TXRH Texas Roadhouse: Morgan Keegan trimming EPS projections based on weaker sales and margins (8.87 )
Morgan Keegan is lowering their EPS ests for TXRH based on firm's projection for weaker SSS and operating margins. Firm believes volatile Sept sales will likely put the finishing touches on an already ugly third quarter. Further, with limited sales visibility and no relief from commodities and other inflationary pressures, firm believes a more cautious outlook is appropriate. Firm is trimming their FY08 EPS to $0.55 from $0.58 on revised co SSS of -1.1% from -0.9% and operating margin of 7.7% from 8.0%. They believe it is also prudent to trim our FY09 EPS projection to $0.60 from $0.62. (consensus FY08 $0.57, $886.88 mln; FY09 $0.63, $1.009 bln).
08:08 MWRK Mothers Work announces promotion of Ed Krell to Chief Executive Officer (13.75 )
Co announces that Dan Matthias will retire as the co's Chief Executive Officer on September 30, 2008. Edward Krell, the co's current Chief Operating Officer, was named by the Board of Directors to succeed Mr. Matthias as Chief Executive Officer, effective October 1, 2008. Mr. Krell has also been appointed to serve as a member of the Company's Board of Directors. Mr. Matthias will continue to serve as a director of the Company and serve as non- executive Chairman of the Board, and will remain available to management in an advisory capacity through September 30, 2012. Rebecca Matthias, the Company's President and Chief Creative Officer, will continue in her current capacity and will report to Mr. Krell.
08:08 DPTR Delta Petroleum announces joint venture and additional leasehold acquisition in Columbia River Basin; reiterates production guidance (14.87 )
Co announcs that it has signed agreements for two separate transactions in the Columbia River Basin of Washington and Oregon. The first is a transaction with EnCana USA, through which Delta has acquired all of EnCana's net leasehold position and interest in wells in the CRB of Washington. This transaction brings the co's total leasehold ownership to approximately 844,000 acres. Secondly, the co has entered into a joint venture agreement with a major Canadian energy to sell a 50% working interest participation in all C.R.B leasehold and wells. Under the terms of the agreement, Delta and its partner currently plan to drill at least three wells in the C.R.B, including the Gray 31-23 well. Upon closing of these two transactions, the Company's position in the CRB will approximate 422,000 net acres, which is unchanged relative to the Company's current position. The co also announced that it has lost approx 15 days of production from its southeast Texas fields, Midway Loop and Newton. Both fields were returned to production the week of September 22, 2008. The lost production approx 0.25 Bcfe and was caused by hurricane activity in the Gulf Coast region. Despite the lost production, the Company expects its third quarter production to be in the mid-range of its previously provided guidance of 6.4 - 6.6 Bcfe.
08:07 WAG Walgreen reports EPS in-line, revs in-line (32.73 )
Reports Q4 (Aug) earnings of $0.45 per share, in-line with the First Call consensus of $0.45; revenues rose 8.8% year/year to $14.6 bln vs the $14.67 bln consensus. Prescription sales, which accounted for 66% of sales in the quarter, climbed 7.9%. Adjusted for calendar shifts, prescription sales in comparable stores rose 2.8% in the quarter, while the number of prescriptions filled in comparable stores increased 0.6%. That compares to a 1.9% decrease in U.S. retail prescription volume (excluding Walgreens) during the same period, according to IMS Health and Walgreens figures. "Tough times are forcing people to make tough choices - delaying doctor visits and prescription use... Even with these challenges, our pharmacies are consistently performing ahead of the industry." Overall margins were negatively impacted by non-retail businesses, including specialty pharmacy, which have lower margins and are becoming a greater part of the total business. Retail pharmacy margins increased due to greater use of generics, while front end margins were essentially flat. Helping the front end was a shift toward higher margin items, including private brand products. Hurting margins were heavier than normal front end promotions.
08:07 SNT Senesco reports FY08 EPS of -$0.26 vs. -$0.19 YoY; revs increased 55% from a year ago to $456,667 (1.05 )
08:06 S&P futures vs fair value: -15.40. Nasdaq futures vs fair value: -24.50.
Futures point to a sharply lower open, with selling interest driven by some disappointment over the details of the recently reached agreement between Congress and the White House on the $700 bailout deal and news that several European financial firms were bailed out. The House is expected to vote on the bailout plan today. Shares of Wachovia (WB) are tumbling 55% in premarket trading on reports that the bank is in talks with several firms to sell itself, according to reports. In overseas news, three European governments bailed out Belgium bank Fortis, the U.K. nationalized mortgage lender Bradford & Bingley and Germany's Hype Real Estate Holding was rescued by a consortium, according to The Wall Street Journal.
08:06 AM American Greetings: Recycled Paper Greetings responds to American Greeting Card (16.39 )
Recycled Paper Greetings issued this response to disclosure by American Greeting Card (AM) in its quarterly earnings call that it has acquired $44 mln in first lien RPG debt. "We were surprised both by American Greetings' disclosure of its accumulation of Recycled Paper Greetings debt on its quarterly earnings conference call, as well as the stated answer for American Greetings' inability to speak further about its actions when questioned by analysts... In fact, it is RPG's position that A.G's actions represent a clear violation of a written confidentiality agreement executed as part of an overture by American Greetings. To that end, weeks before American Greetings made its announcement we filed a lawsuit in the US District Court for the Northern District of Illinois detailing our claim. We plan to continue vigorously fighting actions by A.G which we believe are predatory in nature and intended for the sole purpose of preventing us from conducting business on a fair playing field.... We find it curious that a much larger competitor is accumulating our debt in violation of a clear contract even as its own performance is weakening," continued Mr. Rake. "We believe the acquisition of our debt by American Greetings reflects desperation because we are making significant, daily inroads on American Greetings in the marketplace. Although American Greetings is almost twenty times the size of Recycled Paper Greetings, more and more retailers are discovering that consumers prefer our greeting cards..."
08:04 GY GenCorp announces chief financial officer, Yasmin Seyal, has left the Company and is pursuing other interests (7.09 )
Co announces that its chief financial officer, Yasmin Seyal, has left the Company and is pursuing other interests. Controller Leon Blackburn has also left the Company, effective immediately, to pursue other opportunities. Kathy Redd, GenCorp's current vice president, finance, has been named vice president, controller and acting chief financial officer.
08:03 NED Noah Education founders terminate previously-established rule 10b5-1 trading plans (3.96 )
The co announecs that its three founding members, Chairman and Chief Executive Officer Mr. Dong Xu, Director and Chief Technology Officer Mr. Xiaotong Wang and Director Mr. Benguo Tang have each withdrawn their respective written trading plans that were previously established in July 2008 in accordance with SEC Rule 10b5-1 and Noah's insider trading policy. The 10b5-1 plan was initially adopted to sell portions of each member's stock over time as part of each individual's long-term strategy for asset diversification. The Company also announced that none of the founders reduced their respective holdings during the last open trading window.
08:03 LIZ Liz Claiborne takes steps to accelerate turnaround at Mexx (17.13 )
The co announces that is implementing initiatives to accelerate the turnaround of the Mexx business in Europe. These initiatives will focus on enhancing the brand by improving product appeal, more closely linking the wholesale and retail presentations and strengthening retail operations. To expedite this process, the company has made key appointments to the Mexx Europe Holdings management team. Effective immediately, Tom Fitzgerald will become Interim Chief Executive Officer. Concurrently, the company has initiated a search for a permanent CEO for Mexx which is expected to be completed by early 2009.
08:02 CPBY China Information Security Technology enters into share purchase agreement to acquire 100% of the equity of Shenzhen Zhongtian Technology Development (4.68 )
Co announces that it entered into a Share Purchase Agreement with Wide Peace International Investments Limited, a British Virgin Islands company, whereby it will purchase of Kwong Tai International Technology Limited, a Hong Kong company, and its wholly-owned Chinese subsidiary, Shenzhen Zhongtian Technology Development for a purchase price of $16.5 mln. The acquisition is expected to close on or before October 31, 2008 and will be accretive towards 2009 earnings. Co is obligated to pay $9.9 mln of the purchase price in cash on or before October 31, 2008. The remaining $6.6 mln of the purchase price is payable in 1,280,807 shares of the Company's common stock.
08:02 PAX Prospect Acquisition announces trust investment details (9.01 )
The co announces details related to its assets being held in trust. First, the assets, as of September 25, 2008, totaled $248,721,832.70, as compared to $247,000,000.00 at the time of the Company's initial public offering. Second, those assets are held in a trust account at JPMorgan Chase, N.A., with Continental Stock Transfer & Trust Company as trustee.
08:01 LNC Lincoln National discloses its investment in the securities of WaMu (49.00 )
Co discloses that its investment in the securities of WaMu (WM) at September 25, 2008 was ~$84 mln, at GAAP amortized cost, of which $13 mln was senior debt, $55 mln was subordinated debt and $16 mln was preferred stock. The $84 mln of WaMu securities includes ~$8 mln held as trading securities.
08:01 SATC SatCon Tech announces sale of its electronics and motors divisions (2.10 )
Co announces the sale of its Electronics and Motors divisions for cash proceeds of $5.6 mln as part of its overall strategic restructuring plan. At close of these transactions, Satcon received gross cash payments, before expenses, of ~$5.6 mln. In addition, the buyers assumed accounts payable and other accrued expenses of ~$1.8 mln as part of the sale. Proceeds from both sales will be used to fund Satcon's continued development of solutions for large-scale renewable energy. The assets of Satcon's Electronics division are being sold to Spectrum Microwave, a subsidiary of Spectrum Control (SPEC). The assets of the Motors division are being sold to US Hybrid Corporation, a private company.
08:01 WAG prelim $0.45 vs $0.45 First Call consensus; revs $14.6 bln vs $14.67 bln First Call consensus
08:00 Corporate bonds become fund managers' favorite - WSJ
WSJ reports investors are relieved that Washington is trying to ease the financial crisis, but they aren't persuaded it will mean an end to the bear market in stocks. The reason: They fear that the economy, the financial system and corporate profits could be facing troubles for months to come. Instead of stocks, some money managers looking for a safer way to bet that the financial system won't crater are buying corporate bonds. The credit crisis makes it more expensive for companies to borrow, which means higher yields for investors as long as the companies remain solvent. Many bonds rated single-A or triple-B, in the lower range of investment grade, currently yield more than 7%, even as fears of corporate failures are abating. To get that kind of return from stocks given current prices, says Jack Ablin, chief investment officer at Harris Private Bank, you would have to assume profit gains of 12% or more a year, based on current ratios of prices to earnings.
