Markets & Finance

Fannie Mae Shares Plunge


Fannie Mae (FNM) shares were sharply lower Wednesday following an unconfirmed Dow Jones Newswires story that said additional accounting violations have been uncovered by investigators, including overvaluation of assets and underreporting of credit losses.

Shares of Paychex (PAYX) moved higher Wednesday after the company posted 30 cents vs. 23 cents first quarter earnings per share on 17% higher revenue. The company raised its fiscal year 2006 revenue growth guidance to 13% to 15% from 11% to 12%, and said it anticipates 22% to 24% fiscal year 2006 net income growth.

NRG Energy (NRG) is in advanced talks to acquire Texas Genco from a private-equity group in a deal valued at $5 billion or more, according to the Wall Street Journal.

Constellation Brands (STZ) offered to acquire Vincor International (VN.TO) in a deal valued at about US$1.2 billion, including equity and debt assumption, at US$26.45 cash per Vincor share.

Baxter International (BAX) said it plans to repatriate about $2 billion in unremitted foreign earnings related to the American Jobs Creation Act of 2004 and take a related tax charge in the third quarter. Under the repatriation plan, it intends to privately place $400 million of 5-year notes.

Affymetrix (AFFX) said it expects third quarter product and product-related revenues to be $10 million to $12 million below its previous guidance due to production constraints on its most advanced commercial product, the 500K Mapping Array Set.

Mohawk Industries (MHK) cut its third quarter earnings per share guidance range to between $1.60 and $1.63, and its fourth quarter guidance to between $1.49 and $1.58 due to the impact of Hurricane Katrina on raw materials and energy costs. The company noted fourth quarter guidance does not include the impact, if any, of Hurricane Rita.

Spectrum Control (SPEC) posted 12 cents vs. 8 cents third quarter earnings per share on 28% higher revenue. The company expects fourth quarter revenue to equal or slightly exceed the third quarter level, but is currently unable to gauge the impact Hurricane Katrina may have on its financial and operational performance.

Exelon(EXC) said it expects non-GAAP 2005 earnings per share toward the upper end of its previously estimated $3.00 to $3.15 range because of a strong first half and July and August results.

Air Products and Chemicals(APD) said it expects hurricanes to impact its fourth quarter earnings per share by 5 cents to 7 cents as the company sustained extensive damage to its industrial gas complex.

SYNNEX (SNX) posted 29 cents vs. 38 cents third quarter earnings per share (GAAP) as a restructuring charge and a loss on equity investment offset its 6.7% revenue rise. The company sees 37 cents to 39 cents fourth quarter earnings per share (excluding items) on $1.475 billion to $1.525 billion revenue.

Hartmarx (HMX) posted 18 cents vs. 14 cents third quarter earnings per share as lower expenses helped to offset its 2.3% sales drop. The company lowered its 40% to 45% 2005 earnings growth guidance to 30% to 40% due to soft demand in August and shipments delayed from the third quarter to fourth quarter.

First Marblehead (FMD) announced the resignation of Daniel Meyers, Chairman & CEO, effective immediately. JP Morgan downgraded the stock to neutral from overweight.

Steel Technologies (STTX) said it expects fourth quarter results to reflect lower-than-anticipated shipments and further margin compression. As a result, the company expects shipments to be 5% below projections stated in a July conference call.

Federal Signal (FSS) said it sees its first half operating margin falling short of expectations, and cited continuing multiple issues for its Refuse business. The company reiterated $1.2 billion in 2005 revenue guidance.

Safeco (SAFC) estimated after-tax catastrophe losses from Hurricane Katrina at $78 million, or 61 cents per share. The company says it is still assessing losses from Hurricane Rita and plans to announce third quarter financial results on Oct. 18.

Incyte (INCY) The Food and Drug Administration requested more data on Reverset, Incyte's nucleoside reverse transcriptase inhibitor which is being developed as therapy for treatment-experienced HIV patients. Thomas Weisel reiterated an outperform on the stock.

MedImmune (MEDI) entered into agreement with the National Institute of Allergy and Infectious Diseases to develop investigational pandemic influenza vaccines. Separately, Lehman upgraded to overweight from equal-weight.

Noven Pharmaceuticals(NOVN) shares fell after news that the Food and Drug Administration doesn't expect to approve Noven's ANDA for the generic version of Duragesic, and ceases review of ANDA. Pacific Growth downgraded the stock to equal-weight from overweight.


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