Markets & Finance

Dell Reports First-Quarter Results, Job Cuts


Wachovia agrees to acquire A.G. Edwards, and more stocks in the news Thursday

From Standard & Poor's Equity ResearchDell (DELL) reports preliminary first-quarter operating income of $947 million and earnings per share of $0.34 (better than expected), on revenue of $14.6 billion. The PC maker said that in its second quarter, operating margins will be under pressure sequentially as the company enters the seasonally slower quarter with elevated operating expenses and additional costs related to the ongoing investigations into its accounting. It added that results for the year could be affected by additional transformational actions, changing competitive dynamics, a more aggressive pricing environment and higher component costs in the second half of the year. It will also cut 10% of its workforce, or about 8,800 jobs, over the next year to cut costs.

Wachovia (WB) agrees to acquire A.G. Edwards (AGE). Terms: 0.9844 WB share and $35.80 in cash for each AGE share. Based on WB's May 30 closing price, the deal values AGE at $89.50 per share.

Motorola (MOT) says it will cut an additional 4,000 workers. It expects to record additional restructuring charges of approximately $300 million, or approximately $0.08 per share, incurred over the remainder of 2007.

Ethanol stocks fall after Banc of America downgraded Pacific Ethanol (PEIX), Aventine Renewable Energy Holdings (AVR), and VeraSun Energy (VSE ) to sell from neutral. Andersons (ANDE) was cut to neutral from buy.

Payless Shoesource (PSS) was higher in pre-market trading after it reported earnings of 59 cents in the first quarter, vs. 53 cents a year ago. Same-store sales were up 5%, total sales were 4.9% higher and the firm says a pending acquisition of Stride Rite (SRR) should add to earnings in fiscal 2008.

Dendreon (DNDN) rises on news the FDA confirms it will accept either a positive interim or final analysis of survival from company's ongoing IMPACT study to supplement BLA for PROVENGE. The company will present guidance today at BoA Health Care Conference.

Big Lots (BIG) shares fall after the retailer posts $0.26, vs. $0.12 a year ago, first-quarter EPS on 4.9% same-store sales rise. It sees $0.07-$0.10 second-quarter EPS from continuing operations. It raises fiscal year 2008 EPS from continuing operations guidance to $1.25-$1.30. S&P upgrades to buy.

Chico's FAS (CHS) posts better-than-expected $0.28, vs. $0.29 a year ago, first-quarter EPS from continuing operations on 1.6% lower same-store sales and 16% higher net sales. The apparel retailer says May comps trending down in mid-single digits. S&P keeps hold; ups estimates and target.

Tiffany & Co. (TIF) posts $0.36, vs. $0.30 a year ago, first-quarter EPS on 12% rise in U.S. same-store sales and 15% total revenue rise. It sees 12% sales growth for 2007, $2.10-$2.15 EPS. It plans to expand wholesale distribution of Tiffany watches.

Ciena (CIEN) posts $0.14 second-quarter EPS, vs. $0.02 loss (GAAP) a year ago, on a 48% revenue rise. It sees third-quarter revenue growth of up to 5% from the second quarter, mid-40%s gross margin. It raises 27%-30% fiscal year 2007 growth expectations to 30%-36%.

Yahoo! (YHOO) announces the resignation of chief technology officer Farzad Nazem, effective June 8. JP Morgan upgrades to overweight from neutral.

Sears Holdings (SHLD) posts $1.10, vs. $1.11 a year ago, first-quarter EPS excluding items, on a 3.9% decline in domestic same-store sales and 2.5% lower total sales.

H.J. Heinz (HNZ) posts $0.55 fourth-quarter EPS from continuing operations, vs. breakeven a year ago, despite flat sales. It raises fiscal year 2008 EPS guidance to $2.54-$2.60 and sees sales growth of about 4%. It also raises annual dividend by 8.6% to $1.52.

Mylan Labs (MYL) receives FDA approval for Azithromycin tablets, 250mg, 500mg, a generic version of PFE's Zithromax.

Corning (GLW) expects its diesel sales could reach $500-$600 million by 2010, and at that sales level, it believes this business should have excellent gross margin and be a significant contributor to its bottom line.

Semtech (SMTC) posts better-than-expected $0.11, vs. $0.16 a year ago, first-quarter GAAP EPS on 8.2% sales decline. It sees $0.09-$0.10 second-quarter GAAP EPS on 3%-5% quarter-to-quarter sales rise. It sets $150 million accelerated stock buyback plan.

Genesco (GCO) says it plans to explore alternatives which will maximize shareholder value, including a possible sale of the company. It rejects $51 bid from Foot Locker to acquire the company. It posts $0.10, vs. $0.40 a year ago, first-quarter EPS; it sees $2.37-$2.40 fiscal eyar 2008 EPS.


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