07:59 URBN Urban Outfitters downgraded to Market Weight from Overweight at Thomas Weisel (34.94 )
07:59 Steelmakers see demand fall sharply, prices decline - WSJ
WSJ reports steelmakers in the U.S. are experiencing a sharp pullback from buyers who are spooked by the credit crisis and a slowdown in automobile and construction markets, causing inventories to rise and prices on some key products to drop 10%. Although weakening demand and prices are being partially offset by falling raw-material costs, particularly of scrap, some steelmakers already are cautioning that robust earnings from earlier in the year won't be sustained in the year's second half. "The instability of financial markets and the general slowdown in the commercial building sector are cause for concern in coming quarters," said George Stoe, chief operating officer for Worthington Industries. Demand for rebar steel, often used to build roads, bridges and office buildings, has fallen dramatically in the U.S. because some projects are being delayed or put on hold amid the uncertainty in financial markets, steelmakers said. Exports for rebar steel fell in July, after six straight months of increases, indicating that demand from foreign markets likely won't be a substitute for weak domestic growth.
07:59 OEPNX Steelmakers see demand fall sharply, prices decline - WSJ
WSJ reports steelmakers in the U.S. are experiencing a sharp pullback from buyers who are spooked by the credit crisis and a slowdown in automobile and construction markets, causing inventories to rise and prices on some key products to drop 10%. Although weakening demand and prices are being partially offset by falling raw-material costs, particularly of scrap, some steelmakers already are cautioning that robust earnings from earlier in the year won't be sustained in the year's second half. "The instability of financial markets and the general slowdown in the commercial building sector are cause for concern in coming quarters," said George Stoe, chief operating officer for Worthington Industries. Demand for rebar steel, often used to build roads, bridges and office buildings, has fallen dramatically in the U.S. because some projects are being delayed or put on hold amid the uncertainty in financial markets, steelmakers said. Exports for rebar steel fell in July, after six straight months of increases, indicating that demand from foreign markets likely won't be a substitute for weak domestic growth.
07:59 OEPNX Steelmakers see demand fall sharply, prices decline - WSJ
WSJ reports steelmakers in the U.S. are experiencing a sharp pullback from buyers who are spooked by the credit crisis and a slowdown in automobile and construction markets, causing inventories to rise and prices on some key products to drop 10%. Although weakening demand and prices are being partially offset by falling raw-material costs, particularly of scrap, some steelmakers already are cautioning that robust earnings from earlier in the year won't be sustained in the year's second half. "The instability of financial markets and the general slowdown in the commercial building sector are cause for concern in coming quarters," said George Stoe, chief operating officer for Worthington Industries. Demand for rebar steel, often used to build roads, bridges and office buildings, has fallen dramatically in the U.S. because some projects are being delayed or put on hold amid the uncertainty in financial markets, steelmakers said. Exports for rebar steel fell in July, after six straight months of increases, indicating that demand from foreign markets likely won't be a substitute for weak domestic growth.
07:58 CC Circuit City beats by $0.04, misses on revs; withdraws its previous fiscal 2009 financial outlook (1.37 )
Reports Q2 (Aug) loss of $1.00 per share, ex-items $0.04 better than the First Call consensus of ($1.04); revenues fell 9.6% year/year to $2.39 bln vs the $2.53 bln consensus. Given the initiatives underway and the comprehensive review that the company is undergoing, management believes it is prudent to withdraw its previous fiscal 2009 financial outlook at this time. "We remain very focused on gross margin rate improvement and expense management in fiscal 2009 and are committed to providing updates about our progress during the second half of the year," said Besanko. Domestic segment Superstore openings estimates for fiscal 2009 are shown in Table 6. The timing of store openings depends upon a number of factors and can change during the year.
07:58 Germany's Hypo Real Estate gets rescue plan - WSJ
WSJ reports German bank Hypo Real Estate, an important real-estate lender in the U.S., has been bailed out by a consortium of other German financial institutions, it announced early Monday. The German government and a group of private banks will provide a €35 billion ($50.24 billion) rescue package for Hypo Real Estate, a person familiar with the situation said. The risk shield package will be split into two tranches. The first-loss tranche of €14 billion will be assumed 60% by private banks while the government will assume 40%. The second-loss tranche of €21 billion will be fully assumed by the federal government, according to the person. The government's rescue effort still requires approval by lawmakers. The lower house of parliament's budget committee will meet Tuesday for a special meeting, the person said.
07:56 WB Wachovia: Citigroup nears a deal for Wachovia - NY Times (10.00 )
NY Times reports Citigroup (C) is near a deal for Wachovia, a move that that would concentrate power within the nation's banking industry in the hands of a few giant lenders, The New York Times's Eric Dash and Andrew Ross Sorkin reported Monday morning. Citigroup executives are meeting to complete the deal Monday morning, people briefed on the matter said, cautioning that the talks could unravel. Wells Fargo (WFC), which had also been in talks with Wachovia, could also revive its bid. Although the Federal Reserve and Treasury Department were pushing for a sale, the government was resisting pressure to provide financial guarantees to the buyer, which both Citigroup and Wells Fargo had sought.
07:53 NCC National City: Upgrade details (3.71 )
As mentioned at 6:37 Oppenheimer upgraded National City (NCC) to Outperform from Perform with a $5 tgt saying Washington Mutual (WM) saw $17 bln of deposits leave the bank in the nine days leading up its failure. It was clear that last Friday investors were assuming National City was potentially facing a similar situation as WaMu with NCC down at one point over 50% before finishing down 26%. The firm says they do not feel National City is seeing a mass exodus of depositors, their loan portfolio is more diversified and better quality than WaMu's and the recent sell-off triggered them to upgrade the stock. They see NCC, as a stock trading under $5, as a speculative investment and appropriate for risk-tolerant investors. The firm says the co has been proactively managing their liquidity position and with over 4 mln household customers and 1,400 branches has a strong base of core deposits. In fact, 95% of the co's funding base is deposits, long-term debt and equity. They also say without any option ARMs, better quality home equity loans and a more diverse loan portfolio reflecting that of a more traditional commercial bank, they believe National City's loan quality is much healthier than that of WaMu.
07:52 Vulture funds plan to buy assets ahead of bailout - WSJ
WSJ reports for months, vulture funds and other yield-hunting investors have been poised to buy distressed commercial real-estate assets from ailing institutions. Now, some of them think it may soon be time to pounce. Those investors feel that if they move quickly, they will be able to snap up deals before the government implements its $700 billion bailout plan. They point out that banks and other sellers of the soured securities and mortgages may be more willing to do deals with them because, unlike the government plan, they aren't insisting on provisions such as a limit on executive compensation. "We'll try to buy some of the assets ahead of the transfer," said Chris Hoeffel, a managing director at Bahrain-based Investcorp, which recently formed a $1 billion fund to buy high-yielding commercial real-estate debt. Other opportunistic investors, though, say they likely will stick to the sidelines for now. They are skeptical that the government's purchase of distressed assets will accurately establish what they are worth. So far, there have been few transactions, despite the desperation of banks to sell, because of disagreements over pricing.
07:52 GNTX Gentex lowers Q3 revenue guidance (16.90 )
Co announced that it has revised its prior estimate for top line growth for the third quarter ended September 30, 2008. In the Company's second quarter news release on July 22, 2008, the Company had estimated that its top line growth for the third quarter of 2008 and balance of the year would be approximately ten percent higher than the revenues reported for those same periods in 2007, based on the mid-July light vehicle production forecast of CSM Worldwide. Since that time, there have been numerous automotive announcements of light vehicle production cuts, extended automotive plant shutdowns, significant declines in vehicle sales in both the United States and Europe, and turmoil in the financial markets. Based on those items and poorer economic conditions, the Company now believes that its revenues in the third quarter of 2008 will decline by approximately five percent compared with the same period last year (equates to ~$154 mln vs $174.47 mln First Call consensus). In addition, due to the significant downturn in the equities markets, the Company now expects that the realized gains/losses on the sale of equity investments will be approximately $4 million lower than the second quarter of 2008.
07:51 LXU LSB Industries tgt raised to $23 at Roth (14.91 )
Roth raises their tgt on LXU to $23 from $22. Firm believes LXU's dormant fertilizer facility in Pryor, Oklahoma represents a substantial, undervalued asset that is not currently reflected in valuation. We note economic contribution from this facility is not included in our / Consensus estimates. At the time of publishing this report, LXU has not officially decided to restart the facility. Notably, firm says two major hurdles to start up remain: the attainment of operating permits from local governments, and the identification of an industry partner to purchase, store, and distribute the facility's full fertilizer output. Firm believes the co intends to restart Pryor, given their projected economic contribution from the facility
07:46 WWW Wolverine: Lazard previews 3Q08 results; expects EPS inline with Street expectations (26.67 )
Firm is projecting 3Q08 EPS of $0.60, in line with the Street. The current Street low est is $0.57 and the high est is $0.62. Firm's est is based on a rev increase of 4.5% to $324 mln, in line with the consensus. Firm has increased confidence in WWW's ability to meet the consensus based on mgmt's recent comments at a conf stating performance at the Merrell brand picked up from 2Q given sell-through performance in summer and fall. Backlog numbers in the quarter will likely remain in the 3%-6% range assuming the shift from future orders to at-once orders continued into 3Q. Firm believes the co will reaffirm if not slightly raise 2008 EPS guidance and initiate 2009 EPS guidance in line with their expectation of 8% EPS growth to $2.06.
07:45 ECB to offer banks extra cash through end of year - Bloomberg.com
Bloomberg.com reports the European Central Bank said it will make additional funds available to banks through the end of the year in "special'' auctions to ease tensions on euro-region money markets. The Frankfurt-based ECB said it will loan banks extra cash today for 38 days. "The special term refinancing operation will be renewed at least until beyond the end of the year,'' it said in a statement. Bids must be submitted by 1 p.m. Frankfurt time. The world's largest central banks are injecting liquidity into money markets as more than $550 bln in writedowns and losses tied to the U.S. mortgage market prompt banks to stockpile cash to meet their own funding needs. The ECB said it will continue "to steer liquidity towards balanced conditions in a way which is consistent with its objective to keep very short-term rates close to the minimum bid rate'' of 4.25%. Today's auction will be conducted at a variable rate with no pre-set amount, the ECB said.
