Markets & Finance

Morgan Stanley to Spin Off Discover Unit


Delta rejects US Airways' bid; Circuit City posts a loss; plus more stocks in the news Tuesday

From Standard & Poor's Equity ResearchMorgan Stanley (MS) posted $2.08 vs. $1.64 fourth quarter earnings per share (EPS) from continuing operations on a 24% revenue rise. The company plans to spin off its Discover Credit Card unit.

Delta Air Lines (DALRQ) rejects an unsolicited merger proposal made by US Airways Group (LCC) and concludes its standalone Plan of Reorganization will provide creditors with superior value, faster recovery, and much greater certainty of execution.

Circuit City Stores (CC) posted a 9 cents third quarter loss vs. 6 cents earnings per share (EPS) as higher selling, general, and administrative (SG&A) costs offset a 6.9% sales rise. The company says the pace of decline in flat panel TV prices accelerated during the quarter.

Pfizer,(PFE) names CEO Jeffrey B. Kindler as chairman. The company also raises its quarterly dividend 21% to 29 cents.

Scholastic (SCHL) posted $1.75 vs. $1.58 second quarter EPS on a 5.6% revenue rise. Continues to expect fiscal year 2007 revenue of $2.1 billion to $2.2 billion and EPS of $1.55 to $1.85.

UnitedHealth Group (UNH) sees $1.5 billion to $1.7 billion pretax non-cash charge for stock-based compensation expense for 1994-2005. The company affirms its outlook for $1.17 billion to $1.19 billion fourth quarter earnings and $4.14 billion to $4.16 billion in 2006. It sees $4.7 billion to $4.75 billion 2007 earnings.

Oracle (ORCL) posted 18 cents vs. 15 cents second quarter GAAP EPS on a 23% revenue rise (constant currency). New software license growth of 10% is below some Street estimates.

Hovnanian Enterprises (HOV) posted a $1.88 fourth quarter loss vs. $2.53 EPS on impairment charges, land option write-offs, and a 1.5% revenue decline. The company didn't expect the suddenness and magnitude of the fall in pricing that occurred this year. It sees fiscal year 2007 EPS of $1.50 to $2.00.

eBay Inc (EBAY) is to announce it is changing direction in China, shutting down its auction site there, and replacing it with one majority-owned and run by Tom Online (TOMO), according to the San Jose Mercury News.

Tuesday Morning(TUES) sees 78 cents to 84 cents 2006 EPS (including 6 cents to 7 cents stock option expense), $905-$915 million in revenue, and same-store sales in the range of negative 7.7% to negative 8.7%. Keybanc downgrades to hold from buy.


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