Stocks Slump on Poor Jobs, Earnings News

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According to a Reuters report, Bank of America (BAC) has sold a portion of its holdings in China Construction Bank, generating proceeds of $2.83 billion, but still leaving BofA with a 16.6% stake in the company. The company had planned and then canceled a similar sale in December. On Tuesday, a report in the Wall Street Journal (citing an internal memo) said that BofA's CEO Ken Lewis expects fourth-quarter earnings to be below expectations. The memo reportedly also says Lewis and top executives will not receive a bonus for 2008.

Intel sees lower-than-expected fourth-quarter revenue of about $8.2 billion, down 20% sequentially and 23% year-over-year. The chipmaker cited further weakness in end demand and inventory reductions by customers in the global PC supply chain. Intel said preliminary estimate of fourth-quarter gross margin is at the bottom of the previous expectation of 55%, plus or minus a couple of points.

Time Warner said Wednesday the economic environment has proved somewhat more challenging than it previously expected. The media giant now anticipates that growth in 2008 adjusted operating income before depreciation and amortization will be around 1%. Time Warner also expects a non-cash impairment charge in the fourth quarter of about $25 billion related to goodwill and identifiable intangible assets at the cable, publishing, and AOL segments. Due to this impairment charge, the company expects an operating loss in 2008 as compared to operating income of $8.9 billion in 2007.

U.S. metals giant Alcoa said Wednesday it will implement further smelting reductions of more than 135,000 metric tons per year resulting in reduction of total primary aluminum output by more than 750,000 metric tons, or 18% of annualized output. Alumina production will also be reduced to a total of 1.5 million metric tons. Alcoa will reduce headcount by more than 13,500 employees, or 13% of its global workforce, by the end of 2009, with an additional 1,700 contractor positions eliminated. Alcoa has also instituted a global salary and hiring freeze.

Ethan Allen Interiors (ETH) said it plans to consolidate operations of its Eldred, Pa., upholstery manufacturing plant and several of its retail service centers. The company expects to take about $8 million-$9 million of pre-tax restructuring, impairment and other related charges in the second half of fiscal 2009.

Shares of Indian IT services company Satyam Computer Services (SAY) did not trade in the U.S. Wednesday; the shares lost nearly three-quarters of their value in overseas trading after the company said it received a letter from chairman B Ramalinga Raju tendering his resignation and detailing financial irregularities. The Financial Times reports that B Ramalinga Raju admitted wildly inflating the company's margins to paint a picture of good performance and retain his management position, in one of the worst scams to have hit India's outsourcing sector.

"How many more Madoff/Satyam/Enrons will come to light is the scary prospect as the casual investor is in danger of being lost due to lack of trust of anyone, and who can blame them," wrote Jay Collins of DT Trading in Chicago in a note Monday.

In earnings news Wednesday, Monsanto (MON) posted 98 cents vs. 45 cents first quarter EPS (ongoing) on a 29% sales rise. The company said greater demand in Latin America for its products propelled it to record-setting results. Monsanto raised its fiscal 2009 EPS guidance from a range of $4.20-$4.40 to $4.40-$4.50 on an ongoing basis.

Constellation Brands (STZ) posts 60 cents vs. 55 cents third quarter non-GAAP EPS as lower interest expense offset a 6% reported sales decline. The wine and spirits producer tightened its fiscal 2009 EPS guidance to a range of $1.68-$1.72 from its previous estimate of $1.68-$1.76.

Family Dollar Stores (FDO) posted 42 cents vs. 37 cents first quarter EPS on 2.1% higher same-store sales and 4.2% higher total sales. The discount retailer sees 48 cents-52 cents second quarter EPS on 3%-5% higher same-store sales; it sees $1.63-$1.81 fiscal 2009 EPS on 2%-4% higher same-store sales and 4%-6% higher total sales.