07:41 LFUS Littelfuse lowers guidance for third quarter below consensus (33.91 )
Co sees Q3 EPS of $0.30-0.35 before special charges ($0.09-0.14 after special charges) vs $0.44 First Call consensus; revs $140 mln vs $147.13 mln First Call consensus, down from $145-150 previously. Consistent with previous guidance, the company expects to book a $6.5 mln pre-tax charge related to curtailment of a pension plan in Ireland and severance in the U.K."After a strong first half for our automotive business, automotive sales dropped off sharply in the third quarter... We are still on track with our manufacturing transfers and other cost savings programs, but the current automotive weakness and slowing electronic sales will cause full year earnings per share before restructuring charges to be well below our previous guidance." (stock is halted)
07:39 AAPL Apple: Japanese iPhone 3G sales better than reported - AppleInsider (128.24 )
AppleInsider reports despite a widely publicized report that suggested iPhone sales in Japan were less than half of initial expectations, independent data shows that sales are right in line with expectations in a market that is often difficult for Western companies to enter. An independent market research cited in The Australian indicated that iPhone sales were on track. "Gerhard Fasol, of telecoms consultancy Eurotechnology Japan, estimates they [Softbank] shifted between 75,000 and 125,000 units in July. At that rate, he thinks 2008 sales could total between 645,000 and 1 million."
07:38 INSID Notable positions disclosed in original and amended filings – CSX, GSL, RGA
There were a number of institutional filings reporting new and amended positions out after the close Friday night and earlier this morning; some of the more notable positions include: Global Ship Lease (GSL); Soros Fund Management discloses 20.15% stake in 13D filing... CSX (CSX): Citigroup discloses 5.4% stake in 13G filing... Clean Energy Fuels (CLNE); Boone Pickens discloses 56.1% stake in amended 13D filing, up from 55.6% previously reported on 12/13/07... Reinsurance Group (RGA); Capital Ventures discloses 9.4% stake in 13G filing.
07:37 MDCO The Medicines Co: Cangrelor could benefit from prasugrel delay and label limitations/risk map - Leerink Swann (23.31 )
Leerink Swann believes Cangrelor could benefit from Prasugrel delay or non-approval, since either result holds back an acute use competitor and limits options for bridging to chronic treatment to just Plavix, which MDCO is studying in Phase III. Firm reiterates their Outperform rating and $29 fair value on MDCO. If Prasugrel is approved with label limitations and/or a risk map that constrains its market opportunity, MDCO could be an attractive takeover target for LLY to pair oral Prasugrel with IV Cangrelor in order to get the most out of its market presence and avoid bleeding problems. Firm expects Cangrelor's maximum degree of platelet inhibition combined with fast onset and offset of activity to translate into superior efficacy and bleeding advantages when top-line Phase III data is reported in 2Q09.
07:35 President Bush begins statement on Emergency Economic Stabilization Act
07:32 SCS Steelcase beats by $0.01, beats on revs; guides Q3 EPS below consensus, revs in-line (10.44 )
Reports Q2 (Aug) earnings of $0.23 per share, $0.01 better than the First Call consensus of $0.22; revenues rose 9.3% year/year to $901.8 mln vs the $865.6 mln consensus. Co issues mixed guidance for Q3, sees EPS of $0.16-0.21 vs. $0.25 consensus; sees Q3 revs of $840-875 mln vs. $886.32 mln consensus. Second quarter revenue included a $22.3 million benefit from currency translation effects and a $(4.4) million unfavorable impact from net dispositions as compared to the prior year. Q3 guidance includes restructuring costs of approximately $(6) million after-tax. The earnings estimate also includes increased commodity inflation, which is expected to increase cost of sales by $15 to $20 million compared to the prior year.
07:31 XING Qiao Xing's Chairman plans to purchase up to $10 mln worth of co shares (2.69 )
The co announces that its Chairman and CEO, Mr. Wu Rui Lin plans to purchase up to an aggregate of $10 million worth of shares of Qiao the co. The purchases will be made from time to time on the open market through Nasdaq Stock Market at prevailing market prices, in negotiated transactions off the market, in block trades or pursuant to a 10b5-1 plan... Mr. Wu Rui Lin, commented, "I have full confidence in the Company's future development. My planning of purchasing shares in XING, together with the recently-announced re-purchase program by Qiao Xing Mobile, a subsidiary of XING, demonstrates the strong confidence of the management in both companies. The temporary drop of sales in XING for the second quarter of 2008 was primarily due to the heavy earthquake that happened in Sichuan, China. I believe the performance of the Company could be better after we make some adjustments to our business strategy. I think currently both XING and Qiao Xing Mobile are deeply undervalued. From the Company level, more measures will be considered to increase the value of the Company."
07:31 TRH Transatlantic Hldngs announces a Special Committee of its independent directors is evaluating proposals received from AIG relating to possible transactions involving, AIG's 59% stock interest in TRH (53.64 )
Co announces a Special Committee of its independent directors is evaluating proposals received from American International Group (AIG) relating to the possible disposition of, or other transactions involving, AIG's 59% common stock interest in the co as well as any related business combination transactions involving the co's outstanding shares. The Special Committee has retained Lazard as its financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP as its legal advisor. Potter Anderson & Corroon LLP is acting as Delaware counsel to the Special Committee. There can be no assurance as to whether or when AIG will dispose of all or any portion of its interest in the co or whether or when the Company will engage in any transaction.
07:30 TLAB Tellabs upgraded to Outperform at Robert W. Baird (4.11 )
Robert W. Baird upgrades TLAB to Outperform from Neutral and recommends purchase for value investors based on deeply discounted valuation and potential for 2009's financial prospects to improve relating revenue from its 8800, 8600 and 7100 products and better Opex management. Firm expects more aggressive Opex reductions in 2009, but also lowering their '09 ests to be more conservative. Stock is trading below book value and Street expectations appear extremely low.
07:30 DGLY Digital Ally receives orders for over 900 DVM-500 in-car digital video rearview mirror systems from international customers, reaffirms guidance (7.00 )
Co announced that it has received orders totaling over 900 DVM-500 In-Car Digital Video Rearview Mirror Systems from international customers. The orders are expected to ship in the quarter ending September 30, 2008. Co also reiterated its previous guidance that its revenue for the year ending December 31, 2008 is expected to increase more than 100% to ~$40 mln vs $38.50 mln First Call consensus.
07:30 Iraq signs bln-dollar power deals with GE, Siemens - Reuters.com
Reuters.com reports Iraq has signed preliminary deals worth billions of dollars with General Electric Co and Siemens for equipment to almost double electricity generation capacity, an energy official said. The deals with GE, Siemens and a third company would be worth a total of $7 billion to $8 billion, Iraq's Electricity Minister Karim Waheed told Reuters. Iraq signed a memorandum of understanding earlier this month for U.S. giant General Electric to supply turbines to generate 6,800 megawatts of power, Waheed said. He declined to say how much Iraq would pay GE for the equipment, but said each megawatt would cost between $700,000 and $800,000. That would give a value of between $4.8 billion and $5.4 billion. The country has signed a second MOU with Germany's Siemens (SI) to supply equipment to generate another 2,000 MW, he added. That deal would be worth between $1.4 billion and $1.6 billion. Baghdad was negotiating with a third company for another 1,000 MW, he said, declining to give further details.
07:28 Bank of China says open to Wall Street buys - Reuters.com
Reuters.com reports Bank of China is open to buying into U.S. banks in the wake of the global financial crisis, a senior executive said. Banking industry observers in China are torn over whether the fall in the share prices of many U.S. financial cos presents more of a risk or a buying opportunity. Zhu Min, vice-president of Bank of China, did not shy away when asked whether his bank was currently considering making investments in Wall Street. "We are open. From a business point of view, we are looking for all the possible deals everywhere," Zhu told a meeting of the World Economic Forum being held in this northern port city. While Zhu did not elaborate, his remarks contrast with more cautious comments by senior executives of other Chinese banks on their plans for expanding overseas. Guo Shuqing, chairman of China Construction Bank said that CCB would be relatively careful in considering whether to make purchases abroad, especially in the United States. Jiang Jianqing, chairman of Industrial and Commercial Bank of China, said that the country's biggest lender would be careful in exploring U.S. acquisitions during the current turmoil.
07:26 Defense Technology: Morgan Joseph believes President Bush expected to sign FY2009 defense spending bill
Morgan Joseph notes that last week the U.S. Congress passed the FY2009 Defense Appropriations bill and sent it to the President, who is expected to sign the measure into law before the start of the government's fiscal year Wed. A total amount of $487.7 bln for defense spending is included in the bill, which passed the House last Wed and was approved by the Senate on Sat. Programs that would receive full funding under the terms of the FY2009 bill include missile defense for Europe, body armor, and programs that advance the country's ability in intelligence, surveillance, and reconnaissance. Firm notes ORB produces the interceptors used in the European missile defense system. CRDN is a leading producer of body armor. AXYS and DRS are leading suppliers of ISR systems, which are expected to receive funding at levels much higher than requested because of the findings of a Department of Defense task force that identified ISR capability as critical for engaging terrorists and insurgents in Iraq and Afghanistan.
07:26 COP ConocoPhillips downgraded to Neutral from Buy at Goldman- DJ (76.24 )
07:26 S&P futures vs fair value: -21.00. Nasdaq futures vs fair value: -30.00.
07:26 SMI Semi Manufacturing reaffirms Q3 revs guidance, sees revs growth of 5-8% (1.50 )
07:26 European Markets
FTSE...4907...-181.00...-2.80%. DAX...5897...-165.00...-2.70%.
07:26 Asian Markets
Nikkei...11743...-149.00...-1.30%. Hang Seng...17880...-801.00...-4.30%.
07:23 AEG AEGON has EUR125 mln gross exposure to Washington Mutual - DJ (10.48 )
DJ reports the co said that it has a EUR125-million gross exposure to Washington Mutual through fixed-income instruments, but added it doesn't hold common equity in the U.S. lender as of Sept. 26. Aegon said that any effect of credit losses on its excess capital and net income will be substantially lower as a result of a variety of factors, including taxes and recovery values. During 2008, Aegon has actively lowered its exposure to Washington Mutual by approximately 47%, the company said. The fixed-income amount includes Credit Default Swaps-related exposure to Washington Mutual, Aegon said.
07:22 NOK Nokia is in the advanced stages of discussions for the potential sale of its security appliances business to a financial investor (19.68 )
The co announces that it plans to cease developing or marketing its own behind-the-firewall business mobility solutions. The appropriate technologies and expertise will be reallocated to Nokia's new consumer push e-mail service... Nokia is also announcing that it is in the advanced stages of discussions for the potential sale of its security appliances business to a financial investor.
07:21 CWTR Coldwater Creek upgraded to Market Weight from Underweight at Thomas Weisel (6.05 )
07:21 ANF Abercrombie upgraded to Overweight from Market Weight at Thomas Weisel (38.85 )
07:20 SCANX Early premarket gappers
Gapping up: ING +3.1%... Gapping down: WB -49.8%, RBS -21.6%, XING -20.1%, LYG -18.9%, UBS -14.9%, BHP -8.1%, RTP -7.7%, AAPL -6.4%, NOK -6.3%, BP -5.8%, RDS.A -5.6%, TOT -5.6%, MS -5.1%, RIO -5.0%, LLY -3.9%, RIMM -3.8%, AIG -3.5%.
07:20 COH Coach upgraded to Overweight from Market Weight at Thomas Weisel (25.99 )
07:20 KSS Kohl's downgraded to Underweight from Market Weight at Thomas Weisel (49.13 )
07:19 GGP Gen Growth Prop: S&P downgrades GGP to 'BB'; ratings on Watch Negative (17.05 )
Standard & Poor's Ratings Services lowered its corporate credit rating on General Growth Properties to 'BB' from 'BB+' and placed it on CreditWatch with negative implications. At the same time, we placed our 'BB-' ratings on roughly $5 billion of the company's unsecured debt on CreditWatch with negative implications. Finally, we assigned a recovery rating of '5' to the company's unsecured debt, indicating that lenders can expect a modest recovery (10%-30%) in the event of a payment default (see list). The rating actions were largely driven by our concern surrounding General Growth's significant near-term debt maturities in the context of the currently severely constrained capital markets. The operating performance of the company's core portfolio remains solid, and General Growth has raised significant funds since the beginning of the year for debt refinancings (including a $1.75 billion secured term loan ($1.5 billion funded to date) and $800 million in equity). However, General Growth has an additional roughly $1.2 billion in maturing debt to satisfy for the remainder of 2008, and has $3.1 billion in debt maturing in 2009. Additional demands on the company's capital include General Growth's development pipeline ($787 million in unfunded cost over the next 18 months) and any dividend obligations that are not fully covered by operating cash flow. Furthermore, coverage metrics remain very slim and may be pressured if the company raises additional capital at a higher cost.
07:18 Comcast and Sprint downgraded at Oppenheimer
Oppenheimer says in the midst of a cyclical slowdown in consumer communications that reflects the convergence of increased supply with slowing consumer demand. They are downgrading consumer-focused Comcast (CMCSA) and Sprint (S) to Underperform from Perform as they believe the consumer environment will worsen noticeably in 2H08, coinciding with a land grab for high-value customers in the Wireline and Wireless industries. The firm says their intermediate-term investment theme is to avoid consumer stocks and risk by overweighting lower priced and reasonably positioned T, CTL and EQ as well as those companies benefiting from competition - TNDM and RRST.
07:14 WIRES On The Wires
Fronteer Development Group (FRG) announces that step-out drilling has extended high-grade, oxide gold mineralization by 400 metres along strike at its Long Canyon Project in Nevada... ADC (ADCT) and Accedian Networks announce that ADC has entered into an original equipment manufacturer agreement with Accedian Networks to offer Ethernet demarcation units as part of its LoopStar product family... Cash America International (CSH) announces it has entered into a letter of intent to acquire an 80% ownership interest in a 100 store chain of pawnshops in Mexico.
07:11 PPC Pilgrim's Pride announces definitive written agreement with lenders on temporary covenant waiver (3.55 )
Co announces that on September 26, 2008, it successfully completed a definitive written agreement with its lenders to temporarily waive the fixed-charge coverage ratio covenant under its credit facilities through October 28, 2008. The lenders also have agreed to continue to provide liquidity under these credit facilities during this same 30-day period in accordance with the terms of the waiver agreement.
07:10 DGIT DG FastChannel: Merriman says feedback from ad agencies suggest widespread adoption of HD commercials by end of 2009 (22.73 )
Merriman says that based on feedback from ad agencies at the Advertising Week conference last week, they believe that adoption of HD commercials will be faster than both what firm and the consensus anticipate. It appears that advertisers will move to HD format commercials rather quickly as the FCC mandated transition to digital broadcast signal takes place on Feb 17, 2009, only a few months away. The HD format gives advertisers a much higher quality of picture and takes advantage of wide-screen TVs. As a result, due to the substantial lift in price per delivery (HD vs. SD format), DG FastChannel's rev growth could materially exceed FY09 expectations.
07:09 NTRS Northern Trust announces three actions to support clients in light of the current turbulent market conditions (79.90 )
Co announces three actions to support clients in light of the current turbulent market conditions. "The hallmark of Northern Trust has always been our financial strength and client focus. With today's actions, we are putting Northern Trust's financial strength to work for our clients during extraordinarily challenging market conditions," The co expects to incur pre-tax charges of approx $525 mln ($328 mln after-tax or $1.46 per share) in the third quarter in connection with these three actions. The co will increase the support provided for certain cash investment funds previously covered through capital support agreements (as announced February 22, 2008, and amended July 15, 2008) and will add one additional fund to this coverage. The capital support levels provided by Northern Trust will increase in aggregate by $321 mln, to a maximum capital contribution of $550 mln. These measures will enable the funds to continue to maintain a stable net asset value of $1.00. The co expects to incur a pre-tax charge of approx $290 mln ($181 mln after-tax or $.80 per share) in the third quarter in connection with this action. Cash investment funds impacted by this enhanced support include: Northern Institutional Funds Diversified Assets Portfolio, Prime Obligations Portfolio and Liquid Assets Portfolio, as well as Northern Funds Money Market Fund, all of which are registered money market funds; The Sterling Fund and the US Dollar Fund of Northern Trust Global Funds plc, both of which are pooled cash funds organized as Undertakings for the Collective Investment of Transferable Securities; and The NTGI Collective Short Term Investment Fund and The Northern Trust co Common Short Term Investment Fund, both of which are commingled cash funds. The co will also will take certain actions to provide support for securities lending clients whose cash collateral is invested in five constant dollar, commingled investment pools negatively impacted by recent market events. The co expects to incur a pre-tax charge of approx $150 mln ($94 mln after-tax or $.42 per share) in the third quarter in connection with this action. Northern Trust also announced today that it will put in place a program offering to purchase certain illiquid auction rate securities that were purchased through Northern Trust for Personal Financial Services clients under investment discretion or that were acquired by PFS clients from Northern Trust's affiliated broker/dealer. The terms of the offer will be communicated to those clients who qualify for the program. The co expects to incur a pre-tax charge of approx $85 mln ($53 mln after-tax or $.24 per share) in the third quarter in connection with this action.
07:09 ARTG Art Technology tgt raised to $4.50 at Roth (3.71 )
Roth is raising their tgt on ARTG to $4.50 from $4.00. Firm believes ARTG has been one of their best performing software names over the past 3 months, and we suspect that it can continue to appreciate based on good execution, reasonably healthy end-market demand, and an upward bias to the numbers. Execution has been impressive, as ARTG has put up the numbers for nearly two years running; firm applauds the co on its sensible well-executed acquisitions of eStara and CleverSet, impressive customer wins, a dramatic build in the partner channel, and the relatively-smooth shift towards a more ratable financial model. Firm suspects that the consensus est for 2009 will rise; their 2009E EPS of $0.22 is a nickel above consensus, yet still is more conservative than the co's own internal plan.
07:08 BAS Basic Energy Services announces Azurite asset purchase; anticipated to be accretive to earnings in 2008 (21.87 )
Co announced it has purchased substantially all of the operating assets of Azurite Services Company, Inc., Azurite Leasing Company, LLC and Freestone Disposal, L.P. for approximately $60 mln in cash. Projected revenue for the first twelve months from these assets is expected to be $51 million and the transaction is anticipated to be accretive to earnings in 2008.
07:08 OSIS OSI Systems: Quarter tracking well; momentum continues - Roth (24.06 )
Roth believes positive momentum has continued into Q3 for OSI and have a favorable outlook on the quarter to include bookings and earnings. Firm remains positive on shares of OSIS given the discount valuation, defensive growth drivers, and improving cash flows. Catalysts in security, including cargo, TSA's upgrade at airport checkpoints, and international hold baggage remain healthy and healthcare appears stable. Additionally, firm believes upside to their Opto ests is looking increasingly likely in FY09. Firm continues to look favorably on OSIs's efforts to simplify the story for investors. Profitability is improving and the depth of change is likely to become evident in FY09 in the form of gross margin and tax base improvements.
07:07 AMZN Amazon.com: BWS Financial lowering estimates ahead of results (70.70 )
BWS Financial notes AMZN is scheduled to announce Q3 results on October 22, 2008. At the on set of the third quarter expectations were high, with a weak Dollar and a consumer that was willing to spend more time online to make purchases. Much has evolved from the beginning of July and into Sept. Firm has lowered their EPS for 2008 to $1.47 (without the $0.09 gain in the second quarter) and now forecast 2009 EPS to be $2.16 (consensus FY08 $1.55, FY09 $2.11).
07:06 TSRA Tessera Tessera names Michael Anthofer as Executive Vice President and CFO (17.51 )
Co announced Michael Anthofer has been named executive vice president and CFO, effective immediately. Anthofer joins Tessera from Kodiak Networks Inc., a privately held provider of mobile solutions to wireless providers he joined in 2003 as vice president and CFO.
07:05 Oppenheimer says to avoid consumer communications in 2H08
Oppenheimer believes they are in the midst of a cyclical slowdown in consumer communications that reflects the convergence of increased supply with slowing consumer demand. Firm is downgrading consumer-focused CMCSA and S to Underperform from Perform as they believe the consumer environment will worsen noticeably in 2H08, coinciding with a land grab for high-value customers in the Wireline and Wireless industries. Firm's intermediate-term investment theme is to avoid consumer stocks and risk by overweighting lower priced and reasonably positioned T, CTL and EQ as well as those companies benefiting from competition - TNDM and RRST.
07:04 WPCS WPCS Intl announces that, through its subsidiaries, it has received approximately $10 mln in new projects (4.35 )
07:04 CPHD Cepheid receives FDA Clearance for first rapid on-demand molecular diagnostic test for MRSA and S. aureus (14.60 )
07:03 CAH Cardinal Health plans to spin off Clinical and Medical Products businesses; reaffirms FY09 and 1Q09 EPS guidance (49.84 )
The co announces that it plans for a tax-free spin-off of its clinical and medical products businesses as a separate public company that will be led by current vice chairman and med-tech industry veteran David Schlotterbeck. The company also announced that Chairman and CEO R. Kerry Clark will continue to lead Cardinal Health through the spin-off and then will retire from the company. Clark will be succeeded by George Barrett, who has served as vice chairman and CEO of Healthcare Supply Chain Services since joining Cardinal Health in January... For the current fiscal 2009, the company reiterated guidance it provided on Aug. 7 for revenue growth of 6-7% and non-GAAP diluted EPS from continuing operations to be in a range of $3.80 to $3.95 vs. $3.85 First Call Consensus. Non-GAAP EPS in the first quarter is still expected to be around $0.70 vs. $0.71 First Call Consensus, with EPS returning to more normal levels in the second quarter and overall results stronger in the second half of the year.
07:03 ABI FDA selects Applied Biosystems to provide mass spectrometry instrument systems for food contaminant testing (34.94 )
Co announces the FDA has purchased seven of the co's 4000 QTRAP Systems for the analysis of potential harmful pesticides in the U.S. food supply. These systems will be deployed at FDA field offices in Jefferson, Ark.; Irvine, Calif.; Lenexa, Kan.; Jamaica, NY; Bothell, Wash.; Atlanta, Ga; and College Park, Md.
07:02 HEPH Hollis-Eden Pharm presents additional "Positive Findings" for APOPTONE (HE3235) (1.14 )
The co presented new findings that suggest APOPTONE is inhibiting in preclinical models of castration-resistant prostate cancer, the ability of tumors to synthesize the hormones necessary for their survival, as well as significantly down regulating the androgen receptor. Recent reports from the scientific literature indicate that androgen receptor signaling is active in all stages of prostate cancer, including late stage castration-resistant prostate cancer, and that castration-resistant prostate cancer may be driven by the intratumoral production of androgens.
07:02 FGP Ferrellgas Partners reports Q4 EPS of ($0.61) vs ($0.50) First Call consensus; revs increased 27% to $419.7 mln vs $380.85 mln First Call consensus (18.99 )
"We're especially focused on improving margins. Moreover, we believe we have good reason to be optimistic about the outlook for fiscal 2009 and are projecting Adjusted EBITDA in excess of our fiscal 2007 record performance."
07:02 CBRX Columbia Labs announces "data from our initial dysmenorrhea clinical study suggest a trend for a positive lidocaine effect among secondary data endpoints for the patients' (3.46 )
Co announces results from its Phase II study of vaginally-administered lidocaine, which it is investigating for the prevention and treatment of dysmenorrhea. No treatment currently exists to prevent dysmenorrhea. The primary endpoint of the study was to show a difference between lidocaine and placebo in terms of the time-weighted average patient-assessed pain intensity over four treatment days. Data from the clinical trial did not show a significant difference between the pain scores for the lidocaine and placebo treatment cycles. Patients in the clinical trial were also asked to make a subjective assessment of the treatment at the end of each cycle, and to compare the first and second cycles to one another. While complete analysis of these secondary data is ongoing, top line data suggest a trend for patients to favor their lidocaine treatment cycle. The clinical trial did not reveal any significant adverse events and those adverse events that occurred were similar in both kind and frequency for lidocaine and placebo. "Data from our initial dysmenorrhea clinical study suggest a trend for a positive lidocaine effect among secondary data endpoints for the patients' overall assessments of each menstrual cycle, although the clinical trial did not show a difference between lidocaine and placebo in patient-assessed pain scores, our primary endpoint."
07:01 CLDA Clinical Data announces $25 million private placement (16.44 )
Co announces it has entered into a definitive agreement with certain affiliates of Randal J. Kirk, Chairman of Clinical Data's Board of Directors, with respect to the private placement of 1,514,922 shares of newly issued common stock priced at the closing price of $16.44 per share as of September 26, 2008, plus $0.0625 per share, and warrants to purchase an additional 757,461 shares of common stock at $16.44 per share, for a total purchase price of approximately $25 million. Clinical Data intends to use the gross proceeds from the private placement, which will be paid in full to the Company as no placement agent was used in the transaction, for general working capital purposes.
07:00 COV Covidien announces restructuring program (54.91 )
The co announces that it would implement a restructuring program beginning in fiscal 2009 to improve its cost structure and to deliver improved operational growth. The restructuring program, which includes projects in all four business segments and at corporate, will result in the Company incurring pre-tax charges of approximately $200 million beginning in the first quarter of fiscal 2009. Savings from the restructuring program are estimated at $50 million to $75 million on an annualized basis once the program is completed.
06:57 Bradford & Bingley is seized; Santander buys branches - Bloomberg.com
Bloomberg.com reports Bradford & Bingley, the U.K.'s biggest lender to landlords, was seized by the government after the credit crisis shut off funding and competitors refused to buy mortgage loans that customers are struggling to repay. Banco Santander (STD), Spain's biggest lender, will pay 612 mln pounds ($1.1 bln) for Bradford & Bingley's 197 branches and 20 bln pounds of deposits, the bank said today in a statement. Bradford & Bingley shares were canceled before the market opened in London. Bradford & Bingley became the second British bank after Northern Rock to be nationalized this year as survivors of the global credit crunch balk at swallowing all the risks facing weaker competitors.
06:51 TSP Telesp Part Adr upgraded to Buy from Neutral at Goldman-DJ (23.90 )
06:49 Pound, Euro tumble against dollar as governments bail out banks - Bloomberg.com
Bloomberg.com reports the British pound fell the most against the dollar in 15 years and the euro weakened after European governments bailed out banks and investors lost confidence in the region's financial institutions. The currencies also declined versus the Japanese yen after Belgium, the Netherlands and Luxembourg threw an 11.2 bln-euro ($16.3 bln) lifeline to Fortis, the largest Belgian financial-services firm, and the U.K. Treasury seized Bradford & Bingley Plc, the nation's biggest lender to landlords. The dollar rose the most in eight weeks against the euro after President George W. Bush and Congressional leaders agreed on a $700 bln plan to revive credit markets. The British currency slid as much as 2.6% to $1.7959, from $1.8445 at the end of last week, the biggest intraday decline since June 4, 1993. The euro weakened after the governments of Belgium, the Netherlands and Luxembourg bailed out Fortis to restore confidence in the company following a 35 percent drop in its share price last week.
06:44 CALM Cal-Maine Foods reports 1Q09 results (37.91 )
Reports Q1 (Aug) earnings of $0.47 per share, compared with $0.76 for the year-earlier period, and net sales of $206.9 mln, a 15.8% increase year/year. No First Call estimates are available. "Egg prices and total dozens sold were both up for the first quarter of fiscal 2009 compared with the same period last year. Demand for eggs was strong in both the retail and food service markets. However, our feed costs were dramatically higher and reduced the Company's earnings for the quarter compared with a year ago. Corn and soybean meal prices peaked in July, but have dropped substantially in the last few weeks. While estimates for the final crop yields vary widely, it is expected that feed prices will remain volatile and high for the year ahead. USDA statistics indicate that egg supply will remain flat for the next few months. All of Cal-Maine's operations continue to run smoothly."
06:40 Money-market rates rise as bank rescues stoke lending concern - Bloomberg.com
Bloomberg.com reports the cost of borrowing in euros for three months soared to a record after the bailout of Belgium's Fortis and seizure of U.K. mortgage lender Bradford & Bingley deepened concern more financial institutions will collapse, prompting banks to hoard cash. The euro interbank offered rate, or Euribor, rose 10 basis points to 5.24%, the biggest jump since June, the European Banking Federation said today. Singapore's benchmark rate for three-month U.S. dollar loans rose to the highest level in eight months. The increases show central-bank attempts to breathe life back into money markets haven't succeeded, even after U.S. lawmakers agreed on a $700 bln plan to remove tainted assets from bank balance sheets. The ECB said today it will make additional funds available to banks through the end of the year in "special'' auctions. The central banks of Japan and Australia added more than $20 bln to money markets.
06:37 Nikkei ends down 1.3% over caution on U.S. plan; Sensex down around 600 points
Japan's Nikkei average fell 1.3% on Monday, down for a third day as investor caution about the implementing of a U.S. bailout plan for the financial sector outweighed initial relief that a deal was being done. Major banks shed much of their gains or sank into negative territory, while blue-chip exporters such as Toyota Motor (TM) fell sharply on worries about the global economic outlook. Shippers extended last week's losses after a key freight index tumbled, and energy shares also fell on a decline in oil prices. Hong Kong shares fell 4.3% on Monday, sliding to near two-year lows as investors off-loaded property stocks on a mortgage rate hike and job cuts at HSBC (HBC). The Hang Seng Index ended down 801.41 points at 17,880.68, taking year-to-date losses to almost 36%. India's Sensex was down approx 600 points to 12,498 at 15:43 I.S.T. (Reuters, Business Standard)
06:37 CALLS Early Research Calls II -Update-
Upgrades: KeyBanc upgrades BorgWarner (BWA 32.46) to Buy from Hold and sets a $46 tgt, as they believe that robust demand for the co's products will continue to drive revenue growth and margin expansion, resulting in double-digit EPS growth... Oppenheimer upgrades National City (NCC 3.71) to Outperform from Perform and sets a $5 tgt, based on valuation and believe the bank isn't seeing a mass exodus of despositors while their loan portfolio is more diversified and better quality than WaMu's... UBS upgrades Nortel (NT 2.54) to Buy from Neutral... Wachovia upgrades Brookfield Infrastructure Partners LP (BIP 15.40) to Outperform from Market Perform... Piper Jaffray upgrades Xilinx (XLNX 23.98) to Buy from Neutral... J.P Morgan upgrades Telesp Part Adr (TSP 23.90) to Neutral from Underweight. Downgrades: Morgan Stanley downgrades Apple (AAPL 128.24) to Equal Weight from Overweight... RBC downgrades Apple (AAPL 128.24) to Sector Perform from Outperform. Miscellaneous: Oppenheimer initiates China Mass Media Int'l Advertising (CMM 4.92) with an Outperform and sets an $8.50 tgt, based on a proven attractive partner to China's dominant TV network, China's ad market that is large and fast growing, and expansion into commercial production that creates a potential growth opportunity.
06:28 CALLS Early Research Calls I
Downgrades: Merriman downgrades Bankrate (RATE 39.12) to Neutral from Buy, based on concerns about display advertising trends industry-wide, the co's above-average exposure to the financial vertical, and shares that trade in-line with peers... Merriman downgrades TheStreet.com (TSCM 6.01) to Neutral from Buy, as they believe near-term expectations appear relatively safe but FY09 could be at risk... Baird downgrades Monaco Coach (MNC 2.30) to Neutral from Outperform, Thor Industries (THO 26.80) to Underperform from Neutral, and Winnebago Industries (WGO 13.85) to Underperform from Neutral, based on valuation and checks that suggest fundamentals remain dreadful, including weak demand, failing dealers/manufacturers, tighter credit, and no appetite for inventory... Credit Suisse downgrades Digital River (DRIV 36.03) to Neutral from Outperform... JP Morgan downgrades Arch Capital (ACGL 73.40) to Neutral from Overweight... Deutsche Bank downgrades DISH Network (DISH 24.55) to Hold from Buy and lowers their tgt to $31 from $51, following news that AT&T won't be renewing its five-year partnership with DISH, instead choosing to partner with DirecTV... Citigroup downgrades Starwood Hotels & Resorts (HOT 30.27), Sunstone Hotel Investors (SHO 14.04) and Host Hotels & Resorts (HST 13.95) to Hold from Buy, as they feel tighter credit could result in a more difficult economic environment for the cos than previously anticipated... Citigroup downgrades Strategic Hotels & Resorts (BEE 9.00) to Sell from Hold and lowers their tgt to $6 from $9, based on valuation, balance sheet leverage that is high, and a possible dividend reduction next year. Citigroup downgrades Sadia (SDA 9.50) to Sell from Buy.
06:08 GSL Soros Fund Management discloses 20.15% ownership of Global Ship Lease in Schedule 13D (6.33 )
06:07 GS Goldman seeks to buy up to $50 bln in assets - Financial Times (137.99 )
Financial Times reports Goldman Sachs (GS) is seeking to acquire up to $50 bln in assets from ailing US banks as part of its push into commercial banking, Goldman executives say. Goldman is moving quickly to profit from its push into traditional banking by expanding the activities of its Utah industrial loan corporation, a kind of bank that is regulated by authorities in that western US state. Goldman is moving to shift $150 bln of assets to the balance sheet of the Utah bank. These would include loans to private clients and other assets that would be found more typically at a traditional commercial bank. Goldman also plans to talk to US regulators to identify up to $50 bln in assets it could buy from troubled lenders. These, too, would be put under the Utah bank.
06:06 WIRES On The Wires -Update-
Leuchemix announces that permission to undertake clinical safety trials of its drug LC-1, for leukemia, has been granted and that the sponsored trial will begin shortly; CombiMatrix (CBMX) owns one third of Leuchemix.
06:05 AIG AIG looks to sell 15 units - Financial Times (3.15 )
Financial Times reports AIG (AIG) is considering selling more than 15 businesses, including its aircraft leasing unit, a stake in a large US reinsurer and billions of dollars in properties in an effort to repay a $85 bln government loan and secure its future as an independent co. The board of AIG, which was de facto nationalized this month when the US administration stepped in with an emergency loan, was meeting in New York on Sunday night to discuss a radical plan for asset disposals aimed at helping the company emerge from its crisis. People close to the situation said AIG wanted crucial businesses such as its international life insurance unit and its US pension businesses to be at the core of the "new AIG". But apart from those, AIG was prepared to consider selling most other operations. The co and its advisers are believed to have drawn up a list of about 15-20 large businesses that could be sold. AIG has to move fast because it has a short window to repay the emergency government aid and prevent Washington from taking control of the co. People close to the situation warned that no final decisions on the asset sales had been made and stressed that AIG wanted to retain a large degree of flexibility on asset sales because of the difficult market conditions. Among the units that are most likely to be sold are International Lease Finance which is expected to fetch about $10 bln. AIG is believed to have received expressions of interest from Asian and Middle Eastern buyers.
06:02 GS Goldman Sachs faults NY Times story on AIG risk - Reuters (137.99 )
Reuters reports Goldman Sachs (GS) rejected as "seriously misleading" a published report on Sunday that said the bank had as much as $20 bln of exposure to AIG (AIG). The New York Times had said Goldman was AIG's largest trading partner, citing six people close to the insurer. It also said a collapse of AIG threatened to leave a hole of as much as $20 bln in Goldman, citing several of the people. The report contrasted with a Sept 16 comment by David Viniar, Goldman's CFO, on a conference call with analysts that Goldman's exposure to AIG was immaterial. Hours after he spoke, the U.S. government announced an $85 bln bailout of AIG, which had suffered spiraling losses on credit default swaps, a type of insurance contract whose value is tied to securities such as mortgages and corporate debt. A failure of AIG might have convulsed the global financial system because many companies do business with it. Lucas van Praag, a Goldman spokesman, on Sunday said the Times article was wrong to suggest that Goldman had reason to be concerned about AIG's problems. "Although we have said many times on the record that our exposure to AIG was, and is, not material, the reporter chose to pursue a story line which suggests, by innuendo, that is not the case," he said in an e-mailed statement.
05:56 PG Companies to play defense in downturn - WSJ (68.84 )
The Wall Street Journal reports history doesn't support such confident predictions that Procter & Gamble (PG) is immune to recessions. During the recession of 1979-82 and the downturn about a decade later, P&G lost significant market share in key categories including laundry detergent, diapers and cleaning products, says consultant and industry veteran Burt Flickinger III. People traded down from premium brands to private-label goods and other less-expensive products. P&G has changed its product mix in recent years. But that has probably made it even more exposed to belt-tightening than in the past. It has discarded some lower-priced brands in areas such as shampoo and detergent. P&G is no retailer or advertising-focused media co that will see wild swings in profitability if a deep recession sets in. But the group hasn't been tested by a prolonged downturn for more than 15 years. With its strengthened focus on premium brands, expect even P&G to take some hits to profit if the consumer really goes into a defensive crouch.
05:51 DISH AT&T switches satellite-TV provider - WSJ
The Wall Street Journal reports AT&T (T) is switching its satellite-TV provider to to DirecTV (DTV), ditching satellite rival Dish Network (DISH). The move means that DirecTV now has deals with all the major U.S. phone companies. With the loss of AT&T, Dish no longer has any phone companies as partners. AT&T's switch will likely raise concerns about Dish's prospects. Analysts say that Dish's failure to move as aggressively into high-definition programming as its larger rival, and a greater focus on the lower end of the market have contributed to its problems. An AT&T spokesman declined to comment on why the company picked DirecTV over Dish, or whether Dish's recent troubles contributed to the decision. Terms of the deal weren't disclosed and AT&T and DirecTV didn't detail plans for their new service.
05:43 IMCL ImClone may have talks to announce - WSJ (63.38 )
The Wall Street Journal reports ImClone (IMCL) is expected to announce on Monday that it is continuing talks to sell itself to a major pharmaceutical concern for a price in the range of $6.1 bln, according to people familiar with the matter. The co, which last week rejected an unsolicited offer from Bristol-Myers Squibb (BMY) to acquire it for $5.4 bln, or $62 per share, is expected to announce a deadline by which it hopes to have a deal with its other suitor. The two sides remain in "deep discussions" and believe they can reach a resolution within days, the people said. ImClone said previously that it expected its unnamed suitor to complete a review of its books by Sept. 28. ImClone has refused to identify the co it has been holding talks with but speculation has swirled around Pfizer (PFE) which has declined to comment on the matter. One person involved in the discussions said that more than one co had expressed interest in exploring a transaction with ImClone following Bristol's unsolicited July bid. These parties included both Pfizer and Eli Lilly (LLY), the person said. Eli Lilly declined to comment. Many observers view Bristol as the likely buyer for ImClone because it already owns roughly 17% of the co and holds the U.S. marketing rights for Erbitux.
05:38 Governments agree to bail out Fortis - WSJ
The Wall Street Journal reports the governments of Belgium, Luxembourg and the Netherlands, the three countries in which Fortis operates, agreed late Sunday to inject 11.2 bln euros ($16.37 bln) into the bank. The lifeline came after France's BNP Paribas and ING Groep (ING) walked away from talks to acquire the co over the weekend. Fortis said Monday it will sell most of the ABN Amro assets it acquired for 24 bln euros last year as part of a consortium that included the Royal Bank of Scotland (RBS) and Spain's Banco Santander (STD). Fortis Chief Executive Filip Dierckx said in a statement Monday the moves would "ensure the financial strength and stability of our company going forward." The bank would be left with excess capital of 9.5 bln euros after its transformation. However, it noted that to the extent ABN Amro's retail operations fetch less than 12 bln euros, capital would be depleted. Fortis said it expected to write down 5 bln euros of evaporated value in ABN, lost tax credits and losses on its derivatives portfolio. The co said it has written down 78% of the value of CDOs it wrote. The bank added it expects further impairments on "the remainder of the structured credit portfolio" -- CDOs it owns but didn't create -- but didn't say how big that portfolio is or how large the impairments will be.
05:32 WFC Wells Fargo eyes Wachovia - WSJ (37.31 )
The Wall Street Journal reports Wachovia (WB) was in advanced discussions Sunday night to sell itself to Wells Fargo (WFC), according to people familiar with the situation. Wachovia was also holding talks with Citigroup (C), but by late evening Wells Fargo appeared to be the preferred bidder. Details of the proposed transaction weren't immediately clear, and the discussions could fall apart at the last moment. The Wachovia developments came the same day that Congress and the Bush administration reached agreement on a $700 bln banking-rescue package. Meanwhile, the turmoil in the banking system spread to Europe over the weekend, as a major European bank was bailed out by a trio of governments, the U.K. was plotting the rescue of a British lender and Germany was trying to save a Munich-based lender.
05:28 Early Newspaper Headlines: WFC/WB - IMCL - T/DTV/DISH - PG - GS/AIG
WSJ: Wells Fargo (WFC) eyes Wachovia (WB)... Governments agree to bail out Fortis... ImClone (IMCL) may hae talks to announce... AT&T (T) switches satellite-TV provider (DTV/DISH)... Companies to play defense in downturn (PG). Reuters: Goldman Sachs (GS) faults NY Times story on AIG (AIG) risk. Financial Times: AIG (AIG) looks to sell 15 units... Goldman (GS) seeks to buy up to $50 bln in assets.
04:16 WX WuXi PharmaTech announces it will no longer pursue a 50-50 joint venture with Covance (15.68 )
Co announces that it will no longer pursue a 50-50 joint venture with Covance (CVD 91.93) to provide preclinical contract research services in China.
03:45 WIRES On The Wires -Update-
Comarco (CMRO) announces that it has signed a definitive agreement for the sale of its wireless test solutions business to Ascom Holding AG; under the terms of the transaction, Comarco will receive approx $12.75 mln in cash.
01:17 Lawmakers, White House agree on $700 bln bailout - AP
Congressional leaders and the White House agreed Sunday to a $700 bln rescue of the ailing financial industry after lawmakers insisted on sharing spending controls with the Bush administration. The biggest U.S. bailout in history won the tentative support of both presidential candidates and goes to the House for a vote Monday. The plan would give the administration broad power to use billions upon billions of taxpayer dollars to purchase devalued mortgage-related assets held by financial firms. President Bush called the vote a difficult one for lawmakers but said he is confident Congress will pass it. "Without this rescue plan, the costs to the American economy could be disastrous," Bush said in a written statement released by the White House. He was to speak publicly about the plan early Monday morning, before U.S. markets open. Congress insisted on a stronger hand in controlling the money than the White House had wanted. Lawmakers had to navigate between angry voters with little regard for Wall Street and administration officials who warned that inaction would cause the economy to seize up and spiral into recession. A deal in hand, Capitol Hill leaders scrambled to sell it to colleagues in both parties and acknowledged they were not certain it would pass. "Now we have to get the votes," said Sen. Harry Reid, D-Nev., the majority leader. Rep. John A. Boehner, R-Ohio, the House minority leader, said he was urging "every member whose conscience will allow them to support this" to back it, but officials in both parties expected the vote to be a nail-biter. The final legislation was released Sunday evening, and Republicans and Democrats huddled for hours in private meetings to learn its details and voice their concerns. Many said they left undecided, and leaders were scrambling to put the most positive face on a deeply unpopular plan. The plan would let Congress block half the money and force the president to jump through some hoops before using it all. The government could get at $250 bln immediately, $100 bln more if the president certified it was necessary, and the last $350 bln with a separate certification — and subject to a congressional resolution of disapproval. Still, the resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it. As Bush's team stepped up its efforts to corral reluctant Republicans, the White House released a letter from his budget chief, Jim Nussle, to Boehner saying the measure would cost taxpayers "considerably less" than its eye-popping $700 bln total. Rep. Barney Frank of Massachusetts, the House Financial Services Committee chairman, predicted the measure would pass, though not by a large majority.
01:10 SBUX Starbucks mentioned positively in Barron's (14.96 )
Barron's reports investors may be too dismissive of Starbucks (SBUX), especially in view of Starbucks' history of innovation and growth. A year from now consumers may be feeling richer, and Starbucks will be running smarter. The combination could help lift the shares by as much as 20% to 30%. "There's a lot more upside than downside" to the stock, says Scott Chapman, a partner and portfolio manager at Lateef Investment Management, which started buying Starbucks shares a few months ago. Chapman thinks the co will benefit from the recent decline in oil and gasoline prices, among other things. Management thinks Starbucks' earnings could climb to $1.10 to $1.20 in FY10, and to $1.35 to $1.50 in 2011. Using the midpoint of those ranges, management expects profit growth of 20% to 27% in each of the next three years. If Starbucks earns $0.95 a share this year -- again, the midpoint of management's range -- and can increase earnings by 20% in fiscal '10 and '11, it would earn $1.37, Lateef's Chapman notes. Applying a p/e multiple of 17 -- a modest discount to the co's growth rate -- would yield a stock price of 23 a share, 50% above today's price, he says. SBUX assumes its new products and promotions will boost same-store sales growth into the mid-single digits, while, on the cost side, some big expenses will decline. Milk prices, for instance, soared 80% at some points in 2007, but have been trending lower recently. The cost of leasing real estate also should fall, as more empty storefronts appear.
01:09 WRB W.R. Berkley mentioned positively in Barron's (23.75 )
Barron's reports shares of W.R. Berkley (WRB) are attractively priced at 8x projected '08 operating EPS of $3.27 and for 1.25x book value of $20. Historically Berkley has traded at around twice book value. Investors may need a little patience, because Berkley and other P&C insurers are out of favor; weak pricing in most commercial-insurance lines is crimping profits, a trend that may persist through the end of next year. Founder William Berkley believes the P&C cycle may turn by 2010. If that looks likely, the stock could rise sharply during 2009, reaching the low- to mid-30s as Wall Street starts to anticipate the news. Berkley also stands to benefit from AIG's (AIG) woes, because AIG is a major player in so-called excess and surplus lines, which involve specialized risks subject to less price regulation than standard commercial policies or auto or homeowners insurance. Berkley is one of the five leading E&S insurers, with about 4% of the U.S. market, versus AIG's 20%. Berkley's valuation currently is in line with those of larger P&C companies such as Chubb (CB), Allstate (ALL) and Travelers (TRV). It traditionally has traded at a premium, and produced a better ROE. Despite a tough market, Berkley aims to hit its goal of generating ROE of 15% or better, although the boss acknowledges "it will be difficult to maintain that this year." The co notes actual results have been worse than the operating numbers because Berkley held about $225 mln of Fannie Mae and Freddie Mac preferred stock in its investment portfolio.
01:08 TEL Tyco Electronics mentioned positively in Barron's (27.39 )
Barron's reports Tyco Electronics (TEL) dominates the market for electronic connectors, yet economic worries have hurt shares. The selloff may be overdone. If Tyco Electronics continues to boost operating efficiencies, as expected, it could earn as much as $3.60 a share by fiscal 2010, and command a p/e multiple of 13 to 17, says Peter Bates, an analyst at T. Rowe Price, the largest buyer of the stock in Q2, at 6.5 mln shares. "You have a low risk of losing money, and you could make 50% in 12 to 18 months," says Bates, who expects the stock to rally into the high-40s. Tyco Electronics insiders also are bullish, as evidenced by their recent purchases of stock. Three, including CEO Thomas Lynch, spent a combined $758,000 in August to purchase shares on the open market, at around $32. Insider buys totaled $4 bln in the past 12 months, according to InsiderScore.com.
01:04 REGN VEGF Trap-Eye final Ph. 2 results in age-related mascular degeneration presented at 2008 retina society meeting (22.71 )
Regeneron Pharmaceuticals and Bayer HealthCare AG announce that VEGF Trap-Eye achieved durable improvements in visual acuity and in biologic measures of neovascular disease, including retinal thickness and active choroidal neovascularization lesion size, for up to one year in a Phase 2 study in the neovascular form of Age-related Macular Degeneration.
01:02 WIRES On The Wires -Update-
NextWave Wireless (WAVE) announces, as part of its global restructuring initiative, it will be discontinuing the operations of its GO Networks business unit, a supplier of wide-area Wi-Fi network equipment; accordingly, NextWave filed a request in Israel to seek bankruptcy protection for its GO Networks Ltd subsidiary located in Tel Aviv... -- Semiconductor Manufacturing International (SMI) reiterates its revenue guidance for Q308; Morning Wu, Acting CFO says, "We remain confident of achieving revenue growth of 5% to 8% for Q308, the difficult global macro economic environment taken into consideration."
00:06 KONG KongZhong announces appointment of Chief Executive Officer (3.88 )
Co announces that the Board of Directors has appointed Leilei Wang as the Chief Executive Officer and elected him as Chairman of the Board, both effective from October 13, 2008. Yunfan Zhou, current CEO and Chairman, will step down from both positions on October 13, 2008.
00:05 WIRES On The Wires
Crosstex Energy, LP (XTEX) estimates that the combined negative impact of Hurricanes Gustav and Ike on Q3 cash flows will be approx $12-14 mln; the co has not quantified the impact of the reduced operations at the Sabine, Pelican and Bluewater plants on Q4 results... Magnetek (MAG) announces that it has completed the sale of the assets of its telecom power systems business to Myers Power Products; the purchase price of $1.25 mln (subject to post-closing adjustments) was paid in cash by Myers to Magnetek upon closing... Temecula Valley Bancorp (TMCV) announces its Board of Directors has voted to suspend regular quarterly cash dividends on its common stock effective immediately; this will not affect the cash dividends to be paid October 15, 2008.
Friday After the Close
18:39 MKTIN Market Internals
The Dow increased 1.10% closing at 11143, the Nasdaq was down 0.15% to finish at 2183, and the S&P was up 0.32% to finish at 1213. Leading sectors Casinos and Gaming +10.2%, Other Diversified Financial Services +7.5%, Footwear +4.3%, Retail REITS +4.2%, Consumer Finance +3.9%. Lagging sectors included: Diversified Metals and Mining -6.7%, Aluminum -5.5%, Fertilizer and Agricultural Chem -4.2%, Coal and Consumable Fuels -4.2%, Oil and Gas Exploration -3.9%. Today's movement came from lower than avg. volume (NYSE 1145, vs. closing avg of 1356; Nasdaq 1596, vs. 2223), with decliners outpacing advancers (NYSE 1141/2299; Nasdaq 1220/1678), and with new lows outpacing new highs (NYSE 6/277, Nasdaq 13/207).
18:01 Senator Chuck Schumer gives an update on bailout talks; says they made an offer to the House Republicans - CNBC
CNBC interviews Senator Chuck Schumer and he gave an update on bailout talks... Schumer says Says we're at a bit of an impasse right now. Also says Schumer, and the Senate Democrats have an offer for the House Republicans... says they would say to the House they would not object to putting their insurance provision in the package as an option. Says it would be up to the Treasury Secretary to use it... says if he doesn't want to use it, that's his option. Schumer says they don't believe the insurance provision would work, says Paulson also said it would not work. Schumer says at this point, right now, the just offered this to the House, so they will be waiting for a response.
17:53 PRS Primus Guaranty comments on Standard and Poor's ratings announcement and Washington Mutual exposure (2.79 -0.50)
Co commented on Standard & Poor's Rating Services ("S&P") placement of Primus Financial Products, LLC (PRS) on negative watch. As of September 25, 2008, PRS had ~$820 mln in cash and liquid investments to meet any counterparty claims. PRS's $300 million of debt and preferred securities is long-term or perpetual capital, with the first maturity occurring in 2021. A downgrade of PRS's triple-A rating does not trigger a credit event, or require PRS to post collateral or allow a counterparty to terminate its credit default swap transactions with PRS. Additionally, in anticipation of Washington Mutual (WM) filing for bankruptcy, the co provided the following information with regards to the credit default swaps ("CDS") portfolio of Primus Financial. As of September 25, 2008, PRS's net single-name CDS notional exposure that references WM totaled $16.1 million. The co anticipates that, as a result of a WM bankruptcy credit event, it will have to make cash settlement payments to its counterparties on these transactions, less recoveries. Primus Financial also has CDS exposure to WM in its bespoke tranche portfolios, which are not subject to first loss due to existing subordination levels. The company does not anticipate that Primus Financial will have to make cash settlement payments on its bespoke tranche transactions as a result of a WM credit event. However, the capital requirements associated with each tranche will increase as a result of a reduction in tranche subordination.
17:51 BLK BlackRock lets Merrill use shares in repo deals with Fed - DJ (201.01 +9.65) -Update-
17:43 ODP Office Depot announces new credit facility (5.82 +0.02)
Co announced that it has entered into a new $1.25 bln asset-based credit facility. The facility will be secured by the co's inventory, accounts receivable, cash and depository accounts, and will replace the current $1.0 bln revolving credit agreement.
17:36 AIG American Intl will issue a new series of Convertible Participating Serial Preferred Stock (3.15 +0.13) -Update-
On September 23, 2008, American International Group, Inc. ("AIG") announced that it had signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion revolving credit facility. Under the agreement, AIG will issue a new series of Convertible Participating Serial Preferred Stock to a trust that will hold the Preferred Stock for the benefit of the United States Treasury. The Preferred Stock will hold approximately, but not in excess of, 79.9% of the aggregate shareholder voting power. The issuance of the Preferred Stock, which will be convertible into Common Stock of AIG following a special shareholders meeting to amend AIG's restated certificate of incorporation, would normally require approval of shareholders according to the Shareholder Approval Policy of the New York Stock Exchange (the "NYSE"). The Audit Committee of the Board of Directors of AIG has determined that delay necessary in securing shareholder approval prior to the issuance of the Preferred Stock would seriously jeopardize the financial viability of AIG. Because of that determination, the Audit Committee, pursuant to an exception provided in the NYSE's Shareholder Approval Policy for such a situation, expressly approved AIG's omission to seek the shareholder approval that would otherwise have been required under that policy. The NYSE has accepted AIG's application of the exception.
17:33 Standard & Poor’s Announces Changes to U.S. Indices
Washington Mutual (Wa5M) will be removed from the S&P 500 index after the close of trading on Monday, September 29. Washington Mutual Bank was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named receiver. S&P 100 and 500 constituent JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the FDIC. Washington Mutual's place in the S&P 500 will be taken by S&P MidCap 400 constituent Flowserve Corp. (FLS), Flowserve will be replaced by S&P SmallCap 600 constituent UGI (UGI), and UGI Corp. will be replaced by Taleo (TLEO), all after the close of trading on Wednesday, October 1.
17:32 DE Deere files a mixed securities shelf in an S3 (55.33 -2.15)
17:27 NXG Northgate Minerals announced new three-year collective agreement ratified at Northgate's Stawell Gold Mine (1.46 -0.04)
Co announce that a new three-year employee collective agreement (the "Agreement") has been ratified by the Employee Collective, comprised of the 155 production and maintenance employees at the Stawell Gold Mine located in Victoria, Australia. This Agreement replaces the previous three-year agreement that expired on September 26, 2008.
17:19 WB Wachovia has entered into preliminary discussions with a handful of potential suitors, including Banco Santander of Spain, Wells Fargo and Citigroup, according to a person familiar with the situation - WSJ (10.0 -3.70) -Update-
The WSJ reports that Wachovia (WB) has entered into preliminary discussions with a handful of potential suitors, including Banco Santander SA of Spain (STD), Wells Fargo (WFC) and Citigroup (C), according to a person familiar with the situation. The talks underscore escalating efforts by the Charlotte, N.C., bank to escape mounting loan losses and a plunging stock price. WB officials don't believe they need to rush into a deal, and the bank isn't feeling any liquidity pressures, a person familiar with the company said. Still, given the uncertainty swirling through the economy, financial markets and the U.S. banking industry, WB executives are exploring various strategic options. Bank executives are expected to be in New York this weekend to discuss possible deals. WB declined to comment on the discussions. Earlier Friday, a spokeswoman said the bank is "aggressively addressing our challenges" and "working to strategically strengthen and manage capital and liquidity in this challenging environment." The bank's deposit base, stretching from California to the Northeast, is "large and stable," the WB spokeswoman added. STD, C and WFC declined to comment. (WFC, STD)
17:00 LLY Eli Lilly announced the FDA did not complete its review for the prasugrel new drug application (46.82 +0.22)
Daiichi Sankyo and Eli Lilly (LLY) confirmed that the U.S. Food and Drug Administration did not complete its review for the prasugrel new drug application by the Prescription Drug User Fee Act goal date of September 26, 2008. The proposed indication for prasugrel is for the treatment of patients with acute coronary syndromes being managed with an artery-opening procedure known as percutaneous coronary intervention.
16:56 Senator Barney Frank says by Sunday they will have an agreeement on the bill regarding bailout plan - CNBC
16:49 AIG American Intl says related amendment would boost share capitalization; says related amendment would cut par value of common stock - Bloomberg (3.15 +0.13)
16:41 IMOS Chipmos Technology lowers Q3 revs guidance (1.98 +0.07)
IMOS announced that the received repurchase requests for 3.375% Convertible Senior Notes due 2011 (the "Notes") from holders of the Notes in the aggregate total principal amount of US$78.7 mln during the window period of repurchase right exercise from August 29, 2008 until 5:00 p.m., London time, on September 22, 2008. The co has wired the total required cash for this repurchase to the indenture trustee and paying agent for the Notes, The Bank of New York Mellon, on September 25, 2008. After this repurchase and the notes bought back previously, Notes in the aggregate total principal amount of US$2.3 mln remain outstanding. IMOS today also revised its guidance for Q3 of 2008 to reflect the lower than expected demand in DRAM business due to output decrease from customers and inventory adjustment in the pipeline. The co had originally expected Q3 2008 revenue to be flat to down 6% compared to Q2 of 2008 revenue of NT$4,817.1 mln or US$158.7 mln, with 2.5% to 5.5% of gross margin on a consolidated basis for Q3 of 2008. The co now expects revenue in Q3 of 2008 to be down 6-12% compared to Q2 of 2008 based on the exchange rate of NT$30.36 against US$1.00 as of Jun. 30, 2008, with -0.5% to 3.0% of gross margin on a consolidated basis for the third quarter of 2008. ChipMOS maintains its outlook for strong free cash flow generation capability in 2008 and going forward. The co will keep focus on improving its balance sheet during down cycle through CB repurchase and debt ratio reduction.
16:40 House Speaker Nancy Pelosi says she believes progress is being made on the bailout package... Also says Congress will not leave Washington until a bill is passed, and they will work throughout the weekend - CNBC
16:33 PBR Petrobras Brasileiro funds oil in Santos Basin BM-S-40 block - DJ (46.56 -1.76) -Update-
16:32 MTH Meritage Homes wins jury verdict of $111 mln in trial against former division President Greg Hancock (25.54 +0.57)
Co was awarded $111 million yesterday, in a unanimous jury verdict in Federal District Court in Phoenix. Meritage filed the lawsuit on February 24, 2004, against Greg Hancock, a former division president of Meritage Homes. Hancock is the current owner of Phoenix homebuilder Hancock Communities.
16:31 IMOS now expects revenue in the third quarter of 2008 to be down 6% to 12% compared to the second quarter of 2008, down from flat to down 6%
16:31 IMOS lowers Q3 revs guidance
16:19 PBR Petrobras Brasileiro finds oil in Santos Basin BM-S-40 block - DJ (46.56 -1.76)
16:13 MNI McClatchy announces amendment to its credit agreement (4.50 +0.25)
The co announces that it has entered into an amendment to its $1.175 billion bank credit facility. The amendment provides greater flexibility for the life of the credit facility in the allowable leverage and interest coverage ratios, the two primary financial covenants contained in the agreement, while providing banks in the credit syndicate with new security in certain collateral and higher pricing.
16:05 AEL American Equity Investment Life discloses exposure to certain investments; total amortized cost of the investments represents 0.5% of the total invested assets (9.04 -0.07)
Co discloses information in response to inquiries about American Equity Investment Life Holding Company's exposure to certain investments in securities issued by the Federal National Mortgage Association (FNM), the Federal Home Loan Mortgage Corporation (FRE), Lehman Brothers Holdings (LEH) and its affiliates, Washington Mutual (WM) and American International Group (AIG) and its affiliates. The total amortized cost of the investments in Fannie Mae, Freddie Mac, Lehman Brothers, Washington Mutual and AIG represents 0.5% of the Company's total invested assets on an amortized cost basis as of June 30, 2008.
16:04 MDP Meredith names Joseph Ceryanec VP/Chief Financial Officer (29.12 +0.57)
16:02 NC NACCO Industries discloses its subsidiary will reduce the work force (97.98 +0.81)
Co discloses that for the last few months it has seen a significant reduction in demand in the European forklift truck market. As a result, NACCO Materials Handling Group, a wholly owned subsidiary of NACCO Industries, has confirmed it will reduce the work force at its Craigavon, Northern Ireland facility by 93 employees.
16:02 XING Qiao Xing reports Q2 revs $74.3 mln vs $162.48 mln First Call single analyst est (2.69 +0.03)
Co is only reporting its second quarter operating results because a third party valuation is currently being conducted for the purposes of accounting for the $70 million convertible notes issued by our major subsidiary, Qiao Xing Mobile Communication (QXM), on May 15, 2008. Co reports 2Q08 revs of $74.3 mln vs $162.48 mln First Call single analyst est. The sales revenue was primarily contributed by co's major subsidiary CECT, which is in the mobile phone handset business with its 'CECT' brand and 'VEVA' brand. For CECT, in the second quarter of 2008, handset shipments were approximately 566,000 units, representing a decrease of 46.4% compared to 1,055,000 units in the second quarter of 2007. The decrease in CECT-branded handset shipments in the second quarter of 2008 was primarily due to lower demand caused by the earthquake in Sichuan province in May and a delay in new product launch. In addition, shipments in the second quarter of 2007 were significantly higher due to the shipment of about 610,000 units of C1000, part of which was used to clear the backlog of orders that were placed in the first quarter of 2007.
16:00 WB Wachovia in preliminary talks with Citi - NY Times Dealbook (9.21 -4.15) -Update-
NY Times Dealbook reports Wachovia has begun preliminary talks with Citigroup (C) about a potential merger, people briefed on the matter said Friday afternoon. These talks are early, however, and no deal may emerge from them, these people said.